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Steps in Subcontracting Process

Dear Experts,

In Subcontracting process if the subcontracting period of 180 days is completed and if material is still with Vendor, how to complete the process.

Also how to reverse the Cenvat Credit.And how cmplete/reconcile the challan.

Please explain detail steps and Tcode.

Thanks and Regards,

Sapmm user

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  • Best Answer
    author's profile photo Former Member
    Former Member
    Posted on Nov 20, 2008 at 07:40 PM

    Sub Contracting Cycle

    (1) You have a material that can be procured externally, and you have maintained BOM with components. Any waste generated and received during subcontracting process can be maintained as component with negative quantity.

    (2) You create a subcontracting PO (PO with Item Category L). You can also maintain Purchase Info Record for Subcontract category for material and subcontractor.

    (3) You make a transfer posting to issue components for SC PO. Material is sent to subcontractor. As material remains under your ownership, system does not make any value entry. But quantity is shown as "Material Provided to Vendor"

    (4) You receive finished material against SC-PO. You also specify components consumed in manufacturing of finished goods. Additionally, if you have negative components in BOM, now you'll also receive subcontracting by-products. There are three events, so three accounting entries are generated:

    DR FG Stock/ SC By-Product Stock

    CR Change in Stock (FG/ SC By-Product )

    (for finished goods received)

    DR Subcontracting Charges

    CR GR/IR Clg

    (for moneys payable to Subcontractor)

    DR Consumption (Components)

    CR Change in Stock (FG/ SC By-Product ) 0

    (material provided to Vendor is now charged to expense)

    (5) You do the IV for SC Invoice, and the process is complete.

    Process of Subcontract in MM

    Sub-contract business process:

    You want to buy material from the supplier (processed material/ assembled item) , but for some reason (quality of certain item / price ) you will give some component to vendor .

    Vendor shall process the item / use the item provided & supply the final item.

    SAP process:

    1.Create the finished goods material code.

    2.Maintain the BOM for the material.

    3.Create PO with item category as "L" .

    4.Issue material to vendor with movement type 541

    5.Receive the material against the PO with movement type 101.

    6.MIRO to account for vendor's invoice for the service charge& material used by him.

    Note:: At the Time of GR 543 Mvt is up dated for Raw Material.

    Can anybody tell me how a process has to be given to subcontracting?

    Suppose, I have 3 operations 1)weaving 2)dyeing 3)cutting & packing

    if no 2 process (i.e Dyeing) has to be given to subcontracting, what process should i follow ?

    The following process to be followed for subcontracting.

    1. Item code(material master) to be created at the stage of before dyeing.

    2. Item code(material master) to be created after Dyeing as subcontracted item.(F30)

    3. Bill of material to be created for the material(2) calling for material(1)

    4. Info record and source list to be created for material(2) with the corresponding vendor

    5. PO to be released for material (2)

    6.Along with PO the material(1) to be issued to vendor

    7.On receipt of material when GR is made the stock with vendor will get updated.

    How to Create a Subcontract Order?

    To create a subcontract order, proceed as follows:

    Enter the material you want to order and the item category for subcontracting (L) in the order item.

    Press ENTER to display the screen for component processing.

    Enter the components that the vendor requires to manufacture the product.

    Please note:

    u2013 You do not need to enter the date required for the components. This date is proposed by the system when you press ENTER.

    It is calculated as follows:

    Delivery date of the item - Planned delivery time

    u2013 If you do not want the quantity of the components to be changed if the order quantity of the end product is altered, set the indicator Fixed quantity (column F).

    u2013 You can determine whether the components are available on the date required by selecting Edit -> Availability check.

    If you entered a bill of material as the material in the subcontract order, the components are created automatically.

    If you want to determine the components in the bill of material at a later date (for example, if the bill of material is subsequently changed), choose Item -> Component -> New BOM explosion. The existing components are deleted and redetermined in the bill of material.

    Save the purchase order.

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    • hi

      1. Raw materials are sent to the subcontractor for processing into finish goods through subcontracting challan and in that no excise duty is debit to the excise and this challan includes only approximate value of goods.

      2. The subcontractor needs to send back the material within 180 days of receiving the material into subcontractor premises, in case if he fails to send the material within 180 days then the company needs to debit the CENVAT duty, the process as -

      If the allotted number of days elapses and the subcontractor has not returned some or any of the materials in the challan (status: Posted or Assigned), you must reverse the excise duty that you have credited to your CENVAT account. The scrap has to be returned by the subcontractor. If it is not returned, the excise duty for the scrap has to be reversed.

      This function sets the status to Reversed. From here, you have two options:

      u2022 If you do note expect the subcontractor to return the materials, you can complete it.

      Complete

      1.From the SAP Easy Access screen, choose Logistics u2192 Procurement u2192 Subcontracting u2192 Subcontracting Challans u2192 Complete/Reverse/Recredit.

      2. Enter the challan number and year.

      3. Choose .

      4. Select Complete challan.

      5. Save the challan.

      u2022 If you do expect the subcontractor to return at least some of the materials, you can leave it as it is for the time being. Then, when the materials arrive, you can recredit the excise duty to the account .

      Recredit

      If a subcontractor returns materials after the return date, you can recredit the excise duty credit that you have reversed.

      Recrediting the CENVAT Account

      1. From the SAP Easy Access screen, choose Logistics u2192 Procurement u2192 Subcontracting u2192

      Subcontracting Challans u2192 Complete/Reverse/Recredit.

      2. Enter the challan number and year.

      3. Choose .

      4. Select either of the following options:

      u2212 Take recredit for receipts

      This leaves the challan open for further goods receipts.

      u2212 Take recredit if any and complete challan

      This completes the challan and writes off finally any CENVAT credit that you might have been able to claim.

      5. Save the challan.

      regards

      kunal

  • Posted on Nov 21, 2008 at 03:30 PM
    10

    Hi,

    Refer link;

    [Subcontracting Process w/o Payment of Excise Duty|http://help.sap.com/bestpractices/BBLibrary/Documentation/J85_BPP_V2_EN_IN.doc]

    Subcontracting Process

    Subcontracting without Payment of Duty

    - Creation of Subcontracting PO (ME21N)

    - Transfer Posting of Components to Subcontractor (Mvmt Type - 541) (MB1B/ME2O/MIGO)

    - Creation of Subcontracting Challan w.r.t. Transfer Posting Doc (J1IF01)

    - Goods Receipt w.r.t. Subcontracting PO and Refer Subcontracting Challan at the time of GR (MIGO) {GR with 101 and autoconsumption of components with 543 movement}

    - Reconciliation of Subcontracting Challan (J1IFQ)

    - Completion of Subcontracting Challan (J1IF13)

    - Generation of Annexure IV (J1IFR)

    Master Data

    - MM01- Material Masters for Components and FG

    - XK01 - Vendor Master (Subcontractor)

    - CS01 - BOM for FG

    - ME11 - Purchase Inforecord for Subcontracting

    Configuration: -

    - Go to SPRO > Logistics - General > Tax on Goods Movements > India > Account Determination > Specify Excise Accounts per Excise Transaction > Here maintain as following;

    ETT  Subtrn Typ DC ind Acct name
    57FC            CR     PLABED
    57FC            CR     RG23BED
    57FC            CR     RG23ECS
    57FC            DR     CLEAR
    57FC 01         CR     PLABED
    57FC 01         CR     RG23AT1
    57FC 01         CR     RG23BED
    57FC 01         CR     RG23ECS
    57FC 01         DR     CLEAR
    57NR            CR     CLEAR
    57NR            CR     PLABED
    57NR            CR     RG23BED
    57NR            CR     RG23ECS
    57NR            DR     REVERS
    57NR 01         CR     CLEAR
    57NR 01         CR     PLABED
    57NR 01         CR     RG23BED
    57NR 01         CR     RG23ECS
    57NR 01         DR     REVERS

    - And then go to SPRO > Logistics - General > Tax on Goods Movements > India > Account Determination > Specify G/L Accounts per Excise Transaction > Here do Account Determination for the above combination and Excise Group

    Apart from above also do following configuration for Subcontracting;

    - SPRO > Logistics - General > Tax on Goods Movements > India > Business Transactions > Subcontracting > Subcontracting Attributes

    Here maintain following;

    Excise Group         XX
    Excise TT            57FC
    Subtransaction Type  01
     Subtran Type Text   57FC CHALLAN
     Subc. Period        180
     Rate-subcontracting
     Mvt Grp Issues      0001
     Mvt Grp Receipt     0002
     Filter Non exise
     EI Items            10
     No. range no.       01
     Ass. Val. /Exc Inv
     Subcon Output Type  J1IF

    - SPRO > Logistics - General > Tax on Goods Movements > India > Business Transactions > Subcontracting > Maintain Movement Type Groups

    Here maintain following

    MVT. Grp. MvT S
    0001      101 O
    0001      541 O
    0002      542
    0002      542 O
    0002      543 O

    - J1I9 - maintain No range for object "J_1I57FC" for series group

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  • author's profile photo Former Member
    Former Member
    Posted on Nov 29, 2014 at 05:46 AM

    This message was moderated.

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