Dear,
Carry out the following process:
Regards,
Prashanth Pai
"Award, if Usefull"
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3 Procurement of Subcontracting Materials u2013 Business Process Procedure
3.1 Procurement of Subcontracting Materials
3.1.1 Purpose
In Indian subcontracting process when you issue materials to a subcontractor, you need to keep track of what materials you have issued and when they have to be returned by subcontractor. The reason for this close monitoring has to do with Indian tax law. Under excise law 57AC, when you send materials to a subcontractor for processing, you are not required to pay any excise duty, even though the materials have left your premises. However, if the materials have not been returned to you within 180 days specified by the law, you will have to reverse any excise credit that you posted when you have purchased the materials. When you send material out of your factory premises you need to send with 57F4 Challan. In this process you are going to do the same.
3.1.2 Prerequisites
The following scenario specific master data must be created for operation of this building block and subsequent dependent building blocks.
u2022 Material Master record
u2022 Vendor Master record
u2022 Purchasing Info Record (Optional)
Ensure that Sub-Contracting as Info Category.
u2022 CIN Master Data (Refer User Manual u2013 Procurement of Stock Materials (Domestic))
o Chapter IDs
o Material ID and chapter ID combination (Ensure Sub-Contract check box is selected for the Materials that provided to vendor)
o CENVAT Determination
o Vendor Excise Details
o Excise Indicator for Plants
o Excise Indicator for Plant and Vendor
o Excise Tax Rates
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3.2 Creation of Subcontracting Purchase Order
3.2.1 Use
A purchase order is a legal document used to record an individual purchase with the vendor. It also provides the vendor with a reference document to link to goods receipt and invoice verification processes. The purchase order is a commitment to a vendor for a given subcontracting activity, in a specified quantity at a predetermined price and delivery date.
3.2.2 Prerequisites
Components stock should be available for providing to subcontracting vendor.
3.2.3 Procedure
1. Access the transaction choosing one of the following navigation options:
SAP R/3 menu Logistics Materials Management Purchasing Purchase Order CreateVendor/Supplying Plant Known
Transaction code ME21N
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3.3 Message Output
3.3.1 Use
A Purchase Order needs to be printed for transmitting to vendor.
3.3.2 Procedure
1. Access the transaction choosing one of the following navigation options:
SAP R/3 menu Logistics Materials Management Purchasing Purchase Order Messages Print/Transmit
Transaction code ME9F
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3.4 Transfer of Components to Subcontractor
3.4.1 Use
The Nature of subcontracting purchase order is that company will provide components to subcontractor. This process describes how to transfer post materials to subcontractor.
3.4.2 Prerequisites
Sufficient stocks of components should be available for making transfer posting.
3.4.3 Procedure
1. Access the transaction choosing one of the following navigation options:
SAP R/3 menu Logistics Materials Management Inventory Management Goods Movement Transfer posting
Transaction code MB1B
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3.5 Creation of Subcontracting Challan
3.5.1 Use
It is statutory requirement to send the components to subcontractor with 57F4 Challan.
3.5.2 Prerequisites
u2022 Select the Sub-Contracting Material in Material and Chapter ID Combination of the Excise Master (J1ID) for the sending Material.
u2022 Ensure that the details of the receiving Material maintained in the Excise Master (J1ID).
u2022 CENVAT Determination of the Excise Master (J1ID) Maintained for the both sending and receiving Material.
u2022 Ensure that the Assessable value for the sending material is maintained in the Excise Master (J1ID)
3.5.3 Procedure
1. Access the transaction choosing one of the following navigation options:
SAP User menu
CIN Menu Indirect Taxes Procurement Subcontracting Subcontracting Challans Create
Transaction code J1IF01
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Printing of Subcontracting Challan
3.6.1 Use
It is statutory requirement to send the components to subcontractor with 57F4 Challan.
3.6.2 Procedure
Access the transaction choosing one of the following navigation options:
SAP User menu
CIN Menu Indirect Taxes Procurement Subcontracting Subcontracting Challans Change
Transaction code J1IF11
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3.7 Goods Receipt for Purchase Order
3.7.1 Use
Normally Goods are received from the Vendor as a result of a Purchase Order at the receiving plant
3.7.2 Prerequisites
Purchase Order
3.7.3 Procedure
1. Access the transaction choosing one of the following navigation options:
SAP R/3 menu Logistics Materials Management Inventory Management Goods Movement Goods Receipt For Purchase Order PO Number Known
Transaction code MIGO
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3.8 Reconciling Subcontracting Challan
3.8.1 Use
After making Goods Receipt the GR has to be reconciled with the challan sent to subcontractor.
3.8.2 Procedure
1. Access the transaction choosing one of the following navigation options:
SAP User menu
CIN Menu Indirect Taxes Procurement Subcontracting Subcontracting Challans Reconcile Quantity
Transaction code J1IFQ
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3.9 Completing/Reversal/Re-credit Subcontracting Challan
3.9.1 Use
This transaction is basically used to complete the challan if you have reconciled as stated above step. There may be cases subcontractor may not able to supply within stipulated 180 days limit then in this case also same transaction is used for reversal of challan or re-crediting the amount.
3.9.2 Procedure
1. Access the transaction choosing one of the following navigation options:
SAP User menu
CIN Menu Indirect Taxes Procurement Subcontracting Subcontracting Challans Complete/Reverse/Recredit
Transaction code J1IF13
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3.10 Logistics Invoice Verification for Subcontracting Material
3.10.1 Use
In this process of Logistics Invoice Verification all the Incoming Invoices are verified in terms of their content, prices and arithmetic. When the invoice is posted, the invoice data is saved in the system. The system updates the data saved in the invoice documents in Materials Management and Financial Accounting.
3.10.2 Procedure
1. Access the transaction choosing one of the following navigation options:
SAP R/3 menu Logistics Materials Management Logistics invoice Verification Document Entry Enter Invoice
Transaction code MIRO
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