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Subcontracting Process

Former Member
0 Kudos

Hello together,

I am stuck up with one subcontracting senereio. Actually we have purchased a raw material ( Round bar ). During good receipt we have captured & post the excise invoice. We have issued this raw material to production for maching operation. After maching operation there is platting operation and which will be carried out at subcontractor location. Therefore we have made sub con chalan without payment of excise duty but we have only mentioned the assesable value in the chalan.

Now the 180 days have crossed but we have not recd this material from subcontractor. Now how can I handle this process in SAP CIN.

Though the chalan has prepared without duty paid so what shall i do,

1. Shall i reverse the chalan & create a new one?

2. Shall i reverse the credit entry ( which was captured & post for raw material ) in J1IH t.code

3. DO i need to debit the excise duty amount to subcontracting too as becasue of his delay i lost the excise benifits?

Please let me know your expert opinion.

Thanks in advance.

Accepted Solutions (1)

Accepted Solutions (1)

Former Member
0 Kudos

Hi,

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.

The reason for this close monitoring has to do with Indiau2019s 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 a given length of time specified by the law (in 2000, 180 days).

you will have to reverse any excise credit that you posted when you purchased the materials (see Completion, Reversal, and Recredit). In the case of materials that you have manufactured in-house, you will have to post credit entries to the extent of the CENVAT rate of the assessable value of the materials.

Rgs,

Dhanush.

Answers (0)