Part I entries for subcontract

Question

Dear All,
Can anybody pleaes give me information that how part I entries are updated in subcontracting process.
for example material A001 of 100 qty is to be sent out for processing outside and completely comsumed while 543
please explain as below.
541 - stock to subcontract - IWD - part 1 updated with issue in part I register (reduce 100 qty in part I)
542 - ??
543 - ??
545 - ??
Regards,
Vimlesh

Answer 1

Hi,
This is breifly about Sub contracting process. A) Following is the cycle of sub-contracting without payment of excise duty in SAP -
1) You maintain BOM of the material which you are ordering on the sub-contractor. The materials which you will be supplying to the vendor will be maintained in the BOM. This BOM will be for production use & will have to be released before ordering.
2) If the material you are supplying to the sub-contractor for processing is excisable, then you will have to maintain the details in J1ID with tick at Sub-Contracting. Similarly, if the material you receive from the subcontractor is also excisable then you have to maintain the details in J1ID table. If vendor is excisable then his details are also to be maintained.
3) In the material master of the ordered material, you maintain procurement as F (external procurement) & special procurement as 30 (Sub-Contracting) in MRP views.
4) You raise sub-contracting PO on the sub-contractor with item category as L (Sub-Contracting).
5) You do transfer posting of the child material in transaction MB1B with movement type 541 with reference to the PO you have raised on the sub-contractor.
6) If the material transferred to the subcontractor is excisable, then create subcontracting challan in transaction J1IF01 with reference to the transfer posting document, against which you have transferred the material to the sub-contractor. At this time there is no entry in the excise registers, because the cycle is Sub-contracting without payment of excise duty.
7) The sub-contractor processes the material & sends the processed material back to you.
8) You post the GRN with reference to the sub-contracting PO for the processed material & in the excise tab select option 'Refer the Sub-contracting Challan'. Then at 'More data' button, you refer the sub-contracting excise challan against which the material was transferred to the sub-contractor. During the GRN Posting, system books the consumption of the child componenets you supplied to the subcontractor. The accounting entries at the time of GRN posting are as below - Debit Inventory of Semifinished goods = XY Debit processing charges = Y Credit GR/IR Clearing = Y Credit semifinished inventory at sub-contractor = XY Debit raw material inventory at sub-contractor = X Credit raw material inventory at your plant = X
9) You then reconcile the material document with the sub-contracting challan at J1IFQ, by giving the material document number. This is because, you already have referred the challan at the time of posting GRN. If this reference was not done at GRN, then enter the challan number also at J1IFQ.
10) After reconcilation, you complete the challan at J1IF13. The process of posting challan to completing the same is to be done within 180 days because this is legal requirement. Otherwise you have to pay the excise duty on the raw material you supplied to the vendor, if the processed material is not received within 180 days.
11) You then post the invoice of the sub-contractor, which is nothing but for the processing charges for processing the child components.
B) Following is the cycle of Sub-Contracting with payment of excise duty -
1) You maintain master data of BOM & J1ID as mentioned above.
2) You raise sub-contracting PO as mentioned above.
3) You make transfer posting of child components to the sub-contractor as mentioned above.
4) You create Outgoing Excise invoice in transaction J1IS for the child components you suplied to the subcontractor. This actually makes entries in your excise register by reducing the available modvat credit by the amount of excise duty on the child components.
5) The subcontractor processes the material & sends you the processed material alongwith the excise invoice for the processed material.
6) You capture & post the excise invoice in transactionJ1IEX.
7) You post the GRN of the processed material by referring the subcontracting PO. The consumption of the child components is booked at the time of GRN. The accounting entries are same as mentioned above. You refer the exicse invoice at Excise tab be entering the Excise Invoice Number & date (of Sub-Contractor) in the respective fields.
8) You post invoice of the subcontractor, which now includes the processing charges & the excise duty on the processed material.
Regards
KK