Subcontract challen

Question

When we issue materials to a subcontractor,Under excise law 57AC, when we send materials to a subcontractor for processing, we 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 we within a given length of time specified by the law (in 2000, 180 days).what will be happened??? please explain in detail

Answer 1

We will have to reverse  excise credit that we posted when we purchased the materials ( Completion, Reversal, and Recredit). In the case of materials that we have manufactured in-house,we will have to post credit entries to the extent of the CENVAT rate of the assessable value of the materials.
You use this function to close a challan completely after all the materials have been accounted for. If a challan's return date has elapsed, and thus your right to the CENVAT credit, you use it to reverse the excise credit u2013 or, should your subcontractor return the goods subsequently, to recredit the excise credit.
Completion
You can complete a challan if you have accounted for all of the materials in it (and it thus has the status Fully Reconciled). This prevents you from making any more changes to it.
Reversal of CENVAT Credit
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:
If you do note expect the subcontractor to return the materials, you can
complete it. 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 (see below).
Recredit
If a subcontractor returns materials after the return date, you can recredit the excise duty credit that you have reversed.
J1IF13-complete,reverse and recredit a subcontractor challan
J1IFQ- Reconcile quantity of subcontractor challan
If S/C challan crossed the 180 day limit..Follow the procedure as below---
1) First Reverse the Excise Duties in T.code J1IF13 by reversing the challan
2) If the material is returned as it is from Subcontractor,then do the transfer posting by 542 movement type.Then reconcile the challan w.r.t. 542 Material Document Number.Then complete the challan In J1IF13 if total quantity is received against the challans.
3) If u r doing GR for the subcontracted item . then give the reference of Challan in GR against Excise Tab.Refer the GR material Document No. for Reconcilling the Challans in T.code J1IFQ .Complete the challan in J1IF13
Regards,
Edited by: GAURAV MITTAL on Nov 29, 2009 4:54 PM
Edited by: GAURAV MITTAL on Nov 29, 2009 4:56 PM
Edited by: GAURAV MITTAL on Nov 29, 2009 5:00 PM
Edited by: GAURAV MITTAL on Dec 3, 2009 6:18 PM