CIN MM PDD

TABLE OF CONTENTS

1. COUNTRY VERSION INDIA..............................................................................................10

2. CENTRAL EXCISE DUTIES ON INCOMING GOODS.................................................10

2.1 DOMESTIC & IMPORT PROCUREMENT SCENARIO RELEVANT TO CIN.....12

2.1.1 DESIGN NOTES..............................................................................................................122.1.1.1 Expectations and Requirements...................................................................122.1.1.2 Assumptions..................................................................................................132.1.1.3 Master Data & Basic layouts.......................................................................13

2.1.2 PROCESS FLOW.............................................................................................................142.1.2.1 Maintenance of Tax Rates (FTXP)...............................................................142.1.2.2 Creation of Purchase Order (ME21N)........................................................142.1.2.3 Invoice Verification (BOE) & Capturing Excs Invoice ( J1IEX) – Import. .142.1.2.4 Goods Receipt (MIGO)................................................................................152.1.2.5 Capturing Excise Invoice (MIGO / J1IEX) – Domestic PO........................152.1.2.6 Posting of Excise Invoices (J1IEX)..............................................................16

2.1.3 SPECIAL ORGANIZATIONAL CONSIDERATIONS.............................................................172.1.4 BUSINESS MODEL.........................................................................................................172.1.5 ORGANIZATIONAL IMPACT...........................................................................................17

2.1.5.1 Changes to Existing Organization...............................................................172.1.5.2 Description for Improvements......................................................................17

2.1.6 GAPS.............................................................................................................................182.1.6.1 Description of the functional deficits – (Gaps if any)..................................182.1.6.2 Approaches to covering Functional Deficits – (if applicable).....................19

2.1.7 INTERFACE CONSIDERATIONS.......................................................................................192.1.8 REPORTING CONSIDERATIONS......................................................................................19

2.2 SUBCONTRACTING........................................................................................................20


2.2.2 PROCESS FLOW.............................................................................................................212.2.2.1 Subcontracting without payment of Excise duty..........................................212.2.2.2 Completion, Reverse & Recredit (J1IF13)...................................................22

2.2.2.2.1 Completion...................................................................................................232.2.2.2.2 Reversal of CENVAT Credit.......................................................................232.2.2.2.3 Recredit........................................................................................................23

2.2.2.3 Subcontracting Under Full Payment of Duty...............................................232.2.3 SPECIAL ORGANIZATIONAL CONSIDERATIONS.............................................................232.2.4 BUSINESS MODEL.........................................................................................................242.2.5 ORGANIZATIONAL IMPACT...........................................................................................24


ESSAR Information Technology Limited



2.3 ADJUSTMENT POSTING...............................................................................................26


2.3.2 PROCESS FLOW.............................................................................................................272.3.2.1 Making Adjustment Postings for Scrap........................................................272.3.2.2 Making Adjustment Postings for Materials Not Used in Production..........282.3.2.3 Making Adjustment Postings for Additional Excise Paid by Vendors.........292.3.2.4 Making Adjustment Postings for Money Transferred to PLA......................302.3.2.5 Canceling Outgoing Excise Invoices...........................................................312.3.2.6 Making Adjustment Postings for Other Transactions..................................31

2.3.3 SPECIAL ORGANIZATIONAL CONSIDERATIONS.............................................................322.3.4 BUSINESS MODEL.........................................................................................................322.3.5 ORGANIZATIONAL IMPACT...........................................................................................32




2.4 UTILIZATION...................................................................................................................34


2.4.2 PROCESS FLOW.............................................................................................................352.4.3 SPECIAL ORGANIZATIONAL CONSIDERATIONS.............................................................362.4.4 BUSINESS MODEL.........................................................................................................372.4.5 ORGANIZATIONAL IMPACT...........................................................................................37




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2.5 MAINTENANCE OF EXCISE REGISTERS.................................................................38

2.5.1 REGISTER RG 1............................................................................................................38 2.5.2 REGISTER RG 23A/23C................................................................................................39

2.5.2.1 Part I Entries................................................................................................392.5.2.2 Part II Entries..............................................................................................40

2.5.3 REGISTER RG23 D......................................................................................................412.5.4 SERIAL NUMBERS.........................................................................................................412.5.5 UPDATING EXCISE REGISTERS (J1I5)...........................................................................422.5.6 EXCISE REGISTERS EXTRACTION (J2I5)......................................................................44

2.6 MAINTENANCE OF EXCISE MASTER DATA..........................................................45

2.6.1 PLANT MASTER DATA...................................................................................................452.6.1.1 Excise Indicator for Plant............................................................................452.6.1.2 Excise Indicator for Plant and Vendor........................................................452.6.1.3 Excise Indicator for Plant and Customer.....................................................45

2.6.2 VENDOR MASTER DATA................................................................................................462.6.2.1 Vendor Excise Details..................................................................................462.6.2.2 SSI Rates.......................................................................................................472.6.2.3 Excise Indicator for Plant and Vendor........................................................47

2.6.3 CUSTOMER MASTER DATA............................................................................................472.6.3.1 Customer Excise Details..............................................................................472.6.3.2 Excise Indicator for Plant and Customer.....................................................48

2.6.4 MATERIAL MASTER DATA.............................................................................................482.6.4.1 Chapter Ids...................................................................................................482.6.4.2 Material and Chapter ID Combination........................................................482.6.4.3 Material Assessable Value...........................................................................492.6.4.4 CENVAT Determination...............................................................................492.6.4.5 Excise Tax Rate............................................................................................492.6.4.6 Additional Excise Rate.................................................................................502.6.4.7 Exceptional Material Excise Rate................................................................50

2.6.5 INITIAL ENTRY..............................................................................................................502.6.5.1 Initial Entry in RG1......................................................................................502.6.5.2 Initial Entry in RG23A/C Part I...................................................................50

2.7 GOODS RETURNS TO VENDORS................................................................................51


2.7.2 PROCESS FLOW.............................................................................................................522.7.2.1 Goods Return...............................................................................................522.7.2.2 Creating Outgoing Excise Invoice (J1IS)....................................................532.7.2.3 Verifying, Posting & Printing Outgoing Excise Invoices (J1IV)................542.7.2.3 Canceling Outgoing Excise Invoices (J1IS)................................................54

2.7.3 SPECIAL ORGANIZATIONAL CONSIDERATIONS.............................................................552.7.4 BUSINESS MODEL.........................................................................................................55

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2.7.5 ORGANIZATIONAL IMPACT...........................................................................................552.7.5.1 Changes to Existing Organization...............................................................552.7.5.2 Description for Improvements......................................................................55



3 DIRECT FACTORY SALE..................................................................................................57

3.1 DESIGN NOTES..................................................................................................................573.1.1 Expectations and Requirements...................................................................573.1.2 Assumptions..................................................................................................573.1.3 Master Data & Basic layouts.......................................................................57

3.2 PROCESS FLOW.................................................................................................................573.2.1 Creation of Sales Order...............................................................................573.2.2 Creation of Production order.......................................................................573.2.3 Delivery Advice on Plant.............................................................................583.2.4 Delivery process...........................................................................................583.2.5 Commercial Invoice creation.......................................................................583.2.6 Creating Excise Invoice...............................................................................583.2.7 Posting of Excise Invoice.............................................................................593.2.8 Creation of RG1 register..............................................................................59

3.3 SPECIAL ORGANIZATIONAL CONSIDERATIONS.................................................................593.4 BUSINESS MODEL.............................................................................................................593.5 ORGANIZATIONAL IMPACT...............................................................................................60

3.5.1 Changes to Existing Organization...............................................................603.5.2 Description for Improvements......................................................................60

3.6 GAPS.................................................................................................................................603.6.1 Description of the functional deficits – (Gaps if any)..................................603.6.2 Approaches to covering Functional Deficits – (if applicable).....................60

3.7 INTERFACE CONSIDERATIONS...........................................................................................603.8 REPORTING CONSIDERATIONS..........................................................................................60

4 EXPORT FROM FACTORY (UNDER BOND).................................................................61


4.2 PROCESS FLOW.................................................................................................................614.2.1 Creation of Sales Order...............................................................................614.2.2 Creation of Production order.......................................................................624.2.3 Delivery Advice on Plant.............................................................................624.2.4 Creation of Pre shipment Invoice................................................................624.2.5 Delivery process...........................................................................................624.2.6 Commercial Invoice creation.......................................................................624.2.7 Creating Excise Invoice...............................................................................63

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4.2.8 Posting of Excise Invoice.............................................................................634.2.9 Entry of Bond...............................................................................................634.2.9 Creating ARE-1s document..........................................................................644.2.9 Posting of ARE-1s document........................................................................64





5 EXPORT FROM FACTORY (DUTY PAID).....................................................................67


5.2 PROCESS FLOW.................................................................................................................675.2.1 Creation of Sales Order...............................................................................675.2.2 Creation of Production order.......................................................................685.2.3 Delivery Advice on Plant.............................................................................685.2.4 Creation of Pre shipment Invoice................................................................685.2.5 Delivery process...........................................................................................685.2.6 Invoice creation............................................................................................685.2.7 Creating Excise Invoice...............................................................................695.2.7 Posting of Excise Invoice.............................................................................695.2.8 Creating ARE-1s document..........................................................................695.2.9 Posting of ARE-1s document........................................................................70





6. DEEMED EXPORT FROM FACTORY.............................................................................72


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6.2 PROCESS FLOW.................................................................................................................726.2.1 Creation of Sales Order...............................................................................726.2.2 Creation of Production order.......................................................................736.2.3 Delivery Advice on Plant.............................................................................736.2.4 Creation of Pre shipment Invoice................................................................736.2.5 Delivery process...........................................................................................736.2.6 Invoice creation............................................................................................736.2.7 Creating Excise Invoice...............................................................................746.2.8 Posting of Excise Invoice.............................................................................746.2.9 Creating ARE-3s document..........................................................................746.2.10 Posting of ARE-3s document........................................................................75





7 FACTORY STOCK TRANSFER........................................................................................77

7.1 DESIGN NOTES..................................................................................................................777.1.1 Expectations and Requirements..................................................................777.1.2 Assumptions.................................................................................................777.1.3 Master Data & Basic layouts......................................................................77

7.2 PROCESS FLOW.................................................................................................................787.2.1 Creation of CIR...........................................................................................787.2.2 Creation of Production order......................................................................787.2.3 Delivery Advice on Plant............................................................................787.2.5 Delivery process..........................................................................................787.2.6 Pro Forma Invoice creation........................................................................797.2.7 Creating Excise Invoice..............................................................................797.2.8 Posting of Excise Invoice............................................................................79





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8 DEPOT RECEIPT AND SALES..........................................................................................82


8.2 PROCESS FLOW.................................................................................................................828.2.1 Stock Receipt at Depo..................................................................................838.2.2 Change the status of material from restricted to unrestricted.....................838.2.3 Capturing of Excise Invoice at Depo...........................................................838.2.4 Creation of Sales order................................................................................838.2.5 Delivery process...........................................................................................838.2.6 Creating Excise Invoice...............................................................................848.2.7 Post Goods Issue..........................................................................................848.2.8 Posting of Excise invoice.............................................................................84





9. GOODS RETURN CIN PROCESS......................................................................................87

9.1 DESIGN NOTES..................................................................................................................879.1. Expectations and Requirements...................................................................................879.1.1 Assumptions..................................................................................................879.1.3 Master Data & Basic layouts.......................................................................87

9.2 PROCESS FLOW.................................................................................................................879.2.1 Return order creation...................................................................................879.2.2 In bound delivery creation...........................................................................889.2.3 PGR Creation...............................................................................................889.2.4 Credit Memo request....................................................................................889.2.5 Receive of material in RG23A part1............................................................889.2.6 Credit In RG23A part2.................................................................................889.2.7 Post Goods Issue..........................................................................................899.2.8 Posting of Excise invoice.............................................................................89



9.6 GAPS.................................................................................................................................909.6.1 Description of the functional deficits – (Gaps if any)..................................90

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9.6.2 Approaches to covering Functional Deficits – (if applicable).....................909.7 INTERFACE CONSIDERATIONS...........................................................................................909.8 REPORTING CONSIDERATIONS..........................................................................................90

10. PROCESS FLOW FOR CENVAT CREDIT..................................................................91

11. CIN flow chart for outgoing transactions.............................................................................92

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1. Country Version India

This country version is designed for use by businesses with operations in India. As well as the generic SAP System functions, it comprises functions designed for laws and business practices particular to India, and a country template to help you customize the system according to local requirements.

Most of the country-specific functions for India relate to Financials and Logistics. The main areas are as follows:

Excise duty and the central value-added tax system (CENVAT)

Withholding tax (also known as tax deducted at source)

Sales tax

Maintenance and printing of statutory excise registers

All of the menu paths given in this document are based on the India Localization role, with the exception of functions in withholding tax, whose menu paths are given from the SAP Easy Access menu.

2. Central Excise Duties on Incoming Goods

The Country India Version in SAP covers the most important laws and business practices specific to India. The following documentation describes these aspects of the component.

Country Version India comes with functions for calculating, posting, remitting, and reporting excise duty, and for handling incoming and outgoing excise invoices.

For these purposes, extra fields are available in the vendor master data and material master data for information required in India only.

Country Version India offers two ways of calculating excise duty, a condition-based method and a formula-based method.

You can enter incoming excise invoices in the R/3 System for goods receipts arising from external procurement, subcontracting, and stock transfer. Excise Department can capture incoming excise invoices using a dedicated transaction, or, alternatively, stores in charge can capture them in the standard Goods Movement transaction, MIGO, when they enter a goods receipt.

Finally, you can prepare copies of all excise registers for submission to the excise authorities.

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The following processes are covered in this document:

2.1 Domestic & Import Procurement Scenario relevant to CIN

2.2 Subcontracting

2.3 Adjustment Posting

2.4 Utilization

2.5 Maintenance of Excise Registers

2.5.1 Updating of Excise Registers

2.5.2 Extraction and Printing of Excise Registers

2.6 Maintenance of Excise Master Data

2.6.1 Chapter ID

2.6.2 Material and Chapter ID Combination

2.6.3 Material Assessable Value

2.6.4 CENVAT Determination

2.6.5 Vendor Excise Details

2.6.6 SSI Rates

2.6.7 Excise Tax Rates

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2.1 Domestic & Import Procurement Scenario relevant to CIN

This process illustrates how manufacturing plants can use the R/3 System to procure excisable goods.

In addition to the standard procedure, you also have to capture and post the incoming excise invoice, and the system creates the appropriate entries in the excise registers.

2.1.1 Design Notes

2.1.1.1 Expectations and Requirements

System should determine the taxes and excise duties automatically while creating purchase orders and scheduling agreements.

System should allow procurement of modvatable as well as non-modvatable materials.

Excise Duties for Non-modvatable materials should be loaded on the materials.

System should allow capturing vendor’s excise invoice at the time of Goods Receipt.

System should allow capturing of vendor’s excise invoice in reference to the Purchase Order or the Goods Receipt document.

System should default the amount of excise duty and amount of Ecess on excise duty from the purchase order and it should allow to overwrite.

System should not allow posting of excise duty at the time of Goods Receipt.

System should allow handling the cases when third party sends Material and Excise Invoice. The vendor to whom PO is released sends the invoice. This scenario should be supported.

Cancellation of excise invoice should be possible in the system.

System should handle the case of 50% Cenvatable excise duty for the first year and rest 50% in the next financial year for capital goods.

It should be possible to list GRs without excise invoice

System should allow multiple receipts of Goods against a single excise invoice.

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System should allow adjusting posting with reference to a material document.

System should allow utilization of the credits available in RG23A, RG23C, RG23ECS and PLA Register.

It should be possible to capture Excise Invoice in reference to the commercial invoice number generated against Bill of Entry invoice verification material document.

Goods Receipt against the import purchase order should have a link to the commercial invoice generated against the relevant PO.

System should handle the case of payment of CED through an invoice on disposal of Cenvatable capital goods / goods imported under EPCG Scheme

2.1.1.2 Assumptions

Master Data for Materials, Vendors and Taxes are complete in all respects.

Excise Masters in CIN are maintained in all respects for capturing and posting excise invoices from vendors.

Pricing Procedure for the domestic vendors is configured in the system.

Number Range for the relevant Document types are maintained in the system.

2.1.1.3 Master Data & Basic layouts

Material Master with proper values in the required fields.

Vendor Masters with proper purchasing schema group.

Company Code Data

Plant Master Data

Tax Codes for modvatable and Non-modvatable materials with relevant values in the relevant fields.

G/L Accounts

Following Excise Masters:

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Chapter ID

Material and Chapter ID Combination

Material Assessable Value

CENVAT Determination

Vendor Excise Details

SSI Rates

Excise Tax Rates

2.1.2 Process Flow

2.1.2.1 Maintenance of Tax Rates (FTXP)

Maintenance of Modvatable and Non-modvatable tax rates is done using the transaction code FTXP. The detailed process is maintained in the sub process D.4 in MM process Definition Document.

2.1.2.2 Creation of Purchase Order (ME21N)

You create a purchase order for the goods you want and send it to the vendor. The vendor then sends the materials together with an excise invoice.

2.1.2.3 Invoice Verification (BOE) & Capturing Excs Invoice ( J1IEX) – Import

If the purchase order is an import purchase order on a foreign vendor, you post invoice verification against the bill of entry, which is the commercial invoice.

You then capture an excise invoice for the bill of entry (J1IEX) in reference to the import purchase order(s). At the time of executing the transaction J1IEX, the system asks for the commercial invoice number and the financial year. The invoice verification material document number is entered as the Commercial Invoice number along with the year of posting and the amounts for CVD is defaulted in the field BED and Ecess is defaulted in the field ECS.

You enter the Bill of Entry number as the excise number and the date of the Excise Invoice. You then check the entries and capture the excise invoice number by saving it.

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At the time of invoice verification for the bill of entry, broadly the following accounting entries are generated:

Vendor (Customs Authority) Credit

Provision Clearing A/C Customs Duty Debit

CENVAT Clearing A/C Debit

2.1.2.4 Goods Receipt (MIGO)

When the goods arrive at your company, the warehouseman enters the goods receipt.

If you have captured the excise invoice before posting goods receipt, you have to refer the excise invoice captured by you in reference to the relevant purchase order.

The system:

Creates a material document to record the goods receipt

Creates an accounting document with the following entries:

Inventory account: Debit

GR/IR clearing account: Credit

Provision Clearing A/C Customs Duty Credit (Import PO)

Creates a Part I entry in register RG 23A or 23C

2.1.2.5 Capturing Excise Invoice (MIGO / J1IEX) – Domestic PO

Excise Invoice is captured either at the time of MIGO at the time of Goods Receipt when a single GR is done with a single excise invoice or independently using transaction J1IEX.

If you have to receive goods multiple times against a single excise invoice, then capture the excise invoice first before any GR is done with the transaction code J1IEX for the total quantity and amount mentioned in the excise invoice.

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At the time of GR in MIGO, select Only Refer Excise Invoice and enter the earlier captured excise invoice number and date each time GR is posted related to this excise invoice.

2.1.2.6 Posting of Excise Invoices (J1IEX)

After the Goods Receipt is posted and before the vendor’s invoice verification from takes place you have to post the excise invoice you have captured after checking the amounts and making necessary corrections.

The system automatically debits the excise duty to the excise duty accounts and credits the CENVAT clearing account and the entries broadly are as follows:

RG23 A – CENVAT Debit

RG23 A – EDU CESS Debit

CENVAT Clearing A/C Credit

If the material is an asset, the following accounting entries will be generated

RG23 C – CENVAT Debit (50%)

RG23 C – CENVAT on Hold Debit (50%)

RG23 C – EDU CESS Debit


You execute the transaction code J2I8 to transfer balance transfer for capital goods.

It generates the following accounting entry:

RG23 C – CENVAT on Hold Credit

RG23 C – CENVAT Debit

2.1.3 Special Organizational Considerations

Multiple Goods Receipt should be allowed in the system against a single excise invoice.

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System should not allow posting of excise duty at the time of Goods Receipt.

System should allow handling the cases when third party sends Material and Excise Invoice. The vendor to whom PO is released sends the invoice. This scenario should be supported.

2.1.4 Business Model

Cenvat Credit

2.1.5 Organizational Impact

2.1.5.1 Changes to Existing Organization

Maintenance of Material Master relevant to CIN

Maintenance of Vendor Master relevant to CIN

Maintenance of Company Data

Maintenance of Plant Master Data

Maintenance of Excise Master Data

2.1.5.2 Description for Improvements

System determines the taxes and excise duties automatically while creating purchase orders and scheduling agreements.

System allows procurement of modvatable as well as non-modvatable materials.

Excise Duties for Non-modvatable materials are loaded on the materials.

System allows capturing vendor’s excise invoice at the time of Goods Receipt.

System allows capturing of vendor’s excise invoice in reference to the Purchase Order or the Goods Receipt document.

System defaults the amount of excise duty and amount of Ecess on excise duty from the purchase order.

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System does not allow posting of excise duty at the time of Goods Receipt. However capturing, referring and selecting not to post excise invoice are possible.

System allows handling the cases when third party sends Material and Excise Invoice. The vendor to whom PO is released sends the invoice. This scenario should be supported.

Cancellation of excise invoice is possible in the system.

System handles the case of 50% Cenvatable excise duty for the first year and rest 50% in the next financial year for capital goods.

It is possible to list GRs without excise invoice

System handles the case of creating and printing of subcontracting challans, reconciling the components dispatched and completing the subcontracting process.

System allows multiple receipts of Goods against a single excise invoice.

System allows adjusting posting with reference to a material document.

System allows utilization of the credits available in RG23A, RG23C, RG23ECS and PLA Register.

It is possible to capture Excise Invoice in reference to the commercial invoice number generated against Bill of Entry invoice verification material document.

Goods Receipt against the import purchase order has a link to the commercial invoice generated against the relevant PO.

2.1.6 Gaps

2.1.6.1 Description of the functional deficits – (Gaps if any)

System does not handle the case of payment of CED through an invoice on disposal of Cenvatable Inputs / capital goods / goods imported under EPCG Scheme

2.1.6.2 Approaches to covering Functional Deficits – (if applicable)

System does not have the facility for payment of CED through an invoice on disposal of Cenvatable capital goods / goods imported under EPCG Scheme

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2.1.7 Interface Considerations

Can be interfaced with Supplier Relationship Management of the Supply Chain Management component of SAP.

EDI (electronic Data Interchange) can be Integrated in the system to transmit data electronically.

Can be interfaced with Supplier Workplace (SWP) - E-commerce Internet applications.

2.1.8 Reporting Considerations

Following Transaction codes are available in CIN for reporting purposes:

J1IGR - List of GR's without Excise Invoice

J1IEX - Display Excise Invoice

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2.2 Subcontracting

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 India’s tax law. Under excise law 4(5)(a), 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 period specified by the law (in 2004, 180 days), you will have to reverse excise credit that you posted when you purchased the materials (see Completion, Reversal, and Re-credit). 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.

2.2.1 Design Notes


System should handle the case of creating and printing of subcontracting challans, reconciling the components dispatched and completing the subcontracting process with out excise duty.

2.2.1.2 Assumptions



Pricing Procedures for the vendors are configured in the system.

Number Range for the excise objects are maintained in the system.




Company Code Data

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Plant Master Data

Tax Codes for modvatable and Non-modvatable materials with relevant values in the relevant fields.

G/L Accounts


Chapter ID





SSI Rates

Excise Tax Rates

2.2.2 Process Flow

2.2.2.1 Subcontracting without payment of Excise duty.

You create a subcontract order for the goods that you want to subcontract. (ME21N)

You create a transfer posting order for the materials that are to be sent to the vendor with reference to the purchase order (MB1B - movement type 541).

You create a subcontracting Challan on the basis of the transfer posting order (J1IF01). This is the consignment document that you will send to the subcontractor along with the materials that are to be processed.

You send the materials to the subcontractor, along with a printout of the subcontracting Challan (J1IF11).

The subcontractor processes the materials and returns the ordered goods. When the goods are delivered back to you, the store in charge posts the goods receipt (MIGO) and refers the challan against which the materials were sent to the subcontractor for processing. The delivery may not necessarily cover all the

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goods from the challan: It may also include goods from a number of different challans. The SAP functions allow for this eventuality.

At the time of Goods Receipt, along with a material document, an accounting document is generated with accounting entries as follows:

Stock Account: End Product Debit

Change involving stock Credit

External Services A/C Debit

GR/IR Clearing A/C Credit

Consumption Account Debit

Component Stock A/C Credit

The excise department reconciles (J1IFQ) the goods receipt against the challan, thereby accounting for the return of the materials that you have sent for subcontracting.

The challans here include those that have been captured online at the time of goods receipt and those entered manually.

You create a list of the outstanding challans (J1IFR).

You complete the Challan (J1IF13).

If a subcontractor fails to return all the materials within the time allotted, you have to scrap the material by specifying it as such in the bill of material for the parent material then assigning the bill of material to the subcontracting purchase order. If the scrap generated is not returned by the subcontractor, excise duty relevant to the scrap generated has to be paid. If this scrap is returned after the duty has been paid, an excise journal voucher should be created to reverse the excise duty paid.

2.2.2.2 Completion, Reverse & Recredit (J1IF13)

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 – or, should your subcontractor return the goods subsequently, to recredit the excise credit.

Exactly which function is available depends on the challan's status as follows:

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2.2.2.2.1 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.

2.2.2.2.2 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 not 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).

2.2.2.2.3 Recredit

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

2.2.2.3 Subcontracting Under Full Payment of Duty

This procedure illustrates how you use the R/3 System to send materials to your subcontractors for processing using normal excise invoices.

This process is not applicable to Ester.


Printing of the subcontracting challan

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Cenvat Credit



Master Data for Materials, Vendors and Taxes are maintained for CIN relevant fields.


Pricing Procedures for the vendors are configured in the system.


Transfer Posting of materials for the subcontractor.

Sub contracting challans in the system.


System handles the case of creating and printing of subcontracting challans, reconciling the components dispatched and completing the subcontracting process with out excise duty.

System handles the case of creating and printing of subcontracting challans, reconciling the components dispatched and completing the subcontracting process with excise duty. However this process is not used in Ester.

2.2.6 Gaps


The Printing of the subcontracting challan is not as per the desired format of Ester.


Separate program and form have been created which run with the transaction code ZCHALAN_DEL.

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Can be interfaced with Supplier Workplace (SWP) - E-commerce Internet applications to enable dispatch of RFQ and also to receive vendor’s quotations electronically.


The following reporting transaction codes are available for reporting purpose.

J1IF12 - Display Subcontracting Challans

J1IFR - Challan Listing

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2.3 Adjustment Posting

2.3.1 Design Notes


System should be able to make adjustment posting to any of the CENVAT accounts. It should make adjustment postings to account for:

Scrap

Materials those have not been used in production

Additional excise paid by vendors

Money that has been transferred to the personal ledger account

Other transactions

System should allow to cancel outgoing excise invoices.

Depending on the type of adjustment posting system should be able for handling:

Assigning excise invoice to line items

G/L accounts is determined automatically.

Displaying balances of CENVAT accounts

2.3.1.2 Assumptions




Automatic Account Determination is configured in the system.


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Company Code Data

Plant Master Data

G/L Accounts


Chapter ID





SSI Rates

Excise Tax Rates

2.3.2 Process Flow

Transaction Code: J1IH

2.3.2.1 Making Adjustment Postings for Scrap

You follow this procedure if you have scrapped a material and want to reverse the excise duty debited to your CENVAT account.

From the SAP Easy Access screen, choose Indirect Taxes Excise JV Create Matl write-off.

Enter data as required, including:

Document number

Enter the number of the document that you used to scrap the material.

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CENVAT account selection group box

Specify which account is affected by the adjustment posting is for. If the posting does not have to be remitted immediately, select Fortnightly payment.

Choose to Continue.

The system displays the information from the material document.

Adjust the posting date as necessary.

Adjust the excise duty for each line item either:

Manually

By assigning the line item to an excise invoice

Specify which G/L accounts are to be posted to.

Save the adjustment posting.

2.3.2.2 Making Adjustment Postings for Materials Not Used in Production

You follow this procedure if you have not used a material in the production process and want to reverse the excise duty debited to your CENVAT account.

From the SAP Easy Access screen, choose Indirect Taxes Excise JV Create Matl non-prod.


Document number

Enter the number of the material document that the adjustment posting is to refer to.

CENVAT account selection group box


Choose to continue.

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Adjust the excise duty for each line item either:

Manually

By assigning the line item to an excise invoice

G/L accounts are determined automatically.


2.3.2.3 Making Adjustment Postings for Additional Excise Paid by Vendors

You follow this procedure if a vendor has increased the amount of excise duty that it originally charged you and you want to debit the difference to your CENVAT account.

From the SAP Easy Access screen, choose Indirect Taxes Excise JV Create Additional excise.

Enter data as required.

In the Document number field, enter then number of the document sent to you by the vendor.

Choose continue.


Enter the amount of excise duty in either of the following ways:

o To enter line items for different materials and the excise duty accordingly, choose item details icon and enter the line items in the table.

o To enter the excise duty only, choose header icon and enter the excise duty in the totals fields at the foot of the screen.

If the duty qualifies as countervailing duty (CVD):

o Select CVD applicable.

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o Enter the CVD amount in the BED amount field.


Save the adjustment posting. The following A/C Entries are generated

RG23 A – CENVAT Debit

RG23 A – EDU CESS Debit


If the material is an asset, the following accounting entries will be generated

RG23 C – CENVAT Debit (50%)

RG23 C – CENVAT on Hold Debit (50%)

RG23 C – EDU CESS Debit


2.3.2.4 Making Adjustment Postings for Money Transferred to PLA

You follow this procedure to make an adjustment posting when you transfer money to your personal ledger account (PLA).

You have already transferred the money to your PLA at the bank, using a TR6 challan, and have posted the corresponding accounting document.

From the SAP Easy Access screen, choose Indirect Taxes Excise JV Create TR6 challan.

Enter data as required, including the document number.

You can enter either the challan number or the number of the accounting document.

Choose to continue.

If you entered the accounting document number, the system displays the information from it.

Enter the amounts against the accounts that you require.

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2.3.2.5 Canceling Outgoing Excise Invoices.

You follow this procedure in order to cancel an outgoing excise invoice. It reverses any excise duty accounted for.

From the SAP Easy Access screen, choose Indirect Taxes Excise JV Create Cancel exc. inv. or Indirect Taxes Sales and Outbound Movements Excise Invoice Create/Change/Display .

Enter the number, year, and series group of the excise invoice that you want to cancel.

A dialog box appears.

Choose Yes.


2.3.2.6 Making Adjustment Postings for Other Transactions

You follow this procedure if you want to make an adjustment posting that does not fall into any of the other categories of adjustment offered by this function. You can only use an external document as your reference document.

From the SAP Easy Access screen, choose Indirect Taxes Excise JV Create Other adj.


o Document number

Enter the number of the external document that you want to refer to.

o CENVAT account selection group box


Choose to continue.


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Enter the amount of excise duty in either of the following ways:

To enter line items for different materials and the excise duty accordingly, choose item details and enter the line items in the table.

To enter the excise duty only, choose header and enter the excise duty in the totals fields at the foot of the screen.




Business Area and Cost Center need to be entered if required during GL account determination.


Cenvat Credit



Please refer to point 2.3.1.1


System is able to make adjustment posting to any of the CENVAT accounts. It should make adjustment postings to account for:

Scrap

Materials those have not been used in production

Additional excise paid by vendors

Money that has been transferred to the personal ledger account

Other transactions

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System allows to cancel outgoing excise invoices.

Depending on the type of adjustment posting system is able for handling:

Assigning excise invoice to line items

G/L accounts are determined automatically

Displaying balances of CENVAT accounts

2.3.6 Gaps


No Gaps


Not Applicable


Not Applicable


J1IGR - List of GR's without Excise Invoice

J1IEX - Display Excise Invoice

J1IH – Display Excise JV

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2.4 Utilization

2.4.1 Design Notes


System should automatically calculate the how much excise should be remitted to the excise authorities.

System should allow to pay money from the credits accumulated in RG 23 registers.

System should allow to pay from PLA account if the credits accumulated is not sufficient.

2.4.1.2 Assumptions

All relevant incoming excise invoices have been posted for the period.

All relevant outgoing excise invoices have been posted for the period.

Relevant adjustment postings have been made for the period.




Company Code Data

Plant Master Data

G/L Accounts


Chapter ID



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SSI Rates

Excise Tax Rates

2.4.2 Process Flow

You run the transaction J2IU for the purpose of utilization.

You use this transaction to calculate how much excise duty you must remit to the authorities. Legislation requires you to remit excise duty monthly: for all the goods cleared during the month.

Once the system has determined how much you have to pay, it allows you to specify where the money should be paid from – whether it should be deducted from the CENVAT credits that you have accumulated, or whether it should be deducted from the personal ledger account (PLA).

Irrespective of which date you execute the report on, you can only utilize CENVAT credits posted up until the last day of the month.

On the selection screen, enter data as required:

Organizational data (in the General data group box)

Posting date for the CENVAT payment, if it is different from the run date

The period to be covered by the transaction.

If, for any reason, you want to select an excise invoice individually, you can do so. Any entry in the Period field will be disregarded.

To display a list of all the excise invoices whose excise duty you have not yet remitted, choose Display pend. invoices.

To display a list of only the excise invoices for a given period, enter the period in the Period fields, select “Select pending inv. for period”, and choose Display pend. invoices. You can also print the list of pending invoices.

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To display the last date when tax was remitted, choose Display last util. date (Display last utilization date).

Output

For each sort of excise duty, the system shows you:

How much you have to remit (Amounts payable group box)

How much credit you have at your disposal on the appropriate CENVAT account (Available balances)

This figure is equal to the credits on the CENVAT account less the minimum balance.

How much credit you have on the CENVAT accounts

You now have to specify which accounts can be used to utilize the duty amount. In the Balance Utilization group box, the system proposes how much money should be taken from which accounts. You can overwrite these fields if you want, and choose check icon to refresh the display.

For a list of excise invoices that are considered for the CENVAT payment, choose Display excise invoices. You can print the list and use it as an annexure.

When you have finished, save your entries. The system then:

Creates an accounting document that:

Credits the CENVAT clearing account to remove the excise duty owed

Debits the accounts from which the excise duty is to be paid

Updates the Part II register


Business Area and Cost Center need to be entered if required during GL account determination.

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Cenvat Credit



Please refer to point 2.4.5.1


System automatically calculates the how much excise should be remitted to the excise authorities.

System allows to pay money from the credits accumulated in RG 23 registers.

System allows to pay from PLA account if the credits accumulated is not sufficient.

2.4.6 Gaps


No Gaps


Not Applicable


Not Applicable


J2IU – Displaying Fortnightly Pending Payment Details

J2I9 - New Monthly Returns Report Rule 57AE

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2.5 Maintenance of Excise RegistersThe excise authorities require you to maintain a number of registers relating to excise duty. They have to be printed out monthly and shown to the authorities in the event of an audit. The R/3 System makes all the entries for these registers automatically, and you can prepare copies of them as and when necessary. Alternatively, you can download the data for processing by non-SAP software.

The SAP System handles the following excise registers:

Register RG 1

Register RG 23A and 23C, Parts I and II

Register RG 23D

Personal Ledger Account (PLA)

This is the bank account from which you transfer any money owing to the excise authorities.

Register RT-12

This is a monthly report that summarizes the CENVAT and PLA information from the other registers.

2.5.1 Register RG 1

RG1 is a register of excisable finished goods kept by manufacturing plants. The register shows goods movements from the factory to a store specifically for excisable finished goods.

The R/3 System generates all the necessary entries in the register, and to prepare a copy of the register.

Set the material type to Finished Goods in the material masters that you use for finished goods.

The R/3 System creates all register RG 1 entries automatically.

In most cases, the system does not generate an RG 1 entry at runtime. It generates any missing entries when you execute the Register Update program (see below).

It assigns all entries a serial number.

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Day-to-Day Activities

The system does not automatically generate entries for goods receipts from production orders. You have to generate these yourself (see below).Nor does it generate entries for goods issues, except for goods issues entered using the Goods Movements transaction if you have made the Customizing settings described above.

Periodic Processing

Generate the missing entries once a day using the Register Update program.

Reporting

Prepare a copy of the register as described under Creation of Excise Registers.

2.5.2 Register RG 23A/23C

These are records of receipts and issues of excisable materials, as kept by manufacturing plants. The register consists of two parts:

Part I shows the quantities of the materials.

Part II shows the amounts of excise duty on the materials, and how much you have transferred to the CENVAT accounts.

Previously, manufacturers were required to keep two separate registers, RG 23A and RG 23C for raw materials and capital goods respectively. This is no longer the case, but the distinction still remains in the R/3 System.

The R/3 System generates all the necessary entries in the register. You can prepare a copy of the register as required.

2.5.2.1 Part I Entries

The R/3 System creates Part I entries for all excisable goods movements.


When you enter a goods receipt for excisable materials, the system automatically asks you if you want to create the Part I entry in Register RG 23A or RG 23C. If so, the system generates a Part I entry. If not, it does not, but you can generate all missing Part I entries later.

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The system automatically enters the excise invoice number in the Part I entry. If the excise clerk has already captured the excise invoice when the warehouseman enters the goods receipt, the system enters the excise invoice number in the Part I entry immediately. If the warehouseman enters the goods receipt before the excise clerk enters the excise invoice, the Part I entry does not contain a link to the excise invoice number. However, the system updates the excise invoice number automatically when the excise clerk captures the excise invoice later on.

The system does not automatically generate Part I entries for goods issues of excisable materials, with two exceptions:

When you enter a goods issue for vendor returns

When you enter a goods issue for stock transport orders for plants, but only when you use the Goods Movements transaction

Periodic Processing

Generate the missing entries once a day using the Update of Registers RG 1 and RG 23 (Part I) program.

Reporting

Prepare a copy of the registers as described under Creation of Excise Registers.

2.5.2.2 Part II Entries

Whenever you – as a manufacturing plant – post an incoming excise invoice, or create an outgoing excise invoice, the system automatically creates an entry in Part II of the appropriate register (RG 23A or RG 23C).

The system assigns all Part II entries a serial number, and creates an accounting document for each, to transfer the various types of excise duty to the appropriate CENVAT account.


The system only creates a Part II entry when you post an incoming excise invoice. It does not create one if you only capture an excise invoice. That way, you can ensure that excise clerks can capture excise invoices but cannot make any Part II entries. The excise supervisors can then check and post the excise invoices captured by the clerks.

Similarly, the system also creates a Part II entry when you post an outgoing excise invoice.

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Reporting

All Part II entries are shown when you prepare the excise registers.

2.5.3 Register RG23 D

This is a record of receipts and issues of excisable materials, as kept by depots.

In procurement, when the warehouseman posts a goods receipt, the system creates a register entry.

In sales, when a sales clerk creates a sales order, he has to specify which excise invoices were delivered with the goods that are being sold. Then, when the warehouseman posts the goods issue, the system generates another register entry.

The R/3 System generates all the necessary entries in the register. You can prepare a copy of the register as required.

The R/3 System creates RG 23D entries for all receipts of excisable materials, and when you enter a goods issue, you specify which RG 23D entries the goods came from originally.


When you enter a goods receipt for excisable materials, the system generates a Part I entry in Register 23D.

The system creates one entry for each goods receipt, each of which is numbered with a serial number. Each entry contains a separate line item for each material in the goods receipt, and each line item has its own folio number.

When you enter a goods issue, you have to specify which folio numbers are associated with it. Again, each entry has its own serial number. The excise duty associated with these items is then added to the customer invoice.

Reporting

Prepare a copy of the registers as described under Creation of Excise Registers.

2.5.4 Serial Numbers

The system automatically numbers all entries in the following registers with a serial number:

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RG 1 RG 23A and RG 23C, Parts I and II RG 23D PLA

Each excise group defines its own number range intervals.


Whenever the system creates a register entry, it automatically assigns it a serial number.

Reporting

The serial numbers are shown in the excise registers when you prepare them.

2.5.5 Updating Excise Registers (J1I5)

You use this report to update the information in the following registers:

RG 1

RG 23A, Part I

RG 23C, Part I

This report only creates register entries for goods movements that have not already been entered. It does not create duplicate entries.

You cannot print or display these registers using this report. It is solely for the purpose of updating the registers. Instead, to download the registers, use the Download Register Data report

To access the report, from the SAP Easy Access screen, choose Indirect Taxes Registers Excise Tax Update RG 23A/C Issues and RG 1.

Selection

On the selection screen, you specify:

Which documents you want to cover:

41


Enter general organizational details in the Company details group box.

Enter details about the documents that you want to include in the register, in the Document header and Document details group boxes.

Which register you want to update, in the Registers group box

Whether you want to run the program in batch mode

You can also check what date the data was last extracted.

The system displays a list of material documents that have not yet been entered in the register.

i. Select the documents that you want to add to the register.

ii. To check if there is enough stock in the specific excise group for the register for issues or receipts, select the line items and choose Simulate.

We recommend that you use this option before proceeding; it will show the line items that can be updated in the register.

Issues and receipts are handled separately based on the following register and classification code combinations:

Register Type Goods issues Goods receipts

RG 23A IIM ROP

RG 23C IIM ROP

RG 1 IDH RMA

IPD ROP

IWD ROP

IDE ROP

IWE ROP

IWT

IWO

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Lines that can be updated in the register will be shown with a green traffic light, while those which are not eligible (for example, if there is not enough stock on hand) will be marked with a red traffic light.

You can reselect the required line items and repeat the Simulate process.

iii. Select the line items you want and choose Register entry.

The system updates the Part I or RG 1 tables with the material documents.

For RG 1 issues to sales, wherever there is an excise invoice it is picked up and used for RG 1 updating.

The same option can be used for creating entries in RG 23A or RG 23C Part I registers. While creating entries in the register, system will pick up only those material documents for which Part I posting has not been done yet.

2.5.6 Excise Registers Extraction (J2I5)

You use this report to extract the data in order to create the excise registers.

Features

To access the report, from the SAP Easy Access screen, choose Indirect Tax Registers Excise Tax Extract. (J2I5)

Selection

On the selection screen, enter data as follows:

If you select All registers, the system will create an extract for all registers. If you only want to create an extract for specific registers, Select any register and then the registers that you want.

If you want to find out when an extract was last created, select Last extracted dates. The system then displays the information in a dialog box.

Output

The system extracts the data. You can now print it out using the Register Printout report (J2I6).

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2.6 Maintenance of Excise Master Data

When you execute a business transaction involving materials that are subject to excise duty, the system automatically calculates the duty for you.

You maintain the following types of data:

2.6.1 Plant master data

You assign each of your plants an excise duty indicator. You can use the same indicator for all the plants with the same excise status from a legal point of view, such as all those that are in an exempt zone.

The excise part of the plant master is divided into the following screens:

2.6.1.1 Excise Indicator for Plant

On this screen, you enter your plants' tax registration numbers, which are used for various forms of correspondence and reports:

Central sales tax (CST) number

Local sales tax (LST) registration number

Permanent account number (PAN)

In order for the system to be able to calculate which rate of excise duty to apply on purchases for this plant, you must also assign it a plant excise duty status (for more information about how this works, see Determination of Excise Duty Rates).

2.6.1.2 Excise Indicator for Plant and Vendor

On this screen, you define the final excise duty indicator (for more information about how this works, see Determination of Excise Duty Rates).

2.6.1.3 Excise Indicator for Plant and Customer


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2.6.2 Vendor master data

For each of your vendors with the same excise status from a legal perspective, you define an excise duty indicator. You must also specify the vendor type – for example, whether the vendor is a manufacturer, a depot, or a first-stage dealer. You must also stipulate if the vendor qualifies as a small-scale industry.

For each permutation of plant indicator and vendor indicator, you then create a final excise duty indicator.

In conjunction with other data, this data is used to calculate excise duty on various transactions.

The excise part of the vendor master is divided into the following screens:

2.6.2.1 Vendor Excise Details

On this screen, you enter your vendors' tax numbers, which are used for various forms of correspondence and reports:

Excise registration number (and the range, division, and collectorate in which this is located)




In order for the system to be able to calculate which rate of excise duty to apply on purchases from the vendor, you must also:

Assign it a vendor excise duty

Specify what type the vendor is, for example, a manufacturer, first-stage dealer, or importer for 57AE returns

If the vendor qualifies as a small-scale industry (SSI), you must also specify:

What its SSI status is (which you must first have defined under SSI rates, see below)

Whether or not it is participating in the CENVAT scheme

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2.6.2.2 SSI Rates

On this screen, you define the excise rates that apply to purchases from vendors that qualify as SSIs. You define one status for each band (or "slab") of sales volume provided for by the law, and for each SSI status, the rates of excise duty that applies to that slab under the two schemes (see Excise Duty for Small-Scale Industries).

2.6.2.3 Excise Indicator for Plant and Vendor


2.6.3 Customer master data

You assign the same excise duty indicator to each of your customers that share the same legal excise status.

Again, for each permutation of plant indicator and customer indicator, you then create a final excise duty indicator.


To maintain the data, from the SAP Easy Access screen, choose Indirect Taxes Master Data Excise Rate Maintenance, and then select the following options described below.

The excise part of the customer master contains the following information:

2.6.3.1 Customer Excise Details

On this screen, you enter your customers' tax registration numbers, which are used for various forms of correspondence and reports:

Excise registration number (and the range, division, and collectorate in which this is located)




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In order for the system to be able to calculate which rate of excise duty to apply on sales to the customer, you must also assign it a customer excise duty status (for more information about how this works, see Determination of Excise Duty Rates).

2.6.3.2 Excise Indicator for Plant and Customer


2.6.4 Material master data

The part of the material master record that contains information relating to Indian excise duty.


To maintain the data, from the SAP Easy Access screen, choose Indirect Taxes ® Master Data ® Excise Rate Maintenance, and then select the following options described below.

The excise part of the material master is divided into the following screens:

2.6.4.1 Chapter Ids

On this screen, you define the chapter IDs and corresponding descriptions as described in the excise tariff structure. This information is used when you create excise invoices and is also shown in the various excise registers.

2.6.4.2 Material and Chapter ID Combination

On this screen, you maintain the excise data relating to your materials. For each material, specify:

Chapter ID

Whether the material can be sent to subcontractors (see Subcontracting)

The material type

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This denotes, for example, whether the material is a raw material, a capital good – this affects the CENVAT process – or if it is a finished good on which excise has been paid, to be covered by the Update of RG 1 and Part I Registers.

Whether you accept more than one goods receipt per excise invoice, and if so, whether the excise duty should be credited to the CENVAT account immediately a goods receipt is posted (multiple credit) or not until all the goods receipts have arrived (single credit) (see Multiple Goods Receipts for a Single Excise Invoice)

This information is valid for a given plant. If the information is valid for all of your plants, however, leave the Plant field blank.

2.6.4.3 Material Assessable Value

On this screen, you maintain the net dealer price and the assessable value of all materials that you send to subcontractors or for any other issue. These values serve as the excise base value when the materials are issued, and tell the system how much excise duty to reverse from your CENVAT account.

2.6.4.4 CENVAT Determination

On this screen, you specify which raw materials are used to produce which finished (or semifinished) goods. The system uses this information to determine whether it you can claim a CENVAT credit for a material.

2.6.4.5 Excise Tax Rate

On this screen, you specify for each chapter ID, rate of excise duty that might apply, accordingly you must take into consideration excise duty component on incoming as well as outgoing materials.

You can maintain the basic excise rates in the following forms:

Ad valorem

Specific

As a combination of both

For each rate, specify until which date it applies.

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You can also maintain the additional excise duty and special excise duty in ad valorem form, should any apply. If you need to give these rates as a fixed sum, use the Quantity Based AED and SED screen.

2.6.4.6 Additional Excise Rate

On this screen, maintain any cess applicable.

2.6.4.7 Exceptional Material Excise Rate

On this screen, maintain any exceptions that apply to the excise rates that you have defined. Exceptions can apply to a single material from all vendors, of to a single material from one vendor only. If you have an exceptional rate for a customer–material combination, you can maintain it here as well.

2.6.5 Initial Entry

2.6.5.1 Initial Entry in RG1

For new item, initial entry in J_2IRG1BAL table to be done by selecting new entry. By doing this balance of a particular item will be updated and if there is any difference in balance in that item, in that case balance in the table through change mode is to be corrected. There after the impact of all transactions will be maintained in the future.

2.6.5.2 Initial Entry in RG23A/C Part I

For new items, initial entry in table J_2IREGBAL is to be created for balance updating as mentioned in point 2.6.5.1

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2.7 Goods Returns to Vendors

2.7.1 Design Notes


The system should handle the case of goods returns to vendors.

It should be possible to create outgoing excise invoice for the goods Returns.

Relevant Registers should be updated for the goods returns.

Credits accumulated to be adjusted for the goods return

2.7.1.2 Assumptions



Pricing Procedure for the domestic vendors is configured in the system.

Number Range for the relevant Document types are maintained in the system.

You have specified, per excise group, whether you want to create these excise invoices in one or two steps (see below). You do so in Customizing for Logistics – General, by choosing Taxes on Goods Movements India Basic Settings Maintain Excise Groups.

You have also specified the maximum number of items allowed per excise invoice, in Customizing for Logistics – General, by choosing Taxes on Goods Movements India Basic Settings Maintain Excise Registrations.




Company Code Data

Plant Master Data

50


G/L Accounts


Chapter ID





SSI Rates

Excise Tax Rates

2.7.2 Process Flow

You can create excise invoices in a single step or in two steps, as follows:

In the two-step procedure, the excise clerk first creates the excise invoice, but no postings are made. An excise supervisor then verifies that the invoice is correct and, if so, posts it.

If the excise clerks are more experienced, you may want to use the one-step procedure, which is quicker, but more prone to error.

In this case, when you create an excise invoice, the system automatically posts it in the background.

Note that the functions for creating and canceling these excise invoices are different from those for other excise invoices.

2.7.2.1 Goods Return

Return Delivery of the materials to the vendors is posted as per the steps mentioned in the point C.2.4 in Materials Management Process Definition Document.

2.7.2.2 Creating Outgoing Excise Invoice (J1IS)

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This is the procedure that you follow to create an excise invoice for the less common types of goods movement.

From the SAP Easy Access screen, choose Indirect Taxes Sales/Outbound Movements Excise Invoice For Other Movements Create / Change / Display .

On the selection screen, enter data as required, including:

Reference group box

Specify which document you want to create the excise invoice for and which excise group it is for.

Details group box

Specify the vendor or customer that you are sending the invoice to.

Choose .

If you entered an internal document number, the system copies the item details from it.

Choose .

Enter line items for each of the materials to be included in the excise invoice. For each item, enter the following data:

Material

Quantity

Unit of measure

Base value

Excise duty

To pick the rate and amount from a specific excise invoice, choose Get excise invoice.

Save the excise invoice.

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If you are using the one-step procedure, the system creates and posts an excise invoice. Otherwise, the system saves the information but does not make any postings: it now has to be verified.

2.7.2.3 Verifying, Posting & Printing Outgoing Excise Invoices (J1IV)

You follow this procedure to verify that the information in an excise invoice that has already been created, and to post it once you are satisfied.

From the SAP Easy Access screen, choose Indirect Taxes Sales/Outbound Movements Excise Invoice For Other Movements Post Excise Invoice.

Enter the internal document number of the excise invoice.

Choose Release to accounting.

The system displays the excise invoice. The excise duty that is to be posted is displayed at the foot of the screen, which you can change if necessary.

To access the balance utilization, choose .

To display the balance available on the CENVAT accounts, choose Account Balances.

Save the excise invoice.

The system generates the accounting documents with the following entries.

RG23 A – CENVAT Credit

RG23 A – EDU CESS Credit

CENVAT Clearing A/C Debit

To print the excise invoice, choose .

2.7.2.3 Canceling Outgoing Excise Invoices (J1IS)

From the SAP Easy Access screen, choose Indirect Taxes Sales/Outbound Movements Excise Invoice For Other Movements Create/Change/Display .

Enter the internal document number.

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Choose .

A dialog box appears, asking you to confirm whether you want to delete the excise invoice.

Choose Yes.


You have specified, per excise group, whether you want to create these excise invoices in one or two steps (see below). You do so in Customizing for Logistics – General, by choosing Taxes on Goods Movements India Basic Settings Maintain Excise Groups.

You have also specified the maximum number of items allowed per excise invoice, in Customizing for Logistics – General, by choosing Taxes on Goods Movements India Basic Settings Maintain Excise Registrations.


Cenvat Credit



Maintenance of Material Master relevant to CIN

Maintenance of Vendor Master relevant to CIN

Maintenance of Company Data

Maintenance of Plant Master Data

Maintenance of Excise Master Data


The system handles the case of goods returns to vendors.

It is possible to create outgoing excise invoice for the goods Returns.

Relevant Registers gets updated for the goods returns.

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Credits accumulated are adjusted for the goods return

2.7.6 Gaps


No Gaps


Not Applicable




Can be interfaced with Supplier Workplace (SWP) - E-commerce Internet applications to enable dispatch of RFQ and also to receive vendor’s quotations electronically.


J1IS - Excise invoice for other movements

55


3 Direct Factory Sale

3.1 Design Notes

3.1.1 Expectations and Requirements

Handles sales from factories

Allowing for the creation of excise invoices, which have to send with each consignment that is subject to excise duty.

3.1.2 Assumptions

Copying control from delivery to billing type

Copying control from billing to billing

All the condition and formula based condition type is maintained

The condition record are maintained

3.1.3 Master Data & Basic layouts

Customer master is updated with CIN data.

Material master is updated with tax related information

3.2 Process Flow

3.2.1 Creation of Sales Order

The sales department creates the sales order on the confirmation from customer. Transaction code VA01 is used to create the sales order.

3.2.2 Creation of Production order

On the sales order, production is done if it is Make-to-order scenario

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3.2.3 Delivery Advice on Plant

If the scenario is Make-to-stock then DA is generated.

In the make-to order scenario DA is generated when material is received at finished store from production process and quality Inspection.

Transaction code VL01N is used to create the dispatch advice. System generates the quantity to be delivered.

3.2.4 Delivery process

Delivery process consists of two steps.

In the first step user needs to run the batch determination programme. T-Code VL02N is used

In the second process user needs to do the PGI. Transaction code VL02N is used to do this process.

3.2.5 Commercial Invoice creation

Once delivery is done Commercial Invoice is generated. T-Code is VF01 and type is ZF2. Give value for manual condition type in pricing screen. Select the line item and click on condition button. Verify the taxes and discount value.

3.2.6 Creating Excise Invoice

Once commercial invoice is generated Excise invoice is generated with the reference of Commercial invoice

Use T-Code J1IIN to create excise invoice from factory. Or follow the path from sap easy access----Indirect Taxes-----Sales outbound movements----Excise invoice for sales order---Outgoing Excise Invoice

Chose create or click on from billing. Enter the billing document number and enter the sub transaction type 01 in Khatima sale scenario

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Once you enter the J1IIN main window, system will calculate the BED and ECESS value automatically.

3.2.7 Posting of Excise Invoice

The movement user saves the transaction J1IIN. Systems generates official number, to be printed on the excise number

The movement Excise invoice is generated it also generates excise accounting entries.

Accounting Entries for Example

Description Accounts Credit/DebitExcise Duty Paid XCVBGT DebitRG23A-Cenvat ------- CreditRg23A-EDU CESS ---------- Credit

3.2.8 Creation of RG1 register

Excise department updates the RG1 entries for the transaction. It updates the quantity, Value, Excise value and ECESS value in the table. The transaction code is J1I5. It is created with the reference of delivery document. Mention of Plant, Excise group, series group and movement type is must for this transaction

3.3 Special Organizational Considerations

All excise group and series group determination.

Delivery type and billing type settings

Utilization determination.

3.4 Business Model

CIN flow chart for outgoing transactions

3.5 Organizational Impact

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Maintenance of Customer master and material Master has become essential activity

All the CIN related master data is to maintained and updated as per rules changes

3.5.1 Changes to Existing Organization

Not Applicable

3.5.2 Description for Improvements

Excise amount and other duty is captured correctly

Error recording is minimized in the registers

3.6 Gaps

3.6.1 Description of the functional deficits – (Gaps if any)

NA

3.6.2 Approaches to covering Functional Deficits – (if applicable)

NA

3.7 Interface ConsiderationsNA

3.8 Reporting Considerations

PLA REGISTER

RG23A PART1 REGISTER


RG23D REGISTER

4 Export from Factory (Under Bond)

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4.1 Design Notes


Should handles Export sales from factories

System should be able to handle Export under bond


4.1.2 Assumptions



All the condition and formula based condition type is maintained.

The condition records are maintained. Duty value is not greater than bond value



Material master is updated with tax related information. Number range for bond is assigned in the system

4.2 Process Flow




60







4.2.4 Creation of Pre shipment Invoice

Transaction code VF01 is used for same. This is done for custom department for clearance of shipment. No accounting document is generated at this point. The Billing type is F8





4.2.6 Commercial Invoice creation

Once delivery is done Commercial Invoice is generated. T-Code is VF01.Give value for manual condition type in pricing screen. Select the line item and click on condition button. Verify the taxes and discount value.


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Once commercial invoice is generated Excise invoice is generated with the reference of ZF2 type (Commercial invoice)


Chose create or click on from billing. Enter the billing document number, and enter the sub transaction type 01 in Khatima Export scenario

Once you enter the J1IIN main window, system will calculate the BED and ECESS value automatically. The duty value is calculated not applicable in the pricing. Customer does not need to pay the duty



In the export under bond scenario no accounting entries is generated because duty component is assigned towards bond

4.2.9 Entry of Bond

Organization has to receive bond from central excise department. This bond gives authority to organization to do make export sales order under bond. User needs to enter the bond detail in the system. Following steps needs to be taken

Use the T-Code J1IBN01 to enter the bond detail.

Enter type of bond

Enter the amount

Enter the Bond No

Enter the Bond Issue date and entry date.

Date of Validity of the bond

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Save the transaction

4.2.9 Creating ARE-1s document

Use the T-Code J1IA101.

Enter the Excise invoice number. If the ARE-1s is to be used for more than one excise invoice repeat the steps

Enter the addresses of local excise and custom authority

Enter the Packaging information

Assign the excise bond number to the ARE-1S document

Save the transaction. System will assign one internal doc number and generates the bond reservation amount. At this point user can cancel the transaction if needed.

ARE-1s document is prescribed by govt for export. User creates the ARE-1s document for Excise authority and custom clearance. The ARE-1s document along with shipping bills, commercial invoice and packaging list is produced before excise department for clearance. Once excise department is satisfied, it put seal of clearance.

4.2.9 Posting of ARE-1s document

Once excise officer confirms the ARE-1s document, user can post the ARE-1. User can make any changes before posting, if needed.

Use Transaction code J1IA101 for this process. Choose Post and select the ARE-1s internal document

Enter the internal ARE-1s document number and fiscal year

Enter the date and time the goods were dispatched

Save the document.

Once document is saved system generates an official number. It also clears the excise duty from bond’s reservation amount and debit it to the bond.

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Once ARE-1s is posted cannot be changed for any purpose whatsoever. It become compulsory to send the ARE-1s document along with the consignment





4.4 Business Model




All the CIN related master data is to maintained and updated as per rules changes. The settings for bond numbering has also become must


Not Applicable




4.6 Gaps

Not Apparent at this movement

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Not Applicable


NA



BOND ACCOUNT

5 Export from Factory (Duty Paid)

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5.1 Design Notes


Should handles duty paid export sales from factory


5.1.2 Assumptions








5.2 Process Flow





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Transaction code VF01 is used for same. This is done for custom department for clearance of shipment. No accounting document is generated at this point





5.2.6 Invoice creation

Once delivery is done Commercial Invoice is generated. T-Code is VF01. Give value for manual condition type in pricing screen. Select the line item and click on condition button. Verify the taxes and discount value.



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Chose create or click on from billing. Enter the billing document number ZF2, and enter the sub transaction type 01 in Khatima export scenario

Once you enter the J1IIN main window and click the calculator button, system will calculate the BED and ECESS value automatically. This is duty paid scenario so the duty will be applicable and hence an accounting entries will be generated



In the export duty paid scenario an accounting entries is generated.

Description Accounts Credit/DebitExcise Duty Paid XCVBGT DebitRG23A-Cenvat ------- CreditRg23A-EDU CESS ---------- Crdit


Use the T-Code J1IA101.

Enter the Excise invoice number. If the ARE is to be used for more than one excise invoice repeat the steps

Enter the addresses of local excise and custom authority

Enter the Packaging information, number of packets (Roll no) and number of pallets, container no, trailer no, commercial invoice number, shipping bill no, date of preparation of ARE-1s, time of removal. In this scenario bond will not be utilized

Save the transaction. System will assign one internal doc number. At this point user can cancel the transaction if needed

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ARE-1s document is prescribed by govt for export. User creates the ARE-1s document for Excise authority and custom clearance. The ARE-1s document along with shipping bills, commercial invoice and packaging list is produced before excise department for clearance. Once excise department is satisfied, it put seal of clearance.


Once concerned central excise staff confirms the ARE-1s document, user can post the ARE-1. User can make any changes before posting, if needed.

Use Transaction code J1IA101 for this process. Choose Post and select the ARE-1s internal document


Enter the date and time the goods were dispatched

Save the document.

Once document is saved system generates an official number.

User can no longer change the ARE-1s. User sends the ARE-1s and Excise invoice with the consignment.





5.4 Business Model




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All the CIN related master data is to maintained and updated as per central excise rules changes.


Not Applicable




5.6 Gaps



Not Applicable


NA



6. Deemed Export from Factory

6.1 Design Notes


70


Should handles deemed export sales from factories

System should be able to handle Export under CT1/ CT2/ Annexure and ARE-1s


6.1.2 Assumptions





License Number is maintained in the system




6.2 Process Flow





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Transaction code VF01 is used for same. This is done for custom department for clearance of shipment. No accounting document is generated at this point





6.2.6 Invoice creation

Once delivery is done Commercial Invoice is generated. T-Code is VF01. Give value for manual condition type in pricing screen. Select the line item and click on condition button. Verify the taxes and discount value.



Use T-Code J1IIN to create excise invoice from factory. Or follow the path from sap easy access----Indirect Taxes-----Sales outbound

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movements----Excise invoice for sales order---Outgoing Excise Invoice

Chose create or click on from billing. Enter the billing document number and enter the sub transaction type 01 in Khatima deemed export scenario

Once you enter the J1IIN main window and click on bond, system will calculate the BED and ECESS value automatically. The duty value is calculated but need not be paid by EIL. Customer also does not need to pay the duty



In the export under bond scenario no accounting entries is generated.


Use the T-Code J1IA301

Enter the Excise invoice number. If the ARE is to be used for more than one excise invoice repeat the steps

Assign the deemed export license send by the customer for clearance of goods without actual payment of central excise duties the addresses of local excise and custom authority

Enter the Packaging information

Save the transaction. System will assign one internal doc number and increases the bond reservation amount. At this point user can cancel the transaction if needed

User creates the ARE-3s document for Excise authority and custom clearance. Officer from excise department comes in and check the ARE-3 doc and physical goods to be transported. Once he is satisfied excise department (EIL) takes the printout and give it to the officer. The steps to create the ARE-3 doc are as follow

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Once excise officer confirms the ARE-3s document, user can post the ARE-3. User can make any changes before posting, if needed.

Use Transaction code J1IV305 for this process. Choose Post and select the ARE-3s internal document


Enter the date and time the goods needs to be dispatched

Save the document.

Once document is saved system generates an official number. And it reduces the quantity and value from the license of the customer.

User can no longer change the ARE-3s. User sends the ARE-3s and Excise invoice with the consignment.




The entry of deemed license number in the system

6.4 Business Model





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Not Applicable




6.6 Gaps



Not Applicable


NA



7 Factory stock Transfer

7.1 Design Notes


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System should be able to handle all the Excise transaction of stock transfer

System should be able to update the relevant transaction in the registers

System should be able to differentiate the depo transfer case with other transaction

7.1.2 Assumptions


Copying control from pro forma invoice to Excise invoice



Excise transaction types should be maintained




7.2 Process Flow

7.2.1 Creation of CIR

Based on the requirement depo generates CIR for pant. T-code is MD81 for this transaction


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Based on the requirement production order is generated and after the production stock is transferred to FG. The stock is ready to be delivered at depo









7.2.6 Pro Forma Invoice creation

Once delivery is done Pro formal Invoice is generated. T-Code is VF01 and type is JEX. Give value for manual condition type in pricing screen. The Pro Forma Invoice does not create any accounting entries


Once pro forma invoice is generated Excise invoice is generated with the reference of JEX


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Chose create or click on from billing. Enter the billing document number JEX, and enter the sub transaction type 01 in stock transfer scenario

Once you enter the J1IIN main window, system will calculate the BED and ECESS value automatically.


The movement user saves the transaction J1IIN. Systems generate official number, to be printed on the excise number. It also generates internal number

At this moment system create entries in excise header, Excise detail and part11. The excise transaction type is DLFC in this case. At this point system also generates the accounting entries

Accounting entries for exampleDescription Accounts Credit/DebitExcise Duty Paid XCVBGT DebitRG23A-Cenvat ------- CreditRg23A-EDU CESS ---------- Crdit

With this Factory CIN process gets completed





7.4 Business Model



78





Not Applicable




7.6 Gaps



Not Applicable


NA



PLA REGISTER


79


8 Depot receipt and Sales

8.1 Design Notes


System should be able to handle all the Excise transaction of stock transfer

System should be able to update the relevant transaction in the RG23D registers

80


System should be able to differentiate the depo transfer case with other transaction

8.1.2 Assumptions









8.2 Process Flow

8.2.1 Stock Receipt at Depo

Depo Receives the stock with the reference of delivery document number. The transaction code is MB0A. User needs to mention the target plant and storage location for the transaction. User also needs to mention the movement type which is 101 in this case

8.2.2 Change the status of material from restricted to unrestricted

Depo runs a BDC called ZOWN to change the status of the material. This is done with the reference of MB0A number

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8.2.3 Capturing of Excise Invoice at Depo

This is done to capture the excise invoice created at factory.

The T-code is J1IG. User has to enter the Excise group of depo, the official excise number and MB0A number and series group at this point.

Once these value is entered user needs to click on detail button. This event will generate the main screen of J1IG. Select the line item and enter the excise invoice internal number and year. Once this is done system will automatically generates the excise and Ecess value. This will be same as factory excise invoice

User needs to verify the data and if satisfied save the transaction. This transaction will update the RG23D register

8.2.4 Creation of Sales order

User creates the sales order after getting the confirmation from customer. T-Code is VA01 and type is Z0R2. Enter the sales area and check the pricing condition of the line item. Once entry is completed save the transaction



In the first step Delivery dispatch is use the T-Code VL01N. In the second step user needs to run the batch determination programme.

T-Code VL02N is used. PGI is not done at this stage


Depo user creates the Excise invoice in two steps.

In the first step user capture the factory invoice

Use transaction code J1IJ. It is created with the reference of delivery document. Enter the Excise group 3 and series group 06 for noida depo

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Once user enter the main screen of J1IJ click on the excise invoice. This event will take user into selection list window. Select the right invoice and save the transaction

8.2.7 Post Goods Issue

Once the Excise invoice is captured. User needs to go back to transaction code VL02N and do the PGI. Once PGI is done User needs to verify and post the depo excise invoice

8.2.8 Posting of Excise invoice

Once PGI is done user needs to verify and post the Excise invoice. Transaction code is J1IJ. Click on the verify and post option. System will prompt user to enter the value for delivery, excise group and series group. Once this done user can save the transaction. With this CIN process gets completed.





8.4 Business Model




83




Not Applicable




8.6 Gaps



Not Applicable


NA



RG23D REGISTER

84


9. Goods Return CIN Process

9.1 Design Notes

9.1. Expectations and Requirements

System should be able to handle all types of return such as domestic sales return, export return, depo return, deemed export return

System should be able to update the relevant transaction in the RG23A registers

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9.1.1 Assumptions









9.2 Process Flow

9.2.1 Return order creation

Sales return order is created. The T-code is VA01.

9.2.2 In bound delivery creation

In bound delivery is created with the reference to sales return order. T-Code is VL01N

9.2.3 PGR Creation

Goods is receipt at store at particular storage location as assigned for the rejected material. T-Code is Vl02N

9.2.4 Credit Memo request

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Once delivery is accepted in the store. Sales department generates the credit memo request to FI department, with reference to delivery document

9.2.5 Receive of material in RG23A part1

User needs to record the entry in RG23A part1. Transaction code is J1I5

User needs to enter value for plant, excise group, material document number or date range. Once user press f8 system will take user into main screen here user needs to select the item for which entry needs to be generated in RG 23 A part1. After the simulation entries to be posted. The same process is also applicable for export and deemed export return case

9.2.6 Credit In RG23A part2

In case of export return and deemed export return this transaction is not applicable as no credit is involved

User needs to take take cenvat credit in RG23A Part2 for domestic return and stock transfer return

Transaction code is J1IH for recording entries in Rg23A part2

Use needs to give value for plant, document number, sub transaction type and excise group.

Once user enter the main screen of J1IH, user needs to enter material code and it’s quantity and credit value after determining G/L code and putting business area, entries to be posted. Once user saves the transaction system generates accounting entries. This completes the CIN process as far as returns are concerned

Accounting entries for example

Accounts Name Credit/DebitCenvat Clearing a/c CreditRG23A-Cenvat DebitRG23A- ECESS Debit

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9.2.7 Post Goods Issue

Once the Excise invoice is captured. User needs to go back to transaction code VL02N and do the PGI. Once PGI is done User needs to verify and post the depo excise invoice

9.2.8 Posting of Excise invoice

Once PGI is done user needs to verify and post the Excise invoice. Transaction code is J1IJ. Click on the verify and post option. System will prompt user to enter the value for delivery, excise group and series group. Once this done user can save the transaction. With this CIN process gets completed.





9.4 Business Model






Not Applicable

88





9.6 Gaps



Not Applicable


NA



RG23D REGISTER

10.Process Flow for Cenvat Credit

Yes No

89

Is incoming Excise invoice captured at GR ?

J1I5 ---Receive entry in Part-I & J1IEX—Change mode--Set Cenvat credit amount exactly being availed

J1IEX—capture Excise Invoice


OR OR

11.CIN flow chart for outgoing transactions

90

J1IEX--Post 100% Cenvat entry in RG23A Part-II against inputs

J1IEX—Post 50% Cenvat entry in RG23C Part-II against capital goods 50%

J1IH----Additional credit J1IH----Additional credit

J2I8----Post balance 50% Cenvat credit in RG23C Part-II

J2IU---Pay Central Excise duties FROM RG23A Part-II separately BED, ECESS

J2IU---Pay Central Excise duties from RG23C Part-II separately BED, ECESS

J2I5----Simulate Part-II for the desired date

J2I5---Simulate Part-II for the desired date

J2I6 ---Print RG23A Part-II for the month

J2I6 ----Print RG23C Part-II for the month

VF01--- Billing

J1IIN ---Create EXCISE Invoice of finished goods for direct sale / transfer to depot / Export to Nepal / Direct Export under Bond OR on payment of Duty / Deemed Export

J1IS---other invoice for goods return of RM & captive issues ---J1IV

VL02N-----Delivery --PGI

MB1B--Transfer posting document


91

Direct Sale / Transfer from Khatima

Deemed ExportDirect Export

J1IA101----ARE-1 on payment of Duties / Nepal invoice

J1A101---ARE-1 Clearance under Bond / LUT

J1IA301-----ARE-3 against CT-1/ Ct-2/ Annexure (not working)

J1IBN01--Entry of Bond for clearance of Export goods under Bond

J1I5

J1IA103--Update ARE-1

J1ILIC01----Entry of CT-1 / CT-2 / Annexure

J2IU---Clear from RG23A/C Part-II

J1ILIC05---- Close CT-1 / CT-2/ Annexure

J1I5---Taking back qty of exported goods, which were cleared under Bond

J1I5--- Taking back qty of exported goods, which were cleared under Bond

J1I5---Taking back qty of deemed export goods

Re-processed in plant

CIN MM PDD

Documents