Explain the Procedure For Import P.O. and Duty.

By Sumit

Indian Import cycle is bit more complicated and SAP is not geared to handle in a straight manner through single MIGO as the cycle consists of multiple vendors.

This  requires special Schema to be developed and needs Both FICO and MM consultants to work together. 

Imports will have two categories. 

Category 1: Bonding and De-bonding cycle ( Freight and Insurance during Bonding  and other duties during De-bonding )
 
Category 2 : Home consumption ( all charges to be accounted at one stage )

Further Import cycle also has two types : 
Type 1 for Manufacturing plant  ( CENvat credit for certain duties to be availed )
Type 2 for trading plant ( no credit of duties )

In altogether there are 4 procedures to be adopted for the above.
 
The schema should be such that, at PO stage.  We should be able to assign multiple vendors : Import supplier for Items ( foreign currency ) , India customs  for Duties  (  Indian currency ) , Freight and Insurance separately ( Indian or foreign currency as the case may be ). During schema, duties have to be defiend as VATable and non VATable. Accordingly, accounting posting keys to be defined.
 
Most important aspect is the FI transactions and mapping it to import cycle. In case of Import cycle, MIRO is done first and then MIGO is carried out later steps.
 
Payment of Advance to Supplier : Vendor advance and corresponding enctry in GL account, credit Bank a/c , debit Vendor A/c
 
MIRO is done in Three or four instances ( may be five also if  cenvat credit for duties to be taken ).

Step 1:

MIRO -1, Freight vendor : Inventorised  : Credit Freight Vendor, debit freight & Insurance clearing account, when money is paid : Debit Vendor, Credit Bank
MIRO -2, Insurance Vendor : Inventorised  : Credit  Insurance vendor, Debit  Freight & Insurance clearing account, when money is paid : Debit Vendor, Credit Bank
MIRO- 3, India customs ( All five duties together  ) : Inventorised    credit Vendor, Debit Duties clearing account, when money is paid : Debit Vendor, Credit Bank 
                           OR
MIRO - 3, Basic Duties : non vatable  : to be inventoriesed, Credit Vendor, Debit Duties clearing account  and 
MIRO - 4, ED, Edu cess :  vatable :, Credit Vendor, Debit  vat clearing account, Vat credit  through ji1h and non inventorised, hence will not be part of costing, Credit Vat clearing account, Debit VAT account when money is paid : Debit Vendor, Credit Bank
                       
Step 2:

MIGO : to Stores where  accenting documents gets generated to the extent of inventorising .All the inventorised values in corresponding GL accounts produces the Product Cost.  Debit Inventory
                      Credit GRIR a/c 
                      Credit Freight & Insurance A/c ( for both freight & Insurance )
                      Credit Duty clearing a/c ( 3 or % as the case, may be )

Step 3:

MIRO - 4, on Supplier  ( Foreign exchange ), Entry to be cancelled against advance paid. While carrying out, the difference in exchange rate also to be passed on to separate GL account. : to be inventgorised.
Credit  Vendor a/c, Debit GRIR clearing a/c

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