A document that you use to issue and track subcontracting work. It allows you to make sure that all the materials you have sent to the subcontractor for processing are returned.

You create challans from transfer orders to accompany any materials that you send to subcontractors under rule 57AC. In this respect, they are an extended form of delivery note, with additional information about the excise duty on each material that you have supplied. Materials that are not liable to excise duty do not have to be included in the challan.

As the subcontractors return the finished goods to you, you record the returns in the challan, to make sure that all are returned within the allotted time limit.

If the finished goods returned to you by the subcontractor are of substandard quality, you can also create a subcontracting challan from the returns order.

The challan consists of a header and line items. The header, in addition to organizational data, allows you to enter:

• Preprinted number
• Additional data
• Identification marks
• Nature of processing

Furthermore, each challan has two numbers, an internal document number and a challan number, which the system assigns to the challan when you save it. From a business perspective, this is the most important number. Each challan also has a status, which shows you what stage in processing it is at.

The line items are copied across from the transfer posting when you create the challan. You can also enter additional data for each item.