If your company is based in the European Union (EU) and exports food or agricultural products to non-EU countries, you have to follow the legal rules and regulations of the Common Agricultural Policy (CAP). These rules are only for EU-based companies. To benefit exporters, CAP provides subsidies or restitution and reimburses exporters for the difference between the price of the products in Europe and on the global market.

Dealing with a huge amount of data from multiple sources for carrying out global trade is daunting. You must comply with the required documentation and adhere to the legal rules and regulations. Moreover, if you do not satisfy these required conditions, then you not only risk missing out on the subsidies but also stand to forfeit some collateral, or in business terms, a security you have put up against a refund that is being expected.

The CAP includes the following objectives:

• To increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum use of the factors of production, in particular labor
• To ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture
• To stabilize markets
• To assure the availability of supplies
• To ensure that supplies reach consumers at reasonable prices

Restitution Management

Restitution management is a special concern of companies in the food and agriculture industries because it helps European Union (EU) agricultural exporters recoup subsidies for selling products to non-EU countries at below-normal prices. As part of the EU CAP, when a company sells (exports) products to a customer in a country that pays less for the goods, the seller must then apply for its subsidy (called a restitution) from the EU.

Filing and tracking that application can be difficult. Tracking the status of export licenses and securities is also complicated. Handling complex recipes for processed products that contain multiple ingredients eligible for refund becomes a major task. SAP BusinessObjects Global Trade Services’ tight integration to SAP ERP Central Component (SAP ECC) sales and distribution (SD) and materials management (MM) supports you at every stage of the restitution management process — from managing securities to calculating refunds for restitution.

SAP BusinessObjects Global Trade Services’ restitution management functionality supports exporters and ensures all prerequisites for requesting and receiving export restitutions are fulfilled and minimizes the risk of penalties through a loss of securities or export licenses.

SAP BusinessObjects Global Trade Services’ restitution management functionality supports these restitution requirements:

• License maintenance and assignment
• Security maintenance and assignment
• Manufacturer’s recipe maintenance
• Restitution rate maintenance

Now I examine the restitution process flow from an SAP system perspective (SAP ECC and SAP BusinessObjects Global Trade Services). You carry out restitution in the SAP BusinessObjects Global Trade Services system. You access the preliminary documents that are required for the restitution process to start in SAP BusinessObjects Global Trade Services from SAP ECC (Figure 1).

Figure 1

SAP ECC-SAP BusinessObjects Global Trade Services restitution process flow

In SAP ECC, create a sales order and a delivery document. In the feeder system, create a billing document or pro forma billing document based on the goods that have actually been delivered to the customer (Figure 2). (SAP ECC is the feeder system.)

Figure 2

SAP SD-SAP BusinessObjects Global Trade Services document flow

Now transfer the data from this billing document to SAP BusinessObjects Global Trade Services restitution and create an export declaration. If an advance refund payment (ARP) is required, you must assign a security document immediately to the export shipment document. The individual products listed in the export shipment document are all checked by the restitution service in SAP BusinessObjects Global Trade Services against the product master data to determine whether they are relevant for restitution.

If the product is restitution relevant, then the restitution service runs a check to determine whether the product requires an export license. If the license search shows that an export license is available, then the license is assigned to the export shipment document. The restitution service calculates the restitution rates for the products and multiplies the restitution rates by the quantities of the products to obtain a total expected restitution amount. After you print all the necessary forms and send them to the customs authorities, you can unload the export goods. Finally, you can release the security documents.

Now I discuss some important SAP ECC transactions that are important before moving to SAP BusinessObjects Global Trade Services. First, I show you how master data is transferred from SAP ECC to SAP BusinessObjects Global Trade Services. Execute transaction /SAPSLL/MENU_LEGALR3 in SAP ECC to produce the screen in Figure 3.

Figure 3

Transfer master data from SAP ECC to SAP BusinessObjects Global Trade Services

Click the execute icon in the Transfer Vendors row under the Initial Transfer of Master Data to the SAP GTS tab shown in Figure 3. The transfer of vendors to the SAP system is completed (Figure 4). You now receive a pop-up message that All Materials Processed Successfully in the SAP ECC system. This confirmation first comes from the SAP ECC side. Once the transfer is completed in both SAP ECC and in SAP BusinessObjects Global Trade Services, execute transaction SLG1 to see the details of the transfer (e.g., the number of vendors, customers, materials transferred, the date, and the user who transferred them). This message is the second and final confirmation from the SAP BusinessObjects Global Trade Services end.

Figure 4

Transfer of vendors from SAP ECC to SAP BusinessObjects Global Trade Services

You are now ready to transfer customers as shown in Figure 5. Enter transaction /n/sapsll/menu_legalr3 in SAP ECC and go to the Initial Transfer of Master Data tab to transfer vendors, customers, and material masters to SAP BusinessObjects Global Trade Services. This transaction code and the menu path are the same for all master data transfers (e.g., customers, vendors, and material masters). Enter the customer master number and then click the execute icon. A pop-up appears with the following message: all customers are transferred successfully.

Figure 5

Transfer customers from SAP ECC to SAP BusinessObjects Global Trade Services

Then you need to transfer material master data (Figure 6). Enter the material master number and click the execute icon. The following pop-up message appears: all materials are transferred successfully.

Figure 6

Transfer of material master data from SAP ECC to SAP BusinessObjects Global Trade Services

Once you transfer the master data, you can transfer the SAP SD documents relevant for restitution. To transfer SD documents such as sales orders, outbound deliveries, and billing documents to SAP BusinessObjects Global Trade Services, use the same transaction that you executed for transferring master data: /n/sapsll/menu_legalr3. In the Initial Transfer of Documents to SAP GTS section, click the execute icon in the Transfer Sales Documents row (Figure 7).

Figure 7

Initial transfer of SAP SD documents to SAP BusinessObjects Global Trade Services

In the Sales Document field enter the sales order number that you wish to transfer and populate the Sales Document Type field. Click the execute icon (Figure 8).

Figure 8

Transfer sales orders from SAP ECC to SAP BusinessObjects Global Trade Services

Once you transfer the restitution-relevant sales orders to SAP BusinessObjects Global Trade Services, you have to transfer the corresponding deliveries and billing documents. You can transfer outbound deliveries by clicking the execute icon in the Transfer Outbound Delivery Documents row under the Initial Transfer of Documents to SAP GTS section shown in Figure 7. You reach the screen shown in Figure 9. In the Delivery field enter the outbound delivery document number and populate the Delivery Type field. Click the execute icon to transfer the delivery to SAP BusinessObjects Global Trade Services.

Figure 9

Transfer of outbound deliveries from SAP ECC to SAP BusinessObjects Global Trade Services

You can transfer billing documents by clicking the execute icon in the Transfer Billing Documents row under the Initial Transfer of Documents to SAP GTS tab shown in Figure 7. The screen shown in Figure 10 appears. Populate the Billing Type and Billing Document fields. Click the execute icon to transfer the billing document to SAP BusinessObjects Global Trade Services.

Figure 10

Transfer of billing documents from SAP ECC to SAP BusinessObjects Global Trade Services

Once these prerequisite steps are completed on the SAP ECC side, you now are ready to go through the restitution management steps in SAP BusinessObjects Global Trade Services. First, access the main restitution menu by entering transaction /SAPSLL/MENU_LEGAL in SAP BusinessObjects Global Trade Services (Figure 11).

Figure 11

Restitution area in the SAP BusinessObjects Global Trade Services main menu screen

Now I explain how to classify products for the restitution process. Every product that is relevant for trade needs to be classified to customs commodity codes as a mandatory procedure. This classification helps the customs authorities easily identify the product you are exporting or importing based on the commodity codes that you have assigned to the products. Before the final shipment compliance teams in every organization verify the classified codes to products, so there is a very rare chance of misclassification. Even if there is a misclassification, then the customs authorities request that you classify the product correctly to the correct codes, and you can do it.

On the main menu area in Figure 11 go to the Restitution – Master Data tab. From there you have to classify your products and assign them to commodity codes for declaring the goods to the customs authorities. You can manually maintain the commodity codes in SAP BusinessObjects Global Trade Services or buy them in XML format from data providers. To classify your products enter the main menu path SAP Risk Management > Restitution Master Data > Maintain products (Figure 12). Click the pencil icon.

Figure 12

Classify products

Input the product number and logical system group (which is your SAP ECC system name) and click the execute icon. In the next screen enter the appropriate code or number from the screen shown in Figure 13 and click the save icon at the top of the screen (the save icon is not shown in Figure 13).

Figure 13

Assign a commodity code to your product

You can create, edit, or display a restitution or CAP license for your products from the SAP Risk Management - Restitution area (Figure 14). In the creation screen, enter all the relevant data to create a CAP license for your business transaction. The editing feature helps you modify any wrongly entered data at a later phase.

Figure 14

Create, edit, or display a restitution license

The display feature is for displaying the license and its details. If you are exporting agricultural products, the export declarations should be accompanied with a CAP license. Using this feature, you assign a license to a declaration. It is mandatory that every agricultural product have a CAP license while exporting. If you miss assigning a CAP license to your export declaration, the customs authorities impose hefty fines for not complying with the general trade requirements.

You can create, edit, or display securities for exporting the restitution products from the SAP Risk Management – Restitution area (Figure 15).

Figure 15

Create, edit, or display securities

Because a security document is required against a restitution-relevant export transaction, from the screen shown in Figure 15, you can create, modify, or view a security document. Once the creation of a security document is complete with correct data, you send a copy of it with your export documents. If you are found not compliant with the restitution laws and documentation, you have to pay a hefty fine from the customs authorities and also forfeit your security.

The restitution rates that are required for calculating the refund amount are maintained from the SAP Risk Management – Restitution area (Figure 16). The updated restitution rates are received by your company from data providers who publish them very frequently (once a month or so). Therefore, every time you receive new rates from data providers, you maintain the rates in SAP BusinessObjects Global Trade Services. This way, you always have the latest restitution rates. You have to subscribe to the data providers to obtain this data frequently.

Figure 16

Maintain restitution rates

Now check how to calculate the restitution amount or the refund amount for your products. Click the Restitution button in the SAP Risk Management section of the main menu (Figure 17).

Figure 17

Calculate restitution or refund amounts

Once you enter the Restitution area (Figure 18), click the execute icon to simulate the calculation.

Figure 18

Simulate renstitution calculation

In the screen shown in Figure 19, enter the mandatory fields, such as Legal Regulation, Legal Unit, Logical System Group, Product Number, Quantity, Unit of Measurement, Date of Export, and Restitution Currency, to calculate the restitution amount for the product.

Figure 19

Enter the data and execute restitution calculation

Now I discuss the configuration checklist required for activating the restitution service in SAP BusinessObjects Global Trade Services.

Step 1. Activate the general settings of restitution functionality. Follow IMG menu path Global Trade Services > SAP Risk Management > General Settings > Activate Document Types and IMG > Global Trade Services > SAP Risk Management > General Settings > Activate Item Categories (Figure 20).

Figure 20

General settings for the restitution service

From the dialog structure, enter the Document type and the Item category you wish to use. Save the entries by clicking the save icon so that the entered document type and item category are activated for the restitution service.

Step 2. Activate legal regulations. Follow IMG menu path Global Trade Services > SAP Risk Management > Restitution Service > Activate Legal Regulations (Figure 21).

Figure 21

Activate restitution legal regulations

Activate the restitution service for specific business transactions (e.g., 2 Export/Dispatch as shown in Figure 21) and save your entries to activate the restitution legal regulation in the system.

Step 3. Assign a determination procedure for the restitution service. Follow IMG menu path Global Trade Services > SAP Risk Management > Restitution Service > Assign Determination Procedure for Active Legal Regulations. Define a determination procedure based on the legal regulation that you created specifically for your business transaction (e.g., exports) with a restitution business scenario. The determination procedure value LERES shown in Figure 22 is standard for restitution provided from SAP and is available when you install SAP BusinessObjects Global Trade Services. Hence, the same value is used as a determination procedure for restitution.

Figure 22

Assign a determination procedure

Step 4. Define recipes. Follow the IMG menu path Global Trade Services > SAP Risk Management > Restitution Service > Recipes > Define Type of Recipe (Figure 23).

Figure 23

Define the type of recipe

You have to maintain recipes for your products as they are required for calculating restitution amounts. You maintain recipes as bills of product (BOPs).

Step 5. Define item category of recipe. Follow IMG menu path Global Trade Services > SAP Risk Management > Restitution Service > Recipes > Define Item Category of Recipe (Figure 24).

Figure 24

Define the item category of recipe

Create as many item categories as you need for each type of recipe you defined in the previous activity.

Step 6. Define aggregation rules. Follow IMG menu path Global Trade Services > SAP Risk Management > Restitution Service > Control Settings for Restitution Service > Define Aggregation Rules for Aggregating Document Items (Figure 25).

Figure 25

Define aggregation rules

The calculation of the total restitution amount for an export customs document is based on restitution rates that the customs authorities issue and aggregation rules you define. The aggregation rules are defined so that the system can aggregate customs document items according to specific criteria. You identify which fields in the customs documents must be identical for either basic or final products. The system can then aggregate all the basic or final product items in the document with the same value in the same fields. The aggregated value is the value the system uses together with the restitution rate to calculate the restitution amount.

Step 7. Control Settings for Restitution Service. Follow IMG menu path Global Trade Services > SAP Risk Management > Restitution Service > Control Settings for Restitution Service (Figure 26).

Figure 26

Control settings for the restitution service

In this activity you maintain the following settings:

• Product master maintenance. Here you define if every product is subject to restitution license control or if only specific selected products are subject.
• Control grouping. If you set this indicator, the control groupings can be maintained in the customs product master and used in the restitution license type determination.
• Send email. If you set this indicator, the system automatically sends an email if the customs document is blocked by the lack of a restitution license.
• Aggregation rule. Enter the relevant aggregation rule you want the system to apply to your restitution relevant legal regulation.

Step 8. Define types of securities for restitution service. Follow IMG menu path Global Trade Services > SAP Risk Management > Restitution Service > Control Settings for Restitution Service > Define Types of Securities (Figure 27).

Figure 27

Define types of securities

Define the types of securities you want to use in restitution service. You need to define security types as they are required by law to accompany export licenses.

Ravi Kalluri

Ravi Kalluri is an SAP BusinessObjects Global Trade Services consultant at Accenture Services Pvt Ltd. His focus is on the entire global trade area, including Compliance Management, Customs Management, Risk Management, and Electronic Compliance Reporting. He has an excellent understanding of SAP ERP logistics processes and their integration to global trade in a supply chain environment. His interests are networking, participating in conferences, and writing articles.

You may contact the author at ravi.kalluri@accenture.com.

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