Understanding the Processing of Excise-Exempt Consignments

In some instances, materials that you send to a subcontractor for processing and that you receive back from the subcontractor are not subject to excise tax. You track the movement of these materials by using consignments. You can create and track consignments by using purchase orders or work orders. Your business practices determine whether to use purchase orders or work orders to track the consignments. For work orders, you often associate a purchase order with the work order for items sent to subcontractors.