FI Steel Yield Calculator: Coil-to-Good-Parts Reconciliation under Rule 55

Free-issue steel is coil or sheet supplied by the OEM to a Tier 1 stamping supplier on a delivery challan under Rule 55 of the CGST Rules, without raising a tax invoice. Title to the steel remains with the OEM throughout — the supplier never owns it. The supplier converts the coil into stamped parts (door inners, B-pillars, brackets) and returns good parts, skeleton scrap, and end scrap to the OEM. The Rule 55 challan is the legal instrument that tracks ownership, and the supplier must reconcile coil-in against good-parts-out + scrap-returned at every closing — material balance gaps above the agreed dust/process loss band are treated as missing material and trigger GST liability under Schedule I of CGST Act as a deemed supply between distinct persons.

Yield varies materially by part geometry and blanking layout. Door inner panels typically run 65-70% yield because of the deep draw and the large skeleton frame. B-pillar reinforcements run 72-78%. Small brackets and reinforcement plates can hit 80-85% with nested blanking. The calculator above uses a single 70% reference band for simplicity, but the contractual yield norm must be read from the OEM's PPAP-approved process sheet for the specific part. Yield below 60% almost always indicates die wear, blanking layout drift, or scrap misclassification — not a real material loss — and should trigger a process audit before booking a write-off.

Skeleton scrap is the perforated lattice left after blanking — the negative of the part shape, generated continuously as the coil is processed. It is dense, clean, and commands a higher mill-grade price (typically ₹32-38/kg for HRC skeleton). End scrap is the unprocessed coil tail, edge trim, and off-cuts left at the end of a coil run. It is irregular, mixed-grade, and is sold at a lower defective-melting-scrap price (typically ₹25-30/kg). Both must be physically returned to the OEM under the Rule 55 challan reconciliation — the supplier cannot sell scrap from FI steel on its own account because it never owned the material.

When the OEM (not the supplier) sells the returned scrap to a recycler under the new Income Tax Act 2025, Section 394 TCS at 1% under payment code 1011 applies to the scrap sale value if the buyer's PAN-wise aggregate scrap purchase in the FY exceeds the threshold. The supplier does not collect TCS on FI scrap because the supplier is not the seller — the OEM is. However, if the contract permits the supplier to dispose of certain end-scrap categories on its own account (rare, but it happens for low-grade dust), then the supplier becomes the seller and Section 394 TCS at 1% applies on that supplier-initiated sale. The calculator surfaces the 1% TCS line so the OEM-side accounting team can cross-tally against the supplier's scrap return note.

If coil-in minus good-parts-out minus skeleton-returned minus end-returned exceeds the agreed dust/process loss band — typically 1.5% of coil input weight for HRC stamping — the gap is treated as missing FI material. Under Schedule I read with Section 7 of CGST Act, the supplier and the OEM are distinct persons (different GSTINs), and an unreturned movement of OEM-owned material to the supplier's premises becomes a deemed supply attracting GST at 18%. In addition, the missing material is recovered by the OEM through a debit note priced at the coil cost rate. The calculator's 'cost-equivalent of unreturned material' line computes this recovery exposure at the configured coil rate.