OEM Debit Note Register Template (FOMP, Sorting, Line-Stop, Warranty)

An OEM debit note is a charge raised by the OEM (Maruti, Tata, Mahindra, Bosch, etc.) against a supplier's invoice for deductions such as field-failure-of-material parts (FOMP), sorting and rework at the OEM line, line-stop penalty, warranty claims, quantity short-receipt, or quality rejection. The OEM either deducts the amount from the next payment cycle or expects the supplier to issue a GST credit note. The debit note is a commercial document — the GST treatment depends on whether the original supply value is being reduced (credit note required) or whether it is a separate compensation charge.

Standard reason codes across Indian OEMs include FOMP (field-failure-of-material parts under warranty policy), sorting (rework charges at the OEM line for mixed-grade or defective shipments), line-stop (penalty for halting OEM assembly line), warranty (field warranty claims passed back to the supplier), quantity (short-receipt against invoiced quantity), and quality (rejected parts at incoming inspection). Tracking these codes separately is essential for root-cause analysis, quarterly business reviews with the OEM, and feeding the supplier's own quality and operations dashboards.

Under Section 34 of the CGST Act, a GST credit note is required when the value of the original taxable supply is being reduced — for example, on quantity short-receipt, quality rejection at incoming inspection, or warranty replacement where the supplier accepts the deduction against the original invoice. Time limit: the credit note must be issued by 30 November following the end of the financial year in which the original supply was made, or before filing the relevant annual return, whichever is earlier. Pure compensation charges (line-stop penalty, sorting fees with no quantity change) may not require a credit note — book as a separate expense or compensation.

When a supplier contests a debit note, the OEM typically still withholds the payment, creating a working capital lock equal to the contested amount. The supplier should book the disputed amount as a contingent liability with a corresponding receivable, age the dispute, and track resolution. CARO 2020 requires disclosure of disputed amounts under statutory dues and trade receivables. A contested debit note that ages beyond 12 months without resolution should trigger a write-off decision under the supplier's credit policy. The register's days_open column is the input to that ageing analysis.

Yes. The register, sliced by reason code and OEM plant, produces the input data for the standard QBR slides — Pareto of debit-note value by reason, ageing of open disputes, plant-wise concentration, and trend of total deductions as a percentage of dispatched value. The accepted vs contested split shows commercial acceptance rate. The GST credit-note column shows compliance hygiene. Most tier-1 suppliers maintain this register at the part-number and plant level, then aggregate up for the OEM relationship review.