EXPORT SECOND HAND CAPITAL GOODS

[SHIV MISHRA]

Dear All,

I worked in manufacturing company. recently we export second hand machine which purchased pre GST regime,whether its required to reverse ITC utilised at time of purchase,if Yes than how much ITC to be reverse in such case.Can anyone provide GST rules on above issue.

[KASTURI SETHI]

No reversal is required. Exported goods are treated as duty-paid goods., . Credit is allowed for making zero rated supply. Zero-rate is also a rate of duty for the purpose of export. Read Section 16 of IGST Act, 2017. A case law pertaining to pre-GST era is appended below:

2016 (335) E.L.T. 104 (Tri. - Mumbai) = 2016 (3) TMI 395 - CESTAT MUMBAI COMMISSIONER OF CENTRAL EXCISE, PUNE-II Versus SUESSAN ASIA PVT. LTD.

 

 

[DR.MARIAPPAN GOVINDARAJAN]

The reply by Shri Sethi is supported by a case law. Very good.

[HNA CharteredAccountants]

Section 18 (6) read with CGST Rules require reversal of credit or payment of tax on transaction value, where the supplier has taken Input Tax Credits. The work input tax credit has been defined as credit of input tax (CGST/SGST/IGST/UTGST/cess charged under GST Act). Cenvat Credit availed in the pre GST regime cannot be said to be falling within the definition of Input Tax Credits. Also, there is no specific transitional provision requiring reversal of cenvat credit in case of goods purchased in pre GST regime but sold/discarded in post GST regime.

Irrespective of the above, when goods are exported outside India under claim of LUT, it falls within definition of 'zero rated supply' of goods and accordingly is not liable to GST.

Based on above, we are of the view that there is no GST liability on the export of such capital goods.

Regards,

Ashish

[YAGAY and SUN]

We duly endorse the view of Mr. Ashish.

[SHIV MISHRA]

Thanks Kasthuri & Ashish Sir for Advice.

AI Summary

Zero-rated supply of exported pre-GST capital goods does not require reversal of input tax credit.
Export of second-hand capital goods purchased pre GST does not require reversal of credit when exported post GST. Export under a Letter of Undertaking or as a zero rated supply is treated as duty paid and outside GST levy, and there is no transitional provision mandating reversal of pre GST cenvat credit into post GST input tax credit.