Goods manufactured under excise regime now written off

[Kaustubh Karandikar]

XYZ(Manufacturer) had transferred the unutilized CENVAT credit laying in balance as on July’17 to Electronic credit ledger under GST through TRAN – 1. They are holding certain manufactured stocks of excise regime which they now want to write off. Are they required to proportionately reverse the input tax credit since they had transferred the unutilized CENVAT credit through TRAN – 1 from Excise regime To GST regime?

[DR.MARIAPPAN GOVINDARAJAN]

Yes, they have to definitely reverse the same and the consequences also in GST transfer.

[Ganeshan Kalyani]

Dear Sir, one of the condition in transitional provision was that the duty paid stock should be sold as taxable under GST. Since, some stock is not sold yet, then input tax credit to that extend is not admissible.

[KASTURI SETHI]

I support the views of both experts.

AI Summary

Manufacturers must reverse input tax credit for unutilized CENVAT when transitioning to GST, per transitional provisions. A manufacturer transferred unutilized CENVAT credit to the GST regime via TRAN-1 and is now considering writing off certain manufactured stocks from the excise regime. The question posed was whether they need to proportionately reverse the input tax credit due to this transfer. The consensus among the respondents is that a reversal is necessary. One expert highlighted that under transitional provisions, unsold duty-paid stock should be treated as taxable under GST, implying that input tax credit for unsold stock is not admissible. Another respondent agreed with these assessments.