Reversal of ITC on gold dore bars

[ROHIT GOEL]

Dear Sir,

As per rule 44A of the CGST Rules, 2017, if ITC taken on account of additional customs duty (equivalent to excise duty) paid at the time of importation of gold dore bars and the said gold dore bar/gold/jewellery made out of imported gold dore bar is held as of 1st July 2017, then ITC should be resricted to 1/6th.

In our client's case, they purchased Gold Cast Bars from an importer who imported Gold Dore Bars and thereafter manufactured cast bars from same. The importer has charged Basic excise [email protected]% at the time of sale and has mentioned on the invoice that the cast bars were made from imported dore bars. The officer has proposed that ITC in our case should be restricted to 1/6th as per the rule.

However, we believe since we have not taken ITC of 'additional customs duty paid at the time of import of gold dore bars' but of 'excise duty at the time of acquisition of cast bars' the Rule would not be applicable in our case. Is our view correct? And is there any other view preferred by the experts?

AI Summary

Debate Over ITC Reversal on Gold Dore Bars: Rule 44A's Applicability Questioned Under GST. Clarification Sought. A discussion was initiated regarding the reversal of Input Tax Credit (ITC) on gold dore bars under the Goods and Services Tax (GST) framework. The query focused on whether ITC should be restricted to 1/6th as per Rule 44A of the CGST Rules, 2017, when excise duty is paid on gold cast bars made from imported gold dore bars. The respondent clarified that additional customs duty and basic central excise duty are distinct, suggesting that the rule might not apply in this case. The respondent advised obtaining written confirmation from the department and referenced case laws for further understanding.