Reversal of ITC taken in respect of Capital Goods

[BipadBhanjan dixit]

Our client has a Rolling Mill (RM)plant, supplies TMT to customers and also have captive consumption.Relevant ITC has been appropriately taken on Rolling Mills during the construction of such RM as per the Laws.

Query:

1-Whether, Rule 43 of the CGST Rule,2017 is applicable in this case because of the captive consumption?

2- whether the input tax credit in respect of Capital Goods used in Rolling Mill will be reversed to the extent of qty. captively consumed?

3-Whether Input tax credit in respect of Capital Goods consider only for goods or both goods and service, if needs to be reversed?

AI Summary

Input tax credit reversal for captive consumption: taxable final goods generally do not require ITC reversal under GST rules.
Rule 43 applies only where the conditions of Section 17 (use for non-business purposes or exempt supply) are met; absent those conditions, ITC on capital goods used in making taxable final goods consumed captively need not be reversed. Administrative guidance treats inputs used indirectly through captive processes as eligible for ITC when the final product is taxable. Civil structures like internal roads and boundary walls fall outside "plant and machinery" and credit for such immovable property is not admissible and should be capitalised unless they solely support plant and machinery.