ITC Credit for Raw materials sold as Scrap

[JOHN SHANNEL]

Hello friends,

We had purchased raw materials for production of Finished goods. But due to change of sale plan i could not use the raw materials and sold the same as scrap. The scrap realization is 25% of the raw material value. Can i take ITC credit for these raw materials items under my normal business transaction? Please advice.

AI Summary

Input tax credit eligibility on raw materials sold as scrap depends on business use and absence of statutory reversal rules.
The discussion concludes that ITC is generally available on raw materials sold as scrap where the inputs were acquired in the course or furtherance of business and not lost or destroyed, because sale of scrap constitutes a supply generating output tax and nothing in the GST provisions expressly mandates proportionate denial of ITC in that factual scenario; however, divergent views invoke earlier excise rules, certain advance rulings, or factual distinctions (such as destruction of finished goods) that may lead to different conclusions.