RCM on Metal Scrap

[VENU K]

Notification 6/2024 has made RCM applicable for Metal Scrap (Chapters 72 to 81). Chapters 72 to 81 talks about different metals like Iron and Steel, Articles of Iron and Steel, Copper and Articles, Nickel and Articles, Aluminium, Lead, Zinc, Tin and other base metals.

Now the question is what will be the RCM liability in the following situations when a registered dealer purchases the following articles from an unregistered customer.

1. Old washing machine in exchange by a washing machine dealer

2. Old gas stove in exchange for a new one by an LPG dealer

3.Old Computer by a computer dealer in exchange

I understand that Scrap is defined under GST tariff Chapter 72

Waste and scrap means

1.All metal waste and scrap

2. Metal goods definitely not usable as such because of breakage, cutting up, wear and other reasons.

AI Summary

Reverse charge mechanism on metal scrap applies when items are sold as scrap by unregistered suppliers, not when sold as usable second hand goods.
Notification 6/2024 brings metal scrap under the reverse charge mechanism where registered dealers purchase scrap from unregistered suppliers; the key test is whether the item is metal scrap (metal waste or goods no longer usable) or a second hand usable good, with classification determined by the item's condition, trade practice, and the nature of the outward supply.