ITC reversal on compensation cess needed ?

[BIJO SCARIA]

When the government removes compensation cess on certain goods, I have stock lying as on the date of the rate change on which I had already paid compensation cess. I had also fully utilised the ITC of such cess before the change.

In this case, am I required to reverse the ITC of compensation cess which I had availed and already utilised?”

AI Summary

No ITC Reversal When Compensation Cess Withdrawn Prospectively If Credit Was Validly Availed And Fully Utilised On Stock When compensation cess is later removed, suppliers who validly availed and fully utilised ITC of that cess on stock purchased while the cess was leviable generally need not reverse the credit merely because the cess was withdrawn prospectively. Reversal obligations arise where input credit was wrongly taken, the supplies become exempt or used for non-business purposes, or specific statutory provisions require reallocation. Exported goods are treated differently and typically do not require cess-ITC reversal. Accumulated unrefunded cess balances remain a separate issue.