TaxTMI 
TaxTMI 
Refund of unutilized input tax credit of compensation cess availed on inputs in case where the final product is not subject to the levy of compensation cess
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....er. [ Para 39 ] * The third proviso to sub-section (3) of section 54 of the CGST Act states that no refund of input tax credit shall be allowed * in cases where the supplier of goods or services or both avails of drawback in respect of Central tax. * It is clarified that if a supplier avails of drawback in respect of duties rebated under the Customs and Central Excise Duties Drawback Rules, 2017, he shall be eligible for refund of unutilized input tax credit of Central tax/ State tax/ Union Territory tax / Integrated tax/ Compensation cess. * It is also clarified that refund of eligible credit on account of State tax shall be available if the supplier of goods or services or both has availed of drawback in respect of Central tax. [ ....
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.... of the input tax credit of cess, only for the payment of cess on the outward supplies. [ Para 42 ] As regards the certain issues related to refund of accumulated input tax credit of compensation cess on account of zero-rated supplies made under Bond/Letter of Undertaking on which clarifications have been sought since GST roll out, the same have been examined and are clarified as below: [ Para 43 ] a) Issue: A registered person uses inputs on which compensation cess is leviable (e.g. coal) to export goods on which there is no levy of compensation cess (e.g. aluminium). For the period July, 2017 to May, 2018, no ITC is availed of the compensation cess paid on the inputs received during this period. ITC is only availed of the Central tax, ....
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....e same has actually been claimed, then the aggregate of the recomputed refund of compensation cess of the respective months would be admissible. However, the recomputed amount of eligible refund (of compensation cess) in respect of past periods, as aforesaid, would not be admissible in respect of consignments exported on payment of Integrated tax. This process would be applicable for application(s) for refund of compensation cess (not claimed earlier) in respect of the past period. b) Issue: A registered person uses coal for the captive generation of electricity which is further used for the manufacture of goods (say aluminium) which are exported under Bond/Letter of Undertaking without payment of duty. Refund claim is filed for accumulate....
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....erson. However, the registered person declares ₹ 100/- as 'Net ITC' and uses the same in calculating the maximum refund amount which works out to be ₹ 50/- (assuming that export turnover is half of total turnover). Since both the balance in the electronic credit ledger at the end of the tax period for which the claim of refund is being filed and the balance in the electronic credit ledger at the time of filing the refund claim is ₹ 50/- (assuming that no other debits/credits have happened), the common portal will proceed to debit ₹ 50/- from the ledger as the claimed refund amount. The question is whether the proper officer should sanction ₹ 50/- as the refund amount or ₹ 25/- (i.e. half of the IT....