my client case, He has business of Mkka Pvva where he is using Makka as exempt
input and Packing Material as taxable item. Now he is making Makka Pavva out of
maize. Maize is exempt input. Out of this input he is yielding Makka Pavva as
Taxable item and its By product Churi animal feed which is exempt.
he is getting churri as by product and as it is exempt whether he is required
to reverse credit on Packing material proportion to Exempt sale of churi on
this packing material wholly used for makka pavva still he required to reverse
credit on proportional basis.
guide on the same
input are used for both taxable as well as exempted goods, the amount of credit shall be restricted to
so much of the input tax as is attributable to the said taxable supplies. The
credit that is attributable to exempted supplies must be reversed Whereas if
inputs are being used only for providing taxable supplies, no reversal shall be
made Therefore, if your client is using inputs for making only taxable
supplies, no reversal of ITC shall be made.