Steel Scrap Import + Alang Shipbreaking + Section 194Q TDS Reconciliation

An Indian Electric Arc Furnace based specialty-steel producer procuring HSN 7204 melting-grade steel scrap across three source streams — international CIF import from Turkey (Iskenderun, Aliaga), USA (east and west coast) and Middle East (Jebel Ali, Sohar); domestic Alang ship-recycling facility scrap from Recycling of Ships Act 2019 registered breakers at Alang (Bhavnagar Gujarat) which is the world’s largest ship-recycling yard producing approximately 2.0-2.5 million tonnes usable steel scrap annually from approximately 150-200 ships broken; and domestic scrap aggregators feeding the melt shop — sits under a five-layer cost and tax reconciliation stack. The first layer is the HSN 7204 GST classification at 18 percent (reduced from 28 percent following the 25th GST Council meeting December 2017 with effect from 25 January 2018) with regular Input Tax Credit utilisation because input and output GST rates match at 18 percent (Rule 89(5) inverted-duty-structure refund not applicable). The second layer is the Basic Customs Duty 2.5 percent plus Social Welfare Surcharge 10 percent on BCD plus IGST 18 percent stack on the imported scrap fraction (with subsequent IGST reclaim as ITC in GSTR-3B against the output GST on downstream steel manufacture). The third layer is the Section 194Q buyer-side TDS at 0.1 percent on the aggregate purchase from each seller above fifty lakh rupees per previous year, applicable to Alang shipbreakers and domestic aggregators. The fourth layer is the Section 206C(1)(vi) seller-side TCS at 1 percent on scrap sale, mutually exclusive with Section 194Q per CBDT Circular No. 13/2021 dated 30 June 2021 (Section 194Q prevails where both apply on the same transaction; the seller does not collect TCS). The fifth layer is the Section 195 working on the foreign scrap yard remittance under the applicable DTAA business-profits article treatment (typically no Permanent Establishment in India for a Turkey, USA or Middle East scrap yard, therefore no withholding under most DTAAs; Form 15CA and Form 15CB certification for the AD Category-I bank remittance), combined with the Ind AS 2 landed cost cascade loading each source stream separately before blending at the melt shop and the Ship Recycling Facility Plan plus Ship Recycling Plan plus Inventory of Hazardous Materials audit trail from every Alang supplier registered under the Recycling of Ships Act 2019 and the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships 2009. The reconciliation discipline that stitches source-tagged scrap tonnage to plant-gate landed cost per tonne to blended weighted-average melt-shop scrap cost to Section 194Q TDS deposit per seller to Section 206C mutual-exclusion tag to Bill of Entry and customs IGST ITC and to the Ship Recycling Facility Plan audit trail is the subject of this steel scrap import Alang shipbreaking HSBI TDS Section 194Q walkthrough.

The reconciliation in one paragraph

An Indian Electric Arc Furnace specialty-steel producer must capture every rupee of the five-layer scrap-procurement cost and tax stack — HSN 7204 GST classification with regular ITC utilisation on domestic supply and IGST-paid-at-customs ITC on the imported fraction; Basic Customs Duty plus Social Welfare Surcharge plus IGST on the imported fraction with Bill of Entry reconciliation to ICEGATE; Section 194Q buyer-side TDS at 0.1 percent per seller above the fifty-lakh threshold; Section 206C(1)(vi) mutual-exclusion tag per Alang shipbreaker invoice per CBDT Circular 13/2021; and Section 195 working on the foreign scrap yard remittance with Form 15CA/15CB — against the certified source-tagged scrap flow from the yard or port to the melt shop crucible, and load the per-tonne cost through a source-separated Ind AS 2 landed cost cascade before blending at the melt shop to produce the weighted-average scrap cost per tonne feeding the downstream billet, ingot, wire rod, bar, rod, structural, sheet and plate inventory carrying value under Ind AS 2. The core reconciliation surface is a per-plant-per-month source-tagged scrap procurement ledger keyed on the Alang shipbreaker Document of Authorisation for Ship Recycling reference for the Alang stream, the Bill of Entry number for the international import stream and the aggregator PAN for the domestic aggregator stream. The ledger holds the tonnage received into inventory at the plant weighbridge, the invoice value, the ex-yard or CIF price, freight, port handling, inland transport and unloading to compute the plant-gate landed cost per tonne separately for each source stream, the Section 194Q TDS working per seller with the fifty-lakh cumulative previous-year threshold and the 0.1 percent deposit against the seller’s PAN with monthly Form 26Q filing, the Section 206C(1)(vi) mutual-exclusion tag per Alang shipbreaker invoice, the Section 195 working on the foreign scrap yard remittance with DTAA article treatment and Form 15CA/15CB certification via the AD Category-I bank, the Customs BCD + SWS + IGST computation for each imported consignment reconciled to the Bill of Entry and the subsequent GSTR-3B IGST-at-customs ITC claim, the DASR + SRP + IHM audit trail from every Alang dispatch and the GSTR-2B reconciliation against domestic supplier invoices. Every material deviation between weighbridge scrap tonnage and invoice tonnage, between Section 194Q cumulative aggregate and the fifty-lakh threshold, between Section 206C mutual-exclusion tag and the buyer’s Section 194Q eligibility, between Section 195 remittance and the DTAA business-profits article treatment, between Bill of Entry customs IGST and the GSTR-3B ITC claim, or between Alang dispatch and the DASR + SRP audit trail is flagged as a month-end break for the plant CFO, the plant procurement head, the plant Company Secretary and the statutory auditor.

What the scenario looks like in India — a Sunflag Bhandara EAF specialty-steel persona

The illustrative persona for this walkthrough is a Tier-2 Indian Electric Arc Furnace based specialty-steel producer operating a 380,000 tonnes per annum scrap-fed EAF plus continuous-casting billet caster plus long-product rolling mill configuration in central or western Maharashtra (illustrative persona: Sunflag Iron and Steel at Bhandara district Maharashtra with approximately 400,000 tonnes per annum specialty long-product capacity plus captive iron ore mine at Belgaum, or Kalyani Steel at Chakan Pune Maharashtra with approximately 350,000 tonnes per annum specialty-steel capacity, or Mukand Iron and Steel at Kalwe Thane Maharashtra plus Ginigera Karnataka specialty-steel operations). The plant runs a 100 percent scrap-fed EAF melting shop route (unlike the integrated Blast Furnace plus Basic Oxygen Furnace route that runs on iron ore plus coking coal documented in the blast furnace basic oxygen furnace electric arc furnace process steel reconciliation Wave 2 sibling), producing specialty long products (spring steel, bearing steel, cold-heading quality wire rod, alloy steel bar, forging quality bloom) sold to automotive OEMs, railways, defence and general engineering customers.

The annual scrap procurement of 380,000 tonnes for a 380,000 tonnes per annum EAF operational cadence (approximately 1.00 tonne scrap per tonne liquid steel at approximately 92 percent metallic yield at the EAF) is split approximately across three source streams. The Alang shipbreaking stream contributes approximately 65,000 tonnes annual at an illustrative ex-yard price of Rs 42,000 per tonne (aggregating to approximately Rs 273 crore annual purchase value) — sourced from safe illustrative Alang shipbreakers such as Priya Blue Industries, PBI Metallurgy, Kalthia Ship Breaking and Leela Ship Recycling within the broader GSMB (Gujarat Shipbuilders and Metal Breakers) cluster of yards at Alang (Bhavnagar Gujarat). The international scrap import stream contributes approximately 220,000 tonnes annual at an illustrative CIF USD 380 per tonne from Turkey (Iskenderun, Aliaga), USA (east and west coast) and Middle East (Jebel Ali, Sohar) origin — aggregating at an INR-USD exchange rate of Rs 83 per USD to approximately Rs 693 crore annual purchase value inclusive of BCD 2.5 percent plus SWS 10 percent on BCD plus IGST 18 percent (the IGST fraction is subsequently reclaimed as ITC). The domestic scrap aggregator stream contributes approximately 95,000 tonnes annual at an illustrative ex-yard price of Rs 40,000 per tonne (aggregating to approximately Rs 380 crore annual purchase value) — sourced from safe illustrative aggregators such as BLK Scrap and Hindustan Recyclers plus regional aggregators in the Bhandara / Nagpur / Nashik / Mumbai / Ahmedabad clusters. Every one of these three source streams runs the HSN 7204 GST classification at 18 percent, the Section 194Q buyer-side TDS at 0.1 percent per seller above the fifty-lakh threshold (subject to Section 206C mutual-exclusion for the domestic streams and Section 195 DTAA treatment for the international stream), and the Ind AS 2 landed cost cascade documented here.

The regulatory overlay — Recycling of Ships Act 2019, Hong Kong Convention 2009, Section 194Q, Section 206C, Section 195, Customs Tariff Act 1975 and Ind AS 2

Seven regulatory anchors govern an Indian Electric Arc Furnace specialty-steel producer’s month-end scrap procurement reconciliation packet. The Recycling of Ships Act 2019 read with the Recycling of Ships Rules 2020 (notified 24 November 2020) anchors the compliance regime for every Alang ship-recycling facility supplying HSN 7204 melting-grade scrap to downstream Indian buyers. The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships 2009 (ratified by India on 28 November 2019, entered into force globally on 26 June 2025) anchors the Ship Recycling Facility Plan plus Ship-specific Recycling Plan plus Inventory of Hazardous Materials regime that every Alang facility must operate. Section 194Q of the Income-tax Act 1961 (inserted by the Finance Act 2021 with effect from 01 July 2021) anchors the buyer-side TDS at 0.1 percent on the aggregate purchase from each seller above the fifty-lakh threshold per previous year. Section 206C(1)(vi) of the Income-tax Act 1961 anchors the seller-side TCS at 1 percent on scrap sale, subject to the CBDT Circular No. 13/2021 dated 30 June 2021 mutual-exclusion rule that turns off the seller’s TCS where Section 194Q applies on the same transaction. Section 195 of the Income-tax Act 1961 anchors the foreign scrap yard remittance treatment under the applicable DTAA business-profits article. The Customs Tariff Act 1975 First Schedule Chapter 72 (Iron and Steel) HSN 7204 (Ferrous waste and scrap) anchors the BCD 2.5 percent plus SWS 10 percent on BCD plus IGST 18 percent stack on the imported fraction. Ind AS 2 (Companies (Indian Accounting Standards) Rules 2015) anchors the source-tagged landed cost cascade before blending at the melt shop.

The Recycling of Ships Act 2019 operationalises the Hong Kong Convention in India. Every ship-recycling facility at Alang must obtain a Document of Authorisation for Ship Recycling (DASR) from the Directorate General of Shipping or the Gujarat Maritime Board. Every recycling operation requires an approved Ship Recycling Facility Plan (SRFP) documenting facility-level policies on health, safety, environment, hazardous material, waste and emergency preparedness; a ship-specific Ship Recycling Plan (SRP) prepared before beaching using the Inventory of Hazardous Materials (IHM) as input; and a certified IHM supplied by the ship owner. For every HSN 7204 melting-grade scrap dispatch to a downstream Electric Arc Furnace specialty-steel buyer, the shipbreaker must supply the tax invoice with HSN 7204 classification at GST 18 percent, the weighbridge slip, the DASR reference, the SRP reference of the specific ship broken (linking the scrap batch to the source vessel) and the vehicle e-way bill. The downstream buyer’s statutory auditor cross-checks the DASR + SRP + IHM audit trail during the annual audit — an Electric Arc Furnace specialty-steel producer buying from an unregistered Alang breaker exposes itself to a Central Pollution Control Board hazardous-waste query and a supply-chain traceability query from downstream EU importers under CBAM traceability requirements for the scrap fraction in the steel embedded-emissions computation. The CBAM steel industry EU export carbon border adjustment mechanism reconciliation Wave 2 cornerstone documents the EU importer scrap-fraction traceability requirement that ties back to the Alang DASR + SRP audit trail.

The Section 194Q buyer-side TDS at 0.1 percent applies to every buyer whose previous-year turnover exceeded ten crore rupees, on the aggregate purchase from each seller above the fifty-lakh-rupees threshold per previous year. For a 380,000 tonnes per annum EAF specialty-steel plant with turnover well above ten crore, every Alang shipbreaker and every domestic scrap aggregator whose annual supply crosses fifty lakh crosses the Section 194Q perimeter. Section 206C(1)(vi) applies to the seller side on scrap sale at 1 percent. Both apply on the same transaction. CBDT Circular No. 13/2021 paragraph 4.9 resolves the overlap — Section 194Q prevails; the seller does not collect Section 206C TCS. The Section 194Q on iron ore purchase from mining lease for a steel plant Wave 1 sibling documents the identical Section 194Q mechanic on the iron ore side that transfers directly to scrap steel with only the seller identity differing. For the international scrap import stream, Section 194Q does not apply on the foreign remittance leg (the seller is a non-resident and Section 194Q applies only to purchases from resident sellers) — Section 195 applies on the remittance instead. For most Turkey, USA and Middle East scrap yards without a Permanent Establishment in India, the DTAA business-profits article precludes withholding; Form 15CB certification by a Chartered Accountant and Form 15CA online filing preserve the audit trail for the AD Category-I bank remittance.

The Customs Tariff Act 1975 HSN 7204 stack on the imported fraction is: BCD 2.5 percent (standard rate) on the assessable value (CIF plus 1 percent loading), plus SWS 10 percent on the BCD, plus IGST 18 percent on the (assessable-value plus BCD plus SWS) base. For an illustrative CIF USD 380 per tonne consignment at Rs 83 per USD, the assessable value is Rs 31,540 per tonne, BCD adds Rs 788 per tonne, SWS adds Rs 79 per tonne and IGST adds Rs 5,833 per tonne — producing a customs-cleared landed cost of Rs 38,240 per tonne excluding IGST plus a Rs 5,833 per tonne IGST that is subsequently claimed as ITC in GSTR-3B against the output GST on downstream steel. Rule 89(5) inverted-duty-structure refund is not applicable because the input GST rate on scrap (18 percent) equals the output GST rate on downstream steel (18 percent) — regular ITC utilisation under Section 16 of the CGST Act 2017 applies. This is unlike the Chapter 27 coking coal position where Notification 09/2022-Central Tax (Rate) blocks the Rule 89(5) refund on coking coal input feeding steel output; the coking coal import IGST Chapter 27 Notification 09/2022 reconciliation Wave 1 sibling documents the specific blocked position that does not apply to scrap because scrap and downstream steel carry the same GST rate.

Ind AS 2 loads each source stream’s plant-gate landed cost separately into a source-tagged scrap inventory ledger before blending at the melt shop. The Section 194Q TDS at 0.1 percent and the Section 206C TCS at 1 percent are taxes deducted or collected on behalf of the seller or buyer respectively — they are not incremental costs to the buyer under Ind AS 2 and are therefore not loaded into inventory carrying value. The blended weighted-average scrap cost per tonne at the melt shop then feeds the downstream billet, ingot, wire rod, bar, rod, structural, sheet and plate inventory carrying value cascade under the same Ind AS 2 weighted-average cost formula.

A worked example — Sunflag Bhandara 380,000 TPA EAF specialty-steel plant FY 2026-27 illustrative annual close

Illustrative — the following figures represent the operating pattern of a Tier-2 Indian Electric Arc Furnace based specialty-steel producer procuring scrap across Alang shipbreaking, international CIF import and domestic aggregator streams at approximately 380,000 tonnes per annum scrap requirement. Public disclosures by listed Indian specialty-steel producers do not reveal per-plant source-stream tonnage split or per-tonne landed cost in the granularity below; cross-verify against the current LME scrap benchmark, current INR-USD exchange rate and current Customs Tariff notification schedule before action. The BCD 2.5 percent, SWS 10 percent on BCD, IGST 18 percent, Section 194Q 0.1 percent, Section 206C 1 percent and Ind AS 2 landed cost cascade used below are the statute rates as at drafting; verify the current position before use.

The Sunflag Bhandara EAF specialty-steel plant closes its FY 2026-27 annual scrap procurement position on a 380,000 tonnes per annum operational cadence. The annualised full-year picture is:

The Section 194Q buyer-side TDS working aggregates each Alang shipbreaker’s cumulative previous-year purchase against the fifty-lakh threshold — for the Priya Blue Industries illustrative Rs 173 crore annual aggregate purchase (a subset of the total Rs 273 crore Alang stream), Section 194Q at 0.1 percent on (Rs 173 crore less Rs 50 lakh) = 0.1 percent of Rs 172.5 crore = approximately Rs 17.25 lakh annual TDS deposited monthly against the Priya Blue PAN through Form 26Q. The same Section 194Q working applies for each other Alang shipbreaker (PBI Metallurgy, Kalthia, Leela) and each domestic aggregator (BLK Scrap, Hindustan Recyclers, regional yards) crossing the fifty-lakh threshold. The Section 206C(1)(vi) seller-side TCS at 1 percent is turned off on every one of these transactions per CBDT Circular 13/2021 because Section 194Q applies from the buyer side. For the international CIF import stream, Section 195 applies on the foreign remittance to the Turkey / USA / Middle East scrap yard — the applicable India-Turkey DTAA business-profits article (typically Article 7) precludes withholding where the yard has no Permanent Establishment in India; Form 15CB is obtained from a Chartered Accountant certifying the no-withholding position and Form 15CA is filed online before the AD Category-I bank remits the CIF value via SWIFT.

Common reconciliation breakages

Five breakages recur across Indian Electric Arc Furnace specialty-steel producers running the multi-source scrap procurement stack.

• Section 194Q buyer-side TDS aggregate threshold miscomputed per seller — cumulative previous-year purchase not tracked correctly and the fifty-lakh threshold either crossed silently without TDS deposit or crossed prematurely with TDS deposit before the fifty-lakh mark. Section 194Q operates on the aggregate purchase from each seller above fifty lakh rupees per previous year, deducted at 0.1 percent on the incremental purchase above the threshold. A plant procurement team tracking Section 194Q TDS on an invoice-level basis without a running cumulative-per-seller-per-previous-year aggregate silently misses the threshold crossing for a seller whose cumulative crosses fifty lakh only in month 8 of the previous year, or over-deducts TDS on the initial invoices of a seller whose full-year cumulative never reaches fifty lakh. Reconciliation discipline: a seller-level running cumulative previous-year aggregate is maintained in the scrap procurement ledger, with a threshold-crossing flag triggering the 0.1 percent TDS deduction on the incremental purchase from the point of threshold crossing onwards. Terra Insight’s reconciliation failure mode analysis for India design pillar frames the threshold-crossing check discipline that surfaces this failure at the plant level rather than at the year-end tax return filing.

• Section 206C(1)(vi) mutual-exclusion tag not applied per CBDT Circular 13/2021 — Alang shipbreaker collects TCS at 1 percent in the invoice despite the buyer being a Section 194Q deductor, or the buyer books the TCS as a receivable that the shipbreaker’s TDS certificate never generates. CBDT Circular No. 13/2021 dated 30 June 2021 paragraph 4.9 clearly provides that where Section 194Q applies from the buyer side, the seller shall not collect Section 206C(1)(vi) TCS on the same transaction — the buyer’s 0.1 percent TDS is the operative deduction and the seller’s 1 percent TCS is turned off. An Alang shipbreaker’s month-end sales register that does not scrub for Section 194Q eligible buyers (buyers with previous-year turnover above ten crore rupees whose cumulative from that shipbreaker exceeded fifty lakh) leaves TCS at 1 percent collected in the invoice — the buyer’s books then carry a TCS receivable of 1 percent of the transaction that the shipbreaker’s TCS return (Form 27EQ) never generates against the buyer’s PAN because the shipbreaker was not required to collect. The mirror image — an Alang shipbreaker correctly turning off Section 206C for a Section 194Q buyer, and the buyer failing to deduct Section 194Q on the same transaction — leaves both TDS and TCS uncollected and the transaction outside the tax-at-source perimeter altogether, exposing both parties to a later assessment. Reconciliation discipline: the Section 206C mutual-exclusion tag is applied at each Alang shipbreaker invoice on receipt at the buyer end — the buyer confirms Section 194Q eligibility on the transaction and either accepts the shipbreaker’s TCS entry (if buyer is not Section 194Q eligible) or challenges the shipbreaker’s TCS entry (if buyer is Section 194Q eligible) with a request to reissue the invoice sans TCS. The Section 194Q on iron ore purchase from mining lease for a steel plant Wave 1 sibling documents the identical Section 194Q versus Section 206C mutual-exclusion workflow on the iron ore side that transfers directly to scrap steel.

• Bill of Entry customs IGST paid at ICEGATE not reconciled to the GSTR-3B ITC claim — IGST paid on scrap import silently unclaimed or claimed in the wrong month. The IGST paid at customs on every imported scrap consignment is reflected in the ICEGATE Bill of Entry data flowing into GSTR-2B under the “Import of goods” bucket. The plant GST team’s monthly GSTR-3B ITC claim must match each Bill of Entry to the customs IGST payment challan and claim the ITC in the correct month per Section 16(4) of the CGST Act 2017 (deadline: earlier of the November following the financial year end or the annual return filing date). A mismatch — Bill of Entry filed in month M but ITC claim in GSTR-3B for month M+3 or later than the Section 16(4) deadline — either delays the ITC utilisation and blocks the working capital in the cash ledger, or worse, misses the Section 16(4) window entirely and forfeits the ITC permanently. Reconciliation discipline: the monthly GSTR-2B “Import of goods” section is reconciled invoice-by-invoice to the plant’s Bill of Entry register and the ITC claim in GSTR-3B is booked in the correct month. The Section 16(4) ITC exposure calculator tool computes the incremental ITC forfeiture exposure at any given month against the Section 16(4) deadline.

• Alang DASR plus SRP plus IHM audit trail not preserved — HSN 7204 scrap batch received without traceability to a Recycling of Ships Act 2019 registered facility and a specific ship broken, exposing the buyer to a Central Pollution Control Board hazardous-waste query and a downstream EU CBAM traceability query. The Recycling of Ships Act 2019 read with the Recycling of Ships Rules 2020 requires every Alang ship-recycling facility to obtain a Document of Authorisation for Ship Recycling (DASR) and to prepare a Ship Recycling Facility Plan (SRFP) plus a ship-specific Ship Recycling Plan (SRP) plus a certified Inventory of Hazardous Materials (IHM) for every ship broken. A downstream Electric Arc Furnace specialty-steel buyer purchasing HSN 7204 melting-grade scrap from an unregistered Alang breaker (no DASR) or from a registered breaker without receiving the SRP reference and IHM certification exposes itself to: (a) a Central Pollution Control Board hazardous-waste compliance query on the scrap batch’s hazardous-material content (asbestos, PCB, ozone-depleting substances, heavy metals in paint, oil residues); (b) a downstream EU importer under CBAM traceability requirement on the scrap fraction in the steel embedded-emissions computation; and (c) a statutory auditor query on supply-chain due diligence. Reconciliation discipline: every Alang shipbreaker in the plant’s approved vendor master carries the current DASR reference and a monthly refresh of the SRP + IHM audit trail for every dispatch batch is preserved in the plant’s regulatory documentation archive for at least seven years.

• Section 195 foreign scrap yard remittance workflow gap — Form 15CA / 15CB not filed before the AD Category-I bank remittance, or DTAA business-profits article treatment mis-applied and unnecessary withholding deducted on the CIF import. Section 195 of the Income-tax Act 1961 requires the payer of any sum chargeable under the Act to a non-resident to deduct tax at source. For a CIF import of scrap steel from a Turkey / USA / Middle East scrap yard, the sum is business profits of the foreign yard and the applicable DTAA business-profits article (India-Turkey Article 7, India-USA Article 7, India-UAE Article 7, India-Oman Article 7) precludes withholding where the yard has no Permanent Establishment in India — which is typically the case for a scrap yard that only exports. The plant procurement team’s failure to file Form 15CA online and obtain Form 15CB from a Chartered Accountant certifying the no-withholding position before the AD Category-I bank remittance triggers the AD bank to either reject the remittance or apply a conservative withholding at Section 195 rate. Reconciliation discipline: every CIF import remittance follows a standard Form 15CB obtain plus Form 15CA file plus AD Category-I bank remit sequence, with the DTAA article treatment documented in the CA certificate and the audit trail preserved with the Bill of Entry and customs IGST payment challan.

How a reconciliation platform handles this

A purpose-built reconciliation platform ingests every scrap procurement invoice from every Alang shipbreaker, every Bill of Entry from every international CIF import consignment, every domestic scrap aggregator invoice, every plant weighbridge tonnage record, every customs BCD + SWS + IGST payment challan, every ICEGATE Bill of Entry data feed into GSTR-2B, every Section 194Q buyer-side TDS deposit challan and Form 26Q filing, every Section 206C mutual-exclusion tag per invoice per CBDT Circular 13/2021, every Section 195 Form 15CA and Form 15CB certification for each foreign remittance, every Alang shipbreaker Document of Authorisation for Ship Recycling reference and Ship Recycling Plan and Inventory of Hazardous Materials audit trail, and every GSTR-2B match against the domestic supplier invoice register against a per-plant-per-month source-tagged scrap procurement ledger keyed on the Alang shipbreaker DASR reference for the Alang stream, the Bill of Entry number for the international import stream and the aggregator PAN for the domestic aggregator stream. The platform tags each entry at capture with the applicable regulatory anchor (Recycling of Ships Act 2019 registration for the Alang stream, Customs Tariff Chapter 72 HSN 7204 for the imported stream, Section 194Q buyer eligibility for TDS deduction, Section 206C mutual-exclusion under CBDT Circular 13/2021, Section 195 DTAA article treatment for the foreign remittance) and the Ind AS 2 loading tag (source stream keying — Alang plant-gate landed cost or import plant-gate landed cost or domestic aggregator plant-gate landed cost — before blending at the melt shop). Standing dashboard controls surface any Section 194Q cumulative per-seller aggregate approaching or crossing the fifty-lakh threshold with a TDS deduction trigger, any Section 206C entry in an Alang shipbreaker invoice for a Section 194Q eligible buyer requiring invoice challenge and reissue, any Bill of Entry with customs IGST paid but not yet claimed as ITC in GSTR-3B and approaching the Section 16(4) deadline, any Alang dispatch received without a DASR + SRP + IHM audit trail flagged for regulatory documentation follow-up, any Section 195 foreign remittance pending Form 15CB certification, and any GSTR-2B mismatch on domestic supplier invoices requiring supplier follow-up or ITC reversal. Match-rate improvement of 51 to 88 percent on the scrap-procurement-invoice-to-weighbridge-tonnage reconciliation, the Section 194Q per-seller-aggregate-to-Form-26Q reconciliation, the Bill-of-Entry-to-GSTR-3B-ITC-claim reconciliation, the Alang-DASR-to-shipbreaker-invoice reconciliation and the GSTR-2B-to-domestic-supplier-invoice reconciliation, combined with an ISO 27001:2022 posture and DPDP Act 2023 aligned data handling for regulator-facing submissions to the Directorate General of Shipping, the Gujarat Maritime Board, the Central Pollution Control Board on hazardous-waste compliance, the customs post-clearance audit team, the Central Board of Indirect Taxes and Customs GST audit team, the Income-tax Officer on Section 194Q and Section 195 assessments, and the downstream EU importer under CBAM scrap-fraction traceability, is what makes the platform an infrastructure investment for a Tier-2 Indian Electric Arc Furnace based specialty-steel producer running a multi-source multi-stream scrap procurement footprint. The commercial pillar for the steel cluster is Steel reconciliation software India; the broader authority for the platform is reconciliation software India.

Cross-cluster bridges and where to read next

The scrap procurement mechanic documented here anchors Steel Wave 3 CLOSER Theme 16 and closes the manufacturing programme at 218 articles across six clusters. The Section 194Q buyer-side TDS mechanic ties directly into the Section 194Q on iron ore purchase from mining lease for a steel plant Wave 1 sibling with only the seller identity (mining lease holder for iron ore versus ship-recycling facility for scrap) differing. The Customs BCD + IGST stack on imported scrap ties directly into the coking coal import IGST steel plant Chapter 27 Notification 09/2022 reconciliation Wave 1 sibling with the important difference that scrap under HSN 7204 does not carry the Chapter 27 Notification 09/2022 Rule 89(5) refund block that applies to coking coal (scrap and downstream steel carry the same 18 percent GST rate, so regular ITC utilisation applies with no separate IDS refund workflow required). The Electric Arc Furnace scrap-fed melting route documented here is the operational counterpart to the blast furnace basic oxygen furnace electric arc furnace process steel reconciliation Wave 2 sibling which documents the integrated BF-BOF route running on iron ore plus coking coal. The Alang DASR + SRP + IHM audit trail ties into the downstream CBAM steel industry EU export carbon border adjustment mechanism reconciliation Wave 2 cornerstone where the EU importer requires scrap-fraction traceability in the steel embedded-emissions computation. The DGMS mine safety compliance sibling for iron ore mining sits in DGMS mine safety compliance for iron ore and steel integrated mining Wave 3 CLOSER, and the CSR spend compliance sibling in Section 135 CSR for a steel plant Wave 3 CLOSER. The base metals Wave 3 CLOSER siblings — zinc and lead smelter MMDR royalty cost reconciliation and copper cathode and refinery reconciliation — run the parallel non-ferrous metals mechanic that transfers many controls (Section 194Q, Ind AS 2 landed cost, GSTR-2B ITC reconciliation) directly to the scrap-fed EAF route.

The variance-classification and operational reconciliation methodology framework — mapping each of the five layers of the scrap procurement cost and tax stack to a reconciliation surface, holding the Section 194Q buyer-side aggregate threshold check as a standing control, applying the Section 206C mutual-exclusion tag per CBDT Circular 13/2021, reconciling the Bill of Entry customs IGST to the GSTR-3B ITC claim, cross-checking the Alang DASR + SRP + IHM audit trail, and testing the Section 195 DTAA article treatment on the foreign remittance — sits in reconciliation failure mode analysis and reconciliation playbook for monthly close. The seven-family human-error taxonomy and trust posture on coverage limits sits in human errors detection envelope. Operational lookups sit in the Section 393 payment code finder for the correct Section 194Q payment code on scrap purchase (payment code 1031 for TDS on purchase of goods) and the Section 16(4) ITC exposure calculator for the parallel GST input tax credit exposure that runs alongside the customs IGST and domestic supplier ITC on the scrap procurement chain.

The five FAQs below address the operational questions Indian Electric Arc Furnace specialty-steel producer CFOs, plant procurement heads, plant Company Secretaries on the AD Category-I bank remittance side, statutory auditors, Directorate General of Shipping inspectors on Alang compliance, customs post-clearance auditors on the imported scrap fraction, Central Board of Indirect Taxes and Customs GST auditors on the ITC and mutual-exclusion positions, and Income-tax Officers on the Section 194Q buyer-side TDS and Section 195 foreign remittance assessments ask most often when building the monthly scrap procurement reconciliation packet under the seven regulatory anchors — Recycling of Ships Act 2019 (Alang DASR + SRP + IHM), Hong Kong International Convention 2009 (SRFP regime), Section 194Q (buyer-side 0.1 percent TDS on aggregate above fifty lakh per seller), Section 206C(1)(vi) (seller-side 1 percent TCS on scrap, mutually excluded per CBDT Circular 13/2021), Section 195 (foreign scrap yard remittance under DTAA business profits), Customs Tariff Act 1975 Chapter 72 HSN 7204 (BCD 2.5 percent plus SWS 10 percent on BCD plus IGST 18 percent) and Ind AS 2 (source-tagged landed cost cascade before melt shop blending).

Terra Insight Editorial Team Reconciliation Infrastructure

Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →

Published 30 July 2026

Domain expertise

TDS Reconciliation GST Input Credit Platform Settlements NACH Batch Matching Bank Reconciliation Form 26AS Matching ERP Integrations Enterprise Finance Ops

Reviewed by

NK

Navin Krishnan

Managing Director & Founder — Terra Insight

Ex Amazon India · Intuit QuickBooks · Tata nexarc

ISO 27001:2022 Patent Pending Incorporated 2024