Today, the Superior Court of Justice (“STJ”) recognized the right of taxpayers to credit the ICMS derived from the acquisition of intermediate products necessary for the taxpayer's core activity, even if consumed or gradually worn out in the manufacturing process.

In the case under discussion (Embargos de Divergência em Agravo em Recurso Especial nº 1.775.781/SP), the Court of Justice of the State of São Paulo (TJSP) denied the taxpayer's request and prohibited the booking of ICMS credits on intermediate products not consumed instantly in the manufacturing process. However, the STJ reversed the decision and decided in favor of taxpayers, admitting ICMS credit relating to the acquisition of materials used in the manufacturing process, intermediate products, including those consumed or gradually worn out, as long as the need for their use to carry out the corporate object of the company, that is, its essentiality in relation to the core activity.

The specific case concerns a sugar mil plant that produces ethanol, sugar and energy, which seeks to recognize its right to ICMS credit on mills, electrodes, oils consumed in the production sector, bearings, cables, belts, among others. The process will now return to TJSP to analyze which intermediate products are essential to the sugar mill's corporate purpose for subsequent authorization to credit the correpondent ICMS.

The decision was unanimous by the 1st section of the STJ and must be observed by the entire Judiciary.

Based on the above, we recommend that interested taxpayers check whether they are taking advantage of ICMS credits on intermediate products and take legal action to ensure the right to recover the ICMS unduly collected in the last 5 years (updated?)

We remain at your disposal.

By Henrique Erbolato