TMI Blog2012 (2) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... debonding - a 100% EOU at the time of debonding can be allowed to migrate to EPCG Scheme provided it has positive NFE. However, while the rate of Customs duty chargeable on the capital goods imported under EPCG scheme has been prescribed under Notification No. 64/2008-Cus. issued under Section 25(1) of Customs Act, 1962 and the same along with the education cess is 3.09%, on Central Excise side, there is no such parallel notification issued under Section 5A of Central Excise Act, 1944, prescribing a similar concessional rate of duty in respect of capital goods supply under EPCG scheme. Prima facie in absence of such an Excise Exemption Notification, the EPCG rate prescribed under Customs Notification No. 64/2008-Cus. dated 9-5-2008 cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty on the duty free imported goods as per the provisions of Condition No. 8 of the Exemption Notification No. 22/2003-C.E. and Condition No. 8 of Notification No. 52/2003-Cus. In terms of these provisions, at the time of debonding the duty on the capital goods is required to be paid on the depreciated value calculated at the depreciation rates specified in this Notification and at the rate of duty in force on the date of debonding or clearance, as the case may be. Para 6.18 (d) of the Exim Policy in force permitted a 100% EOU at the time of debonding to migrate to Export Promotion Capital Goods Scheme (EPCG) provided the EOU has fulfilled positive NFE criteria on the date of debonding and both the Notifications No. 22/2003-C.E. as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciated value, the Department is of the view that these are not capital goods and no depreciation would be available. On this ground differential duty of Rs. 20,73,953/- has been demanded. 1.3 A differential Excise duty of Rs. 1,58,193/- and differential Customs duty of Rs. 22,26,129/- has been demanded on indigenous and imported spare parts and accessories payable at the time of debonding on the ground that these items were not specified in the EPCG licence granted to them. 1.4 The Commissioner vide order-in-original No. 19/11-EX/JPR - 11/2011, dated 29-3-2011 has confirmed the duty demand of Rs. 6,63,54,420/- (Rs. 6,61,96,227/- in respect of indigenous capital goods and Rs. 1,58,193/- in respect of indigenous spare parts/accessor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital goods on payment of duty @ 3.09%, that though there is no doubt that 3.09% rate is prescribed in respect of capital goods imported under EPCG scheme, the amendment of Notification No. 22/2003-C.E. by Notification No. 24/2008-C.E. would necessarily mean that excise duty @ 3.09% can be paid in respect of indigenous capital goods at the time of debonding if the unit is migrating to EPCG scheme, that if the Department s interpretation that even if the 100% EOU at the time of debonding chooses to migrate to EPCG Scheme, in respect of indigenous capital goods, duty at the prevailing Central Excise rate - 14.42% would be required to be paid and not at the EPCG rate of 3.09% is accepted, the amendment made to Notification No. 22/2003-C.E. by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d were eligible for migration to EPCG Scheme in terms of the provisions of Condition No. 8 of the Notification No. 22/2003-C.E. issued under Section 5A of Central Excise Act, 1944, and Condition No. 8 of Notification No. 52/2003-Cus. issued under Section 25(1) of Customs Act, 1962. In terms of the provisions of these Notifications, at the time of debonding the duty on the capital goods is payable on the depreciated value and at the rate in force on the date of clearance on debonding. The dispute is in this case is about the rate of duty payable. Since the capital goods, in question, on which duty the demand is made are indigenously manufactured capital goods procured free of Central Excise duty, at the time of debonding it is a Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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