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2014 (12) TMI 895 - AT - Customs100% EOU - De-bonding - Depreciation on capital goods - whether depreciation can be allowed on the capital goods imported under Notification No. 153/93, though the notification does not provide specifically for the same, prior to 2003, most of the notifications issued under the Customs Act, did not provide for depreciation norms when the capital goods were allowed de-bonding - Held that:- C.B.E. & C. issued Circulars right from 1994 onwards allowing depreciation on capital goods at the time of de-bonding. For instance vide Circular No. 314/19/94-FTF, dated 2-9-1994, the rate of depreciation on capital goods at the time of de-bonding of entities working under 100% EOU scheme was prescribed at the rate of 5% per quarter in the first two years and 4% per quarter for the next two years subject to a maximum of 70%. The said norms were modified vide Circular, dated 11-4-1997, wherein the depreciation norms were changed to 7% per quarter in the first year, 6% per quarter in the second year and 5% per quarter for the third year subject to maximum of 70%. Later on vide Circular No. 49/2000, dated 22-5-2000, the norms were further liberalized and the maximum amount of depreciation was permitted at 90% for a period of 8 years and for computer and computer peripherals, accelerated depreciation was allowed. Later on these depreciation rates were incorporated in the notification itself and Notification No. 52/2003, dated 31-3-2003 provides for depreciation norms in para 4 of the Notification itself for capital goods other than computer and computer peripherals and computer and computer peripherals separately. Similarly, Notification No. 22/2003-C.E., dated 31-3-2003 provides for depreciation on capital goods procured independently. Thus from the circulars issued by C.B.E. & C. from time-to-time, it is clear that depreciation has to be allowed in respect of the capital goods, from the date of installation/use of capital goods till the date of de-bonding. Similar provisions exist in respect of domestically procured capital goods also. Therefore, the finding of the adjudicating authority that the appellant is not eligible for depreciation on capital goods is completely contrary to the express provisions of EXIM Policy as also the provision of Notification Nos. 52/2003-Cus., dated 31-3-2003 and 22/2003-C.E., dated 31-3-2003 and Boards Circulars issued from 1994 onwards. Therefore, the said order cannot be sustained in law. In view of the above, the matter has to go back to the adjudicating authority for fresh consideration for determining the quantum of duty which the appellant is liable to pay at the time of de-bonding by taking into account the appellant’s entitlement to depreciation on the capital goods sought to be de-bonded in terms of the rates prescribed under Notification No. 52/2003-Cus. and 22/2003-C.E. from the date of installation/putting to use of the capital goods till the date of de-bonding. - Decided in favour of assessee.
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