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2018 (9) TMI 1387 - AT - Customs100% EOU - eligibility for depreciation on capital goods in the computation of liability to duty upon failure to comply with prescribed export obligation - Held that:- The goods had been imported without payment of duty in accordance with notification no. 13/81-Cus dated 9th February 1981 which, while binding the appellant to fulfill the conditions stipulated therein, could be invoked only upon exiting the scheme in the Export-Import Policy (now referred to as Foreign Trade Policy). On the issue of eligibility for full depreciation on capital goods, when subject to proceedings for failure to comply with prescribed export obligation, the Tribunal has, in Shriram Grape Growers Cooperative Society Ltd v. Commissioner of Central Excise & Customs, Nasik [2018 (3) TMI 205 - CESTAT MUMBAI] hes held that As on the date of the impugned order, the appellant has been in existence for over a decade and, by application of the straight-line depreciation approved by the Central Board of Excise & Customs, the value of capital goods would be nil. Consequently, no duty liability would arise. The annual export obligation is a function of the cost of inputs and the depreciation for the year; thus the value of the imported machinery is compensated by exports over a period of 10 years and any shortfall in any of those years, attributable to mismatch with the amortisation for the year, would result in recovery of proportionate duty for that year. Disallowance of depreciation, in these circumstances, to the full extent would be tantamount to recovery of tax/duty in excess of that which has foregone. The appellant is entitled to depreciation up to the date of payment of duty and, which being more than ten years, to the full extent. Consequently, there is no duty liability and other detriment action would also fail to sustain - appeal allowed - decided in favor of appellant.
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