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2017 (7) TMI 394 - CESTAT NEW DELHIEPCG scheme - rate of duty on the capital goods/ spares pares procured indigenously - The case of the Revenue is that there is no specific Central Excise notification which provides exemption from payment of duty when cleared to unit availing EPCG scheme. The capital goods / spares parts which were originally procured duty free in terms of N/N. 22/2003-CE dated 31.03.2003 while setting up of EOU, would have to be debonded in terms of para 8(1) of the said Notification - Held that: - Para 8 of the said Notification stipulates that no such clearance or debonding of capital goods under EPCG Scheme of Chapter 5 of Foreign Trade Policy shall be allowed if the user industry has not fulfilled the positive NFE criteria at the time of clearance or debonding in terms of para 6.18 (d) of the Foreign Trade Policy. Thereafter, the procedure for such clearance and method of calculation of depreciation are mentioned in the said Notification - Admittedly, in the present case, the appellant-assessee are entitled for debonding as they have achieved positive NFE. Accordingly, debonding was permissible in terms of the said Notification. It is to be noted that Notification No.22/2003-CE is for providing exemption to goods brought into EOU. This Notification does not provide any exemption to the capital goods, spare parts etc. for supply under EPCG Scheme. We are in agreement with the original authority regarding absence of any exemption Notification covering the situation as explained above, to support the claim of the appellant-assessee for an exemption from Central Excise duty. The rates applicable to any goods should have a clear legislative provision by way of rate in the tariff or by a supporting exemption notification - no specific exemption Notification could be cited by the appellant-assessee to claim exemption for the capital gods which are being debonded to avail EPCG Scheme. In such situation, we are not able to accept the claim of the appellant-assessee. The appellant –assessee emphasised that the demand is not tenable as there is Revenue neutral situation resulting no addition to the Government revenue. We find that the concept of Revenue neutrality cannot be considered as a bar for non confirmation of tax dues, otherwise payable by the appellant –assessee. If that be so, then in many of the cases the appellant themselves can choose whether to pay duty on goods or services, when the credit is available; or to pay duty only on final product. Such discretion is not vested with tax payer. The rate of duty on the depreciated value should be on the date of debonding under EPCG Scheme. We note that when the debonding is done in terms of Notification No.22/2003-CE, then the rates of depreciation as prescribed in the Notification has been correctly applied. Valuation - Capital goods - includibility - fire control system, water storage tank etc. - Held that: - the items like cord can, fire control system, water storage tank etc. will fall within the scope of “capital goods” as understood in the trade parlance. Accordingly, the original authority allowed depreciation applicable to capital goods and dropped the demand for differential duty on this account. We are in agreement with the reasons recorded by the impugned order. EPCG scheme - the spare parts and accessories procured from domestic sources and also imported - eligibility - Held that: - On analysis of the authorisation as well as nature of items as recorded in the impugned order, we are in agreement with the findings of the original authority regarding the eligibility of these items under EPCG Scheme. In the present appeal, the Revenue could not bring out any substantial issue either in fact or in law to interfere with the finding of the original authority. Penalty u/r 25 - Held that: - It is clearly recorded that the appellant-assessee have not breached any of the provisions of Rule 25 of Central Excise Rules, 2004 as they have not removed the excisable goods in contravention of any of the Rules - penalty set aside. Appeal allowed - decided partly in favor of appellant.
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