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2016 (2) TMI 360 - CESTAT MUMBAI

2016 (2) TMI 360 - CESTAT MUMBAI - 2016 (343) E.L.T. 377 (Tri. - Mumbai) - Refund claim - higher rates of depreciation allowed - conversion from or exiting from Export Oriented Unit - Held that:- The dispute is one of valuation i.e., the extent to which the original value should be reduced in acknowledgement of the use to which capital goods have been put for export of goods. The goods are not transferred to another entity and thus there is no transaction value. The residuary method of valuation .....

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reciation from time to time before the practice of incorporation in notifications was commenced in 2003. Rates of depreciation were prescribed in circular no 27/98-Cus dated 21st April 1998 and amended later by circular no 43/98-Cus dated 26 th June 1998.The impugned order while allowing the appeal of the respondent-assessee had accepted the contention in the application for refund adopting the rates found in the Handbook of Procedures of the relevant Foreign trade Policy. We find from above tha .....

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R) For the Respondent : Shri V B Gaikwad, Adv ORDER Per C J Mathew Revenue is before us against order-in-appeal no. PII/BKS/124/2005 dated 28th February 2005 of Commissioner of Central Excise (Appeals-II), Pune which allowed refund of ₹ 15,20,754/- as claimed by the respondent, M/s RM Mohite Textiles Ltd. 2. In brief, the respondent, having been issued with Letter of Permission dated 5 th February 1991 to set up a 100% Export Oriented Unit by Development Commissioner, SEEPZ, for manufactur .....

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toms Act, 1962 and Central Excise Act, 1944. Export Oriented Units are entitled to import and procure locally without payment of duty all kinds of capital goods, consumables and raw materials required for manufacture of approved goods. IN the Export Promotion Capital Goods scheme, the licencee is permitted import, as well as indigenous procurement, of capital goods either at nil rate or concessional rate. Under both schemes, export obligations imposed by the Foreign Trade Policy are incorporated .....

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to be discharged which, in the event of conversion as an Export Promotion Capital Goods entity, shall be at the concessional rate of 5%. In addition, while operating under the Export Oriented Unit Scheme, finished goods, inputs and capital goods can also be cleared into the Domestic Tariff Area on payment of appropriate duties. 4. For the clearance of manufactured goods into the Domestic Tariff Area, the charging provision in section 3 of Central Excise Act, 1944 but the rate of duty and comput .....

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April 2003, by payment of duty of ₹ 68,25,784/- on 26th July 2003. Thereafter, on the ground of being eligible for depreciation of ₹ 20,54,13,516, refund of ₹ 15,20,754/- paid in excess was sought. While the original authority rejected the claim by holding the first computation to be proper and in accordance with the extant circular of Central Board of Excise & Customs, the first appellate authority took a contrary position to grant relief to M/s RM Mohite Textiles Ltd. Hen .....

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he unit to any other place in India and hence required application of the rates prescribed in the Handbook of Procedures of the Foreign Trade Policy. 7. Learned Authorized Representative reiterated the grounds of appeal and also pointed out that the process of conversion did not involve taking to another place in India thereby rendering the capital goods ineligible for depreciation. Our attention was also drawn to the impropriety of applying the straight line method because the unit had resorted .....

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t provide for depreciation norms when the capital goods were allowed de-bonding." 8. This line of argument does not impress. To start with, Revenue is in appeal against the higher rates of depreciation allowed to the unit by the first appellate authority when the original authority had acknowledged the eligibility to depreciation uniformly at ten per cent per annum. Further, though operations would continue with the very same capital goods at the original plant, the debonding of the unit ta .....

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o him, the rate of depreciation prescribed in the notification of 2003 would be effective for conversion only from 2004 and that the respondents are governed by the circular no 27/98-Cus dated 21st April 1998. 10. We note that the notification in which the rates of depreciation are prescribed, essentially, intend to provide exemptions at the time of procurement of importation as the case may be. The specific conditions in the notification that permit removal of capital goods refer to "said .....

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ot, admittedly, incorporate rates of depreciation. Hence, the contention of the respondent that they are eligible for depreciation but not at the rates prescribed in the notification of 2003 needs consideration. 11. The dispute is one of valuation i.e., the extent to which the original value should be reduced in acknowledgement of the use to which capital goods have been put for export of goods. The goods are not transferred to another entity and thus there is no transaction value. The residuary .....

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