2008 (7) TMI 254 - AT - Customs

100% EOU debonding benefit of depreciation on machinery - appellants have abandoned the bonded place and the machinery is not available appellant submits that the machineries are not required to be examined for the purpose of working out the depreciation & the date of expiry of bonding period should not be taken for calculating the depreciation since value of the machinery has already been worked out in the SCN, appellants prayer for depreciation is justified

Summary

Issues: Duty demand for non-performance of export obligation and fulfillment of conditions stipulated in export bonds.

In this case, the Appellate Tribunal CESTAT, Bangalore, dealt with a duty demand issue amounting to Rs. 9,58,320/- against the appellant for not fulfilling the export obligation and conditions stipulated in export bonds. The appellant argued that they had partially complied with the export orders and deposited certain amounts before the Tribunal. They claimed financial hardship and unit closure due to labor trouble and threats to their lives, leading them to leave Bangalore. The appellant's main contention was the entitlement to depreciation on machinery, citing various judgments such as Khabros Steel India Ltd. v. CCE, Jaipur and others. The appellant sought depreciation as of the date of the demand raised by the Commissioner.

The Departmental Representative contended that depreciation should be calculated from the expiry of the bonding period, referring to the Supreme Court's decision in Kesoram Rayon v. CC, Calcutta. It was argued that as the appellants had abandoned the bonded place and the machinery was unavailable, depreciation was not warranted in the current circumstances. However, the Tribunal noted that the appellants had left Bangalore for safety reasons, as evidenced by their letters to the Deputy Commissioner. Considering the circumstances, the Tribunal ruled that the examination of machinery and its conditions for depreciation calculation was unnecessary. The value of the machinery and duty had already been determined in the Show Cause Notice. The Tribunal acknowledged that failure to comply with the export obligation required discharging the duty liability but also allowed for depreciation as per Boards Circular. The Tribunal ordered the appellant to be entitled to depreciation on the machinery, to be calculated from the expiry of the bonding period, as per the Supreme Court's decision in Kesoram Rayon. The matter was remitted back to the Original Authority to calculate depreciation with interest, following principles of natural justice, to be completed within four months from the receipt of the order.