2017 (11) TMI 1253 - AT - Customs

100% EOU - Extended period of limitation - demand of customs duty - debonding of unit - Held that - it cannot be said that the facts of the assessee-appellant in context with de-bonding and payment of duties was not within the knowledge of the department. Hence, in such an eventuality, the SCN should have been issued within one year from the relevant date - In this case, since the same was issued beyond the period of one year, the duty demand cannot be confirmed against the assessee-appellant on the ground of limitation alone. Identical issue decided in the case of M/s Century Denim Versus CCE, Indore 2015 (1) TMI 1031 - CESTAT NEW DELHI , where it was held that when all the facts are fully disclosed to the Department, extended period of limitation cannot be invoked for confirmation of duty demand. Appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Calculation of duty payable on de-bonding
- Calculation of depreciation on capital goods
- Invocation of extended period of limitation for duty demand confirmation

Analysis:

Calculation of duty payable on de-bonding:
The appellant, engaged in manufacturing cotton yarn and knitted fabrics, applied for conversion of its EOU under EPCG scheme and was granted an EPCG license. Upon de-bonding, duty payable on capital goods was calculated at the depreciated value based on Notification No.52/2003-Cus. The department issued a show cause notice proposing a demand of Customs duty, which was confirmed in an adjudication order. The Commissioner (Appeals) partially dropped the duty demand, but the appellant appealed to the Tribunal against the remaining demand.

Calculation of depreciation on capital goods:
The adjudicating authority held that depreciation should be calculated from the date of capitalization of assets in the books of accounts, not from the date of putting the capital goods to use. The Commissioner (Appeals) confirmed the demand, stating that depreciation should be calculated at the applicable rate prevalent during the import of capital goods. The appellant argued that the rate of depreciation should be based on the existing notification at the time of importation.

Invocation of extended period of limitation for duty demand confirmation:
The appellant contended that the duty demand was time-barred, as the show cause notice was issued beyond the one-year limit from the relevant date, despite all facts being disclosed to the department during de-bonding. Citing previous tribunal decisions, the appellant argued against the invocation of the extended period of limitation under Section 28. The Tribunal, considering the facts disclosed during de-bonding, held that the duty demand could not be confirmed on the ground of limitation alone and allowed the appeal in favor of the appellant.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal solely on the ground of limitation, without delving into the merits of the case. The appeal filed by the Revenue was dismissed, emphasizing the importance of adhering to the statutory limitation period for duty demand confirmation.