2018 (2) TMI 820 - HC - Central Excise

Debonding of units - depreciation of capital goods - matter placed on remand - Held that - Central Board of Excise and Customs Circulars right from 1994, which, in the opinion of the tribunal, allow depreciation of capital goods at the time of de-bonding. It gave illustration as to how the notifications were applied and in the cases of 100% EOU as well that scheme operates. Finally, the tribunal referred to the two notifications. Beyond all this and which had missed the attention of the adjudicating authority, the tribunal did not render any definite or final opinion. It is in these circumstances that the tribunal directed a remand on the second occasion. That is because the Revenue argued, according to the tribunal s opinion and prima facie contrary to its own circulars and notifications issued from time to time - That is why the assessee was also mandated to follow the prescribed procedure. If that has been fulfilled, then, the duty liability in terms of the Revenue scheme had to be worked out. We do not see how such an order, by which the tribunal did not allow the appeal of the assessee but remanded the matter to the adjudicating authority, results in a substantial question and arising for our consideration - Appeal dismissed.

Summary

Issues:
1. Appeal against the order passed by the Central Excise and Service Tax Appellate Tribunal (CESTAT) on 1st April, 2014.
2. Dispute over remand to the adjudicating authority and substantial question of law.
3. Demand of duty comprising central excise duty and customs duty.
4. Benefit sought under two notifications dated 31st March, 2003 and 13th August, 1993.
5. Assessee being a registered 100% Export Oriented Unit (EOU) under the Software Technology Park (STP) Scheme.
6. Procurement of capital goods and availing benefits of notifications.
7. Dispute over payment of duty at the stage of de-bonding at the depreciated value.
8. Tribunal's direction for remand and adherence to prescribed procedure.

Analysis:
1. The High Court heard both sides on the appeal against the CESTAT order. The Revenue contested the remand to the adjudicating authority, arguing it was a formality as the tribunal had taken a definite view, raising a substantial question of law. The tribunal dealt with an appeal by the assessee against the duty demand confirmed by the Commissioner of Central Excise and Service Tax, Pune. The demand included central excise duty and customs duty amounts. The benefit was sought under two specific notifications.

2. The factual position revealed the assessee's status as a registered 100% EOU under the STP Scheme, with infrastructural facilities for a software technology park and a bonded warehouse license under the Customs Act, 1962. The assessee procured capital goods and applied for de-bonding, agreeing to pay duties on the depreciated value. Despite paying the depreciated value duty and seeking a no-dues certificate, a show cause notice proposed recovering the entire excise duty forgone. The Revenue argued against the scheme allowing duty payment at depreciated value.

3. The tribunal, in para 5.3 of its order, referenced notifications and circulars permitting depreciation of capital goods at de-bonding, including cases of 100% EOU. However, it did not provide a final opinion, leading to a remand due to the Revenue's disagreement with its own circulars. The tribunal directed adherence to the prescribed procedure for duty liability determination. The High Court found the tribunal's order of remand not raising a substantial question for consideration, dismissing the appeal without costs.