2018 (5) TMI 910 - AT - Central Excise

Debonding of part of unit - quantification of the customs duty - whether the second order of the Dy. commissioner amounts to review of the first order? - Held that - The exact quantification of the amount to be paid would depend on the date of debonding and the quantum of depreciation available at that time. Any assessment of quantification done prior to that date would only be a provisional assessment - the second order of the Dy. commissioner does not amount to review of the first order in so far as the first order was a conditional order and the appellants were entitled to depreciation till the date of debonding - appeal allowed - decided in favor of appellant.

Summary

Issues:
Quantification of customs duty on account of debonding - Review of Dy. Commissioner's orders - Entitlement to depreciation till the date of debonding.

Analysis:
The appeal involved a dispute regarding the quantification of customs duty on account of debonding by M/s Indoworth (India) Ltd. The appellant, an EOU, had requested partial debonding of their unit, leading to the Dy. Commissioner issuing orders for payment of customs duty. The first order dated 11.12.2006 required a specific amount to be paid for debonding, followed by a subsequent order dated 5.4.2007 asking for a different amount. The Revenue challenged the second order, arguing that the first order had already quantified the duty, making the second order invalid. The Commissioner (Appeals) set aside the second order, stating that the first order had become final, and the Dy. Commissioner could not review his own order.

The appellant contended that the first order was conditional, subject to fulfilling certain conditions, and the duty liability was re-assessed after meeting those conditions. They argued that the duty liability could not be finalized until the date of debonding was determined, and depreciation calculated accordingly. The final debonding only occurred after receiving a No Objection Certificate from the customs authorities. Therefore, any quantification of duty liability before the actual debonding was provisional in nature.

Upon reviewing the submissions, the Tribunal found that the first order was conditional, and the duty amount depended on the date of debonding and available depreciation. As per the Foreign Trade policy, the appellant was entitled to claim depreciation until the debonding date, making any assessment before that date provisional. The Tribunal concluded that the second order did not constitute a review of the first order, as the duty quantification was subject to the debonding date. Consequently, the Commissioner (Appeals) order was set aside, and the appeal was allowed with any consequential relief as per the law.

In summary, the Tribunal clarified that the quantification of duty liability for debonding was contingent on the debonding date and available depreciation. The provisional nature of the assessment before debonding was emphasized, leading to the setting aside of the second order as it did not amount to a review of the first conditional order. The decision highlighted the importance of final debonding for accurate duty assessment and upheld the appellant's entitlement to depreciation until the debonding date.