2002 (11) TMI 165 - AT - Central Excise

Summary

Issues involved: Duty liability of a 100% EOU upon debond u/s Notification No. 13/Cus., dated 6-2-81 as amended.

First Issue - Appeal No. E/1795-R/97-Mum:
The dispute is whether Jigs and fixtures were liable to be imported under Notification No. 13/81. The assessee argues that Jigs and Fixtures were covered under the heading at Sl. No. 1 of the notification "Capital Goods" even before Sl. No. 12 was incorporated. They contend that the amendment incorporating Sl. No. 12 was clarificatory. The Revenue's objection that Jigs and Fixtures were not eligible until Sl. No. 12 was added is countered by the assessee stating that these items were part of the list of capital goods authorized for import under the EOU scheme. The assessee also challenges the timing of the Revenue's objection, stating it should have been raised at the time of import, not debonding.

Second Issue - Appeal No. E/1795-R/97-Mum:
The dispute arises regarding the period for allowing depreciation on capital goods. The assessee argues that depreciation should be calculated up to the date of computation of duty at debonding, not just until the date of application for debonding. They assert that the Revenue's computation allowing depreciation only until the application date is incorrect based on the terms of Notification No. 13/81, which state that depreciation should be allowed up to the date of payment of duty.

Third Issue - Appeal No. E/1687/2002-Mum:
The main contention is whether the export obligation fulfillment should impact duty liability at debonding. The Revenue argues that the unfulfilled export obligation should be considered in calculating duty liability. However, the Tribunal finds that duty liability upon debonding is not linked to export obligation as per Notification No. 13/81 and EOU provisions. The duty liability arises on debonding, irrespective of export performance, as the goods are treated as imported goods subject to duty post-debonding.

Fourth Issue - Appeal No. E/1687/2002-Mum:
The dispute involves whether manufactured goods in stock should be subjected to duty at the time of debonding. The assessee argues that duty liability on such goods arises upon their removal from the factory, not at debonding. The Tribunal agrees, stating that upon debonding, the EOU becomes a manufacturing unit in the domestic tariff area, and duty on manufactured goods in stock is payable upon their removal, not at debonding.

In conclusion, Appeal No. E/1795-R/97-Mum filed by the assessee succeeds, as Jigs and fixtures were considered eligible under Notification No. 13/81, and depreciation should be allowed up to the date of duty payment. Appeal No. E/1687/2002-Mum filed by the Revenue fails, as duty liability at debonding is not linked to export obligation, and duty on manufactured goods in stock is payable upon removal, not at debonding.