2009 (12) TMI 388 - AT - Central Excise

STPI Unit- The dispute relates to the rate of depreciation that has to be allowed for the purpose of paying duty at the time of de-bonding. The case of the appellant is that they are entitled to claim depreciation at the rate of 10% for every quarter in the first year, 8% for every quarter of the second year and 7% for every quarter in the third year in terms of appendix 14.1 of the handbook procedure applicable to STPI unit. On the other hand, the original authority has held that the depreciation has to be only at the rate of 20% per annum as prescribed under Notification No. 52/2003-Cus., dated 31-3-2003. As a result, the appellant had been directed to pay a sum of Rs. 2,57,652/- as against the claim of the appellant that only a sum of Rs. 39,704/- was payable by them. Held that- appellant not able to show any provision nullifying condition in Notification or having overriding effect. impugned order holding rate of depreciation to be 20% per annum sustainable.

Summary

Issues:
Dispute over rate of depreciation for duty payment upon de-bonding from STPI scheme.

Analysis:
The case involved an appeal against the Commissioner (Appeals) order regarding the rate of depreciation to be allowed for duty payment upon de-bonding from the STPI scheme. The appellants, registered as an STPI unit, imported goods duty-free under Notification No. 52/2003-Cus. Upon opting out of the scheme, they were required to pay duty on the capital goods in use. The appellant claimed depreciation rates as per the handbook procedure applicable to STPI units, while the authority held that depreciation should be at 20% per annum as per the notification. The dispute centered on the correct rate of depreciation for duty calculation.

Upon review, the Tribunal observed that the handbook procedure did not clearly specify the purpose of depreciation mentioned therein. In contrast, Notification No. 52/2003-Cus. explicitly mandated a depreciation rate of 20% per annum for duty calculation upon de-bonding. As the appellants initially availed duty exemption under this notification, the duty liability upon de-bonding had to be determined based on the specific provisions of depreciation outlined in the notification. The Tribunal found no provision overriding the notification's conditions. Consequently, the Commissioner (Appeals) order upholding the original authority's decision was deemed legally sound. The appellants failed to demonstrate any grounds warranting interference with the lower authorities' orders.

In conclusion, the Tribunal rejected the appeal, affirming the decision on the rate of depreciation for duty payment upon de-bonding from the STPI scheme. The judgment underscored the importance of adhering to the specific provisions of the notification governing duty liability in such cases, emphasizing the legal validity of the Commissioner (Appeals) order in this context.