2019 (2) TMI 611 - AT - Customs

100% EOU - debonding of unit - N/N. 52/2003 and N/N. 22/2003 dt. 31/03/2003 - challenge to the assessment of ex-bond bill of entry before the Commissioner of Customs(Appeals) praying for 100% depreciation - Held that - The capital goods were procured and installed in the EOU in 1986 and the order of de-bonding was passed by the Development Commissioner on 19/07/2002 - the appellants are entitled to depreciation from 1986 to 2002 which also works out to 156% as per the Notification No.52/2003 and Notification No.22/2003 dt. 31/03/2003 - Further, in fact the de-bonding of the capital goods were allowed on 14/03/2008by the Asst. Commissioner and thereafter the duties were paid. The circular No.14/2004-Cus dt. 13/02/2004 also prescribe that the depreciation is admissible till the date of payment of duty - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against dismissal of appeal by Commissioner(Appeals) regarding depreciation on capital goods for EOU.

Analysis:
1. Background: The appellant, an EOU for manufacturing and exporting polished granite slabs, faced difficulties in procuring granite blocks, leading to a shortfall in export obligations. The Development Commissioner ordered de-bonding of the EOU in 2002, but the capital goods were not de-bonded immediately.

2. Contentions: The appellant argued that they were entitled to depreciation till the date of payment of duty or de-bonding, citing judicial precedents supporting depreciation till such events. The Commissioner(Appeals) rejected the appeal, stating that the EOU status ceased in 2002, hence no depreciation was admissible post that date.

3. Appellant's Arguments: The appellant contended that the impugned order was legally unsustainable and contrary to established legal principles. They highlighted that depreciation should be calculated from the date of putting goods to use till payment of duty or de-bonding, as per judicial precedents and circulars.

4. Judicial Precedents: The appellant referenced several cases where depreciation was allowed till payment of duty or de-bonding, emphasizing that the EOU status remains until these events occur.

5. Decision: After reviewing submissions and records, the Tribunal found that the appellant was entitled to depreciation from 1986 to 2002, amounting to 156%, as per prevailing notifications. The de-bonding of capital goods in 2008 and subsequent duty payment supported the appellant's claim for depreciation. Citing the circular and judicial precedents, the Tribunal held the impugned order unsustainable and allowed the appeal with consequential relief.

6. Conclusion: The Tribunal set aside the Commissioner(Appeals) order, ruling in favor of the appellant's entitlement to depreciation on capital goods till the date of payment of duty or de-bonding. The decision aligned with established legal principles and precedents, ensuring fair treatment for the appellant in line with customs regulations.