Method of calculation of the depreciation which should be allowed to the 'Capital Goods' at the time of assessment of duty from Free Trade Zone - 100% Export Oriented Units to Domestic Tariff Area - Regarding - Central Excise - 305/52/85-FTT

Method of calculation of the depreciation which should be allowed to the 'Capital Goods' at the time of assessment of duty from Free Trade Zone - 100% Export Oriented Units to Domestic Tariff Area - Regarding Ins. F. No. 305/52/85-FTT Dated 15-4-1987 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Method of calculation of the depreciation which should be allowed to the 'Capital Goods' at the time of assessment of duty from Free Trade Zone - 100% Export Oriented Units to Domestic Tariff Area - Regarding. The undersigned is directed to invite attention to Notification No. 244/86-Cus., dated 14-4-1986, and to say that the question of laying down an appropriate method for calculating the depreciation that should be allowed to the 'capital goods', which are permitted to be taken outside the Free Trade or Export Processing Zones or 100% Export Oriented Units to any other place in India on payment of duty leviable thereon has been under consideration of the Board. 2. It has been decided that the depreciation to such 'Capital Goods' at the time of assessment of duty while being taken outside the Free Trade on Export Processing Zones or 100% EOUs should be calculated at the depreciation rates presently in force for assessment of used cars. It has also been decided that for subsequent years after fourth year a flat rate of depreciation of 2% per every quarter may be provided for. The rate of depreciation for such goods, would be as follows :- For every quarter during 1st year - 4% For every quarter during 2nd year - 3% For every quarter during 3rd year - 2.5% For every quarter during 4th year and thereafter Subject to an overall limit of 70% - 2% 3. It may be clarified that under the notifications applicable to Free Trade or Export Processing Zones, depreciation is permitted only to such capital goods as have been used within the Zone for a period of not less than 3 years. Similarly, in the case of 100% EOUs, depreciation is permitted only to such capital goods as have been used by the EOUs during the period of export obligation stipulated by the Board of Approval. Accordingly, in the case of 100% EOUs, no depreciation would be permissible if the unit is being debonded without completing the period of export obligation prescribed by the Board of Approval.