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TMI Blog2016 (10) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... ve years thence, in 2011, can be denied depreciation from originally imported value. The CBEC have issued a number of circulars clarifying the grant of deprecation on debonding of capital goods from EOU/EPZ/EHTP/STP units. Boards circular No.305/52/85-FTP dated 15-04-21987 prescribed the method for calculating the depreciation on capital goods permitted to be taken outside the units and the overall limit of depreciation was fixed at 70%. Subsequently the rates were revised. Appellant eligible for the depreciation as prescribed by the CBEC Circular applicable at the time of debonding - refund claim allowed - appeal allowed - decided in favor of appellant. - Appeal No.C/2641/2011 & C/734/2012 - Final Order No. A/30762-30763/2016 - Dated:- 7-9-2016 - Ms. Sulekha Beevi, C.S., Member(Judicial) And Mr. Madhu Mohan Damodhar, Member(Technical) Shri Ajay Kumar, Advocate for the Appellant Shri K.S.Krishna Prasad Raghavendra, ARs for the Respondent ORDER [Order per: Madhu Mohan Damodhar,] 1.1 The issue involved in this appeal is denial of depreciation on the equipments used in the export of software after de-bonding of warehouse and recovery of duty on full value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r No.29/2003 dated 03-04-2003 in the case of Iflex Solutions Ltd Vs Commissioner of Customs [2005(184)ELT259(Tri-Mum]. Ld. counsel further argued that the Notification does not mention that the exemptions is applicable only STPI units, it provides exemption for the goods and not to the class of importers, infrastructure or otherwise. 5. On behalf of the Revenue, Ld. AR Shri K.S.Krishna Prasad, reiterated the correctness of impugned orders. 6. Heard both sides and have gone through the facts of the case. 7. For better understanding of the issue, it would be useful to reproduce the relevant portions of the Notification No.153/1993-Cus dated 13-08-1993 and of Notification No.52/2003-cus dated 31-03-2003; NOTIFICATION No.153/1993, dated August, 13, 1993 In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the telematic infrastructural equipments (hereinafter referred to as the said goods) as specified in the Annexure to this notification, when imported into India for being used for the export of software ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be imported. (vii) The Collector of Customs, may subject to such conditions as may be prescribed by him, allow a unit to re-export the said goods subject to the necessary permission being granted by the Chief Executive of the Software Technology Park. (viii) The procedure as may be prescribed by the Collector of Customs is followed by such unit. ANNEXURE I Telecommunication Transmission Equipment 1A Terrestrial Transmission equipment. II. Satellite Communication Equipment III. DATA COMMUNICATION EQUIPMENT IV. AUTOMATIC DATA PROCESSING MACHINES AND UNITS NOTIFICATION No.52/2003, dated 31-03-2003 EOU/STP/EHTP units Exemption to goods procured by Notification Nos. 3/88-Cus., 277/90-Cus., 138/91-Cus., 140/91-Cus., 95/93-Cus., 96/93-Cus., 126/94-Cus., 196/94-Cus., 53/97-Cus., 47/98-Cus. and 58/2000-Cus. rescinded In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) (hereinafter referred to as the said Customs Act), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts,- (a) all goods as specified in the Annexure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n; (b) - (9) The Software Technology Park (STP) unit may be allowed to import duty free Telematic Infrastructure equipment. The telemetric infrastructure equipment so imported may also be utilized for export by other Software Technology Park (STP) units. (10) - 4. Without prejudice to any other provision contained in this?4. notification, the said officer may, subject to such conditions and limitations as he may deem fit to impose under the circumstances of the case for the proper safeguard of revenue interest and also subject to such permission of the Development Commissioner, wherever it is specially required under the Export and Import Policy, allow the unit to clear any of the said goods for being taken outside the unit, to any other place in India in accordance with the Export and Import Policy: Provided that - (a) such clearance of capital goods, may be allowed on payment of duty either on the depreciated value thereof and at the rate in force on the date of payment of such duty or on the transaction value whichever is higher. The depreciation shall be allowed at the rate of 20% per annum of the original value in respect of computer and computer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003-Cus. Nonetheless, it must be kept in mind that the 1993 notification was one the early steps taken by the Government to provide suitable conditions for the then nascent growth of software technology in the country. Notifications issued subsequently, like 52/2003-Cus did take cognizance of the early obsolescence of capital goods related to software technology and in fact, extended depreciation at attractive terms. But just because No.153/21993 Cus is bereft of such a provision, would it mean that capital goods imported by appellant in 2006, when cleared to DTA five years thence, in 2011, can be denied depreciation from originally imported value? We think not. The CBEC have issued a number of circulars clarifying the grant of deprecation on debonding of capital goods from EOU/EPZ/EHTP/STP units. Boards circular No.305/52/85-FTP dated 15-04-21987 prescribed the method for calculating the depreciation on capital goods permitted to be taken outside the units and the overall limit of depreciation was fixed at 70%. Subsequently, CBEC vide F.No.314/19/94-FTT Part-VI dated 11-04-1997, had provided for accelerated rate of depreciation for the computers in view of their rapid obsolescenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular Nos. 27/98 dated 24.4.98 and 43/98-Cus dated 26.6.98 stand modified to the above extent 9. From the above discussions, we are of the considered opinion that the appellant would definitely be eligible for the depreciation as prescribed by the CBEC Circular applicable at the time of debonding. 10. While arriving at this conclusion, we also follow the decision of the Tribunal on identical issue in Kumar Housing Corporation Ltd Vs CCE Pune-III[2014(308)ELT-741(Tri-Mum)] 5.2 The appellant has been approved as a 100% EOU in? the STP Scheme by the Govt. of India and the appellant has procured the capital goods both indigenously without payment of duty and as well as imported under the provisions of Notification No. 153/93 and 22/2003. After using the capital goods for some time, the appellant sought to de-bond the said capital goods. The appellant has applied for de-bonding to the competent authorities and subject to paying the appropriate duty and obtaining NOC from the customs, the appellant s request for de-bonding is permitted. 5.3 As regards the question whether depreciation can be? allowed on the capital goods imported under Notification No. 153/93, thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority for fresh consideration for determining the quantum of duty which the appellant is liable to pay at the time of de-bonding by taking into account the appellant s entitlement to depreciation on the capital goods sought to be de-bonded in terms of the rates prescribed under Notification No. 52/2003-Cus. and 22/2003-C.E. from the date of installation/putting to use of the capital goods till the date of de-bonding. If the appellant discharges the duty liability on the depreciated value, the jurisdictional Customs/Excise department is bound to permit de-bonding as per the procedure prescribed. Needless to say the appellant has to follow the prescribed procedure and has to obtain permission for de-bonding from the competent authorities. The question of imposition of any penalty would not arise at all in the facts and circumstances of the case 6. Thus, the appeals are allowed by way of remand. 11. In the event, the Order-in-Appeal dated 13-06-2011 is bad in law and required to be set aside, which we hereby do. By implications, the Order-in-Appeal dated 28-12-2011 will also be required to be set aside, which we hereby do. 12. Appeals C/2641/2011 and C/734/2012 allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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