Customs - De-bonding - Depreciation cannot be denied to goods imported under Notification No 153/93 Cus - CESTAT
By TIOL News Service
HYDERABAD, DEC 14, 2016: 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 of the equipment.
Appellant was permitted to set up an infrastructure facility for STP units under the STPI Scheme. Under notification No. 153/93-Cus dated 13-08-1993, the appellants were permitted to import duty free infrastructural facility equipment's worth Rs.19.90 Crores, for the purpose of export of software by the STPI units. The Inter-Ministerial Standing Committee has approved the import vide their letter dated 15-06-2005. the appellants were issued 100% EOU Bonded Warehouse License No.15/2006 vide AC, Customs & Central Excise, Hyderabad letter dated 06-04-2006.
On de-bonding, the department insisted for payment of duty on the original value of the equipment, without allowing depreciation on the ground that said Notification No. 153/93-Cus does not have any specific provision for allowing“Depreciation”.
The appellant contended that when all conditions of Notification 153/1993-Cus had been fulfilled, denial of depreciation on the sole ground that the benefit was available only to STPI units as the appellant had only provided infrastructure, is erroneous. Even in cases where the STPI unit has kept the goods in store which are not in working condition, Tribunal has extended the depreciation by relying on CBEC circular No.29/2003 dated 03-04-2003 in the case of Iflex Solutions Ltd Vs Commissioner of Customs [2005(184) ELT259(Tri-Mum]= 2005-TIOL-226-CESTAT-MUM . Ltd.
After hearing both sides, the Tribunal held:
+ The impugned goods were imported under Notification No.153/1993-Cus in 2006 after obtaining the approval for such import and duty exemption provided therein from the Inter-Ministerial Standing Committee. This being the case, Notification No.153/1993-Cus allowed an importer to re-export the said goods, subject to necessary permission being granted by the Chief Executive of the software technology park. No other facilitation concerning removal from the STPI or clearance to the DTA is mentioned in the notification and, certainly there is no provision for depreciation on such removals, unlike the subsequent Notification 52/2003-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 obsolescence, keeping the overall limit at 70%. This scale was not found adequate and vide CBECs F. No.314/19/94-FTT dated 21-04-1998(circular No.27/98-Cus) an even higher depreciation for the purpose of payment of duty on clearance, both for imported and indigenous capital goods, was prescribed, subject to an overall limit of 90% for computers and 75% for capital goods other than computers.
+ The appellant would definitely be eligible for the depreciation as prescribed by the CBEC Circular applicable at the time of debonding. While arriving at this conclusion, the decision of the Tribunal on identical issue in Kumar Housing Corporation Ltd Vs CCE Pune-III - 2014-TIOL-2887-CESTAT-MUM is followed. Impugned Order in Appeal is set aside.
(See 2016-TIOL-3231-CESTAT-HYD)
