Period of Depreciation should extend up to Date of Payment of Duty: CESTAT [Read Order]

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Ahmedabad held that period of depreciation should extend up to the date of payment of duty.

The brief facts of the case are that M/s. Anjaleem Enterprises Pvt. Ltd. was a unit engaged in the development and export of Software as a 100% export-oriented unit. The unit availed the benefit of exemption from payment of Customs duty under the provisions of Notification 13/81-Cus., dated 9-8-1981, and imported capital goods. Later the appellant applied for D-Bonding of the 100% EOU and by letter and the department of Industrial Development permitted the Appellant to clear capital goods without payment of duty and to gift the imported capital goods to an educational institution that was eligible to import such goods without payment of duty.

The department issued a show-cause notice demanding duty on the imported goods. The Appellant applied to the office of Assistant Commissioner of Customs and Central Excise for completion of De-Bonding formalities and for clearance of the goods without payment of duty by way of gift to MS University. The Appellant also filed Ex-Bond Bill of entry for such duty–free clearance. The Commissioner dropped the said show cause notice dated 06.11.1997 and directed the Assistant Commissioner to consider the Appellant’s request for clearance of the goods without payment of duty on merit and in accordance with the law.

The Assistant Commissioner ordered for payment of duty and interest. Being aggrieved, the Appellant filed an appeal before the Commissioner wherein the Commissioner set aside the order and remanded the matter back to the Assistant Commissioner. In de-novo proceeding, Assistant Commissioner directed payment of duty with interest for clearance of goods to MS University. In the appeal filed by the Appellant, the Commissioner upheld the direction to pay duty by filing a revised Bill of entry but he set aside the demand of interest. Against the said Order-In-Appeal appellant preferred an Appeal to the Tribunal challenging the said order to the extent it upheld the liability to pay duty.

By the said order tribunal held that duty was payable by the Appellant. However, in the calculation of duty, the Assistant Commissioner had erred in allowing depreciation only up to July 1994 when permission for de-bonding was granted by the Ministry of Industry and directed that depreciation should be allowed till the date of payment of duty. The Tribunal by said order upheld the setting aside of the interest. 

Ramesh Nair, Judicial Member, and Raju Technical Member held that “ Lower Adjudicating authority held that deprecation was allowed only up to the date of permission for de-bonding which has been categorically held to be incorrect by the tribunal in its above remand order. Clearly, lower authorities are not following the directions given by Tribunal. Therefore, the impugned order is not sustainable in law.”

To Read the full text of the Order CLICK HERE

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