EPCG concessional rate cannot be extended to indigenous capital goods on debonding without an excise exemption notification.

On debonding of a 100% EOU migrating to the EPCG Scheme, indigenous capital goods were required to bear Central Excise duty at the rate applicable under the excise framework on the date of clearance, after depreciation. The concessional 3.09% EPCG rate relied on by the unit applied to imported capital goods under customs notifications, but no corresponding Central Excise exemption existed for indigenous capital goods. That legal gap could not be filled by adjudication, so the claimed excise concession was not available and complete waiver of pre-deposit was refused.

---

---

Issues: Whether, at the time of debonding of a 100% EOU migrating to the EPCG Scheme, indigenous capital goods could be assessed to Central Excise duty at the EPCG concessional rate of 3.09% in the absence of a corresponding excise exemption notification, and whether complete waiver of pre-deposit was warranted.

Analysis: The unit had achieved positive NFE and was eligible to migrate to the EPCG Scheme. The relevant notifications permitted debonding on payment of duty on depreciated value at the rate in force on the date of clearance. However, the concessional 3.09% rate relied upon by the appellant was contained in the customs notification for imported capital goods, while no parallel Central Excise notification prescribed a similar concession for indigenous capital goods. The absence of such an excise exemption was treated as a legal gap that could not be supplied by adjudication, so the appellant was held not entitled to total waiver of pre-deposit.

Conclusion: The EPCG customs rate could not be applied to indigenous capital goods for excise purposes on debonding, and the request for full waiver was rejected.

---