Depreciation on capital goods removed in breach of EOU conditions was disallowed, sustaining the duty demand.

Capital goods removed from a 100% EOU to a sister unit without the required permission were found to be outside the appellant's custody and possession when the exit order was issued and when officers inspected the premises. In breach of the notification conditions, depreciation could not be claimed on goods no longer held by the appellant, so reassessment of duty on a depreciated value was not permitted. The claim for depreciation was rejected and the duty demand was sustained.

---

---

Issues: Whether duty on capital goods removed from a 100% EOU without permission could be reassessed by allowing depreciation on the goods.

Analysis: The capital goods had been removed from the appellant's premises to a sister unit without obtaining the required permission and in breach of the notification conditions. By the time of the exit order and also when the officers visited the premises, the goods were not in the appellant's custody or possession. In such circumstances, depreciation could not be claimed on goods that were no longer held by the appellant. The request to reassess duty on a depreciated value was therefore not acceptable.

Conclusion: The claim for depreciation was rejected and the duty demand was sustained against the appellant.

---