Depreciation on EOU capital goods runs till duty payment on debonding, not just the de-bonding order date.

In debonding of a 100% EOU, depreciation on imported capital goods is to be computed up to the date of payment of duty on clearance, not merely up to the date of the Development Commissioner's de-bonding order. The text notes that Notification No. 52/2003-Cus, Notification No. 22/2003-CE and CBEC Circular No. 14/2004-Cus support depreciation till duty payment. Accordingly, the position stated is that the assessee's depreciation claim is admissible up to the clearance date.

---

---

Issues: Whether depreciation on capital goods imported by a 100% EOU was admissible up to the date of payment of duty and de-bonding, or only up to the date of the Development Commissioner's de-bonding order.

Analysis: The capital goods were installed in the EOU in 1986 and the de-bonding order was passed on 19.07.2002, while the ex-bond bills of entry were presented and duty was paid only on 14.03.2008. The applicable notifications governing debonding and clearance were Notification No. 52/2003-Cus and Notification No. 22/2003-CE dated 31.03.2003. The Board's Circular No. 14/2004-Cus dated 13.02.2004 also prescribed that depreciation is admissible till the date of payment of duty. The settled position relied upon by the appellant supported computation of depreciation up to payment of duty rather than limiting it to the date of the debonding order.

Conclusion: Depreciation was held admissible up to the date of payment of duty, and the assessee's claim was accepted.

Final Conclusion: The order denying depreciation beyond the de-bonding order date was set aside, and the appeal succeeded with consequential relief.

Ratio Decidendi: In the case of debonding of an EOU, depreciation on capital goods is to be computed up to the date of payment of duty on clearance, not merely up to the date of the de-bonding order.

---