Quarter-based depreciation under exemption notifications cannot be restricted by departmental circulars for debonded EOU capital goods.

Where exemption notifications expressly state that any part of a quarter must be taken as a full quarter for depreciation, that quarter-based benefit applies to debonded capital goods of a 100% EOU. The departmental circular addressed the period and method of depreciation generally, but it could not curtail the express entitlement created by the notifications. An administrative circular cannot override or dilute a delegated legislative instrument, so the contrary demand was unsustainable.

---

---

Issues: Whether, while computing depreciation for debonded capital goods of a 100% EOU, a part of a quarter must be treated as a full quarter under the applicable exemption notifications, and whether the departmental circular could restrict that entitlement.

Analysis: The depreciation clauses in paragraph 8 of Notification No. 22/2003-CE and paragraph 4 of Notification No. 52/2003-Cus. expressly provide that for the purpose of computing depreciation for any part of a quarter, a full quarter is to be taken into account. The departmental circular dealt with the period from which depreciation is admissible and the manner of computation generally, but did not curtail the express quarter-based benefit granted by the notifications. An administrative circular cannot override or dilute the terms of a delegated legislative instrument such as an exemption notification.

Conclusion: The appellant was entitled to treat part of the quarter as a full quarter for depreciation, and the demand founded on the contrary view was unsustainable.

Ratio Decidendi: Where an exemption notification expressly allows a full quarter to be taken into account for a part-quarter period, a departmental circular cannot restrict that entitlement.

---