Strict compliance with customs exemption conditions governs depreciated valuation for Free Trade Zone transfers and limitation runs from communication.

A customs exemption notification granting depreciated valuation for capital goods transferred from a Free Trade Zone to the Domestic Tariff Area required strict compliance with the specified permission conditions. The text states that permission from the licensing authority under the Import-Export Policy was not enough for the concession; Board permission for withdrawal or disposal was also necessary, so the depreciated valuation benefit was unavailable. On limitation, the appeal period was counted from communication of the impugned order, and the filing was treated as within three months, so the limitation objection failed. The stated ratio is that exemption conditions must be strictly satisfied before concessional valuation applies.

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Issues: (i) Whether the imported capital goods transferred from the Free Trade Zone to the Domestic Tariff Area were entitled to valuation on depreciated value under Paragraph 2C of Notification No. 77/80 dated 17-4-1980. (ii) Whether the appeal was barred by limitation under Section 129A(3) of the Customs Act, 1962.

Issue (i): Whether the imported capital goods transferred from the Free Trade Zone to the Domestic Tariff Area were entitled to valuation on depreciated value under Paragraph 2C of Notification No. 77/80 dated 17-4-1980.

Analysis: Paragraph 2C conditioned the concessional valuation on permission being granted in accordance with the Import-Export Policy, and on the goods having been permitted for withdrawal or disposal by the Kandla Free Trade Zone Board. The Policy and the Handbook contemplated different procedural settings, but the Notification imposed the additional requirement of Board permission for the purpose of obtaining the duty concession. Permission from the licensing authority alone was sufficient for transfer under the Policy, but not sufficient for depreciation-based valuation under the Notification.

Conclusion: The benefit of depreciated valuation was not available, as permission of the Board was not obtained; the finding is against the assessee.

Issue (ii): Whether the appeal was barred by limitation under Section 129A(3) of the Customs Act, 1962.

Analysis: The appeal period ran from the date on which the impugned order was communicated. The date stated in the appeal papers showed communication on 24-4-1990, and the filing on 13-7-1990 was within three months. The alternative contention based on an unreadable endorsement on the copy of the order was not accepted as a reliable date of communication.

Conclusion: The objection on limitation failed; the finding is in favour of the appellant.

Final Conclusion: The concessional duty claim failed, the limitation objection was rejected, and the order denying refund stood restored.

Ratio Decidendi: Where a customs exemption notification grants concessional valuation only upon satisfaction of specified permission requirements, those conditions must be strictly fulfilled for the concession to apply, even if the underlying policy permits the transfer itself.

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