Method of depreciation working ....Indigenous capital goods procured without payment of duty

[deepak kalambate]

Dear Sir,

Indigenous capital goods procured by 100% EOU without payment of duty and paid duty on depreciated value at the time of debonding, what is the proper method for calculation of depreciation.

1. As per Notification No. 39/2007 CE?  or

2. As per FTP Para 6.36.3

 

[Surender Gupta]

Something is missing!

Whether, cenvat credit has been av availed against the duty paid by the EOU on debonding. If yes, irrespective of the fact at what value, such EOU has paid the duty, the unit availing the CENVAT credit should treat the same as fresh and depreciation to be calculated fresh.

However, more detailed and clear query may help to address the issue precisely.

[deepak kalambate]

Dear Sir,

100% EOU has procured goods without payment of duty and no cenvat credit is taken.  At the time of debonding, depreciation was calculated as per para 6.36.3 of FTP and paid excise duty on depreciated value.

Now C.Ex. department is saying that EOU should calculate depreciation as per notfn no.39/2007 and not as per FTP Para 6.36.3

Pl advise.

[Surender Gupta]

When no cenvat credit has been availed, there is no question to apply the provisions of Cenvat Credit Rules, 2004 on the transaction.

You need to follow provisions of FTP only.

[deepak kalambate]

Dear Sir,

Thanks for your reply.

Can u please send me any related case laws or OIO

Thanks & Regards,

AI Summary

Depreciation method for EOU capital goods: apply FTP debonding rule if no cenvat credit; otherwise treat as fresh credit event.
Depreciation on indigenous capital goods procured by a 100% EOU must be calculated under CENVAT/central excise provisions and treated as fresh where CENVAT credit was availed; if no CENVAT credit was taken, the CENVAT rules do not apply and depreciation should be determined pursuant to the Foreign Trade Policy debonding provision relied upon by the EOU.