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Circular No. 14 /2004-Cus
13th February, 2004

F.No 305/195/2003-FTT
Government of India
Ministry of Finance
Department of Revenue
Central Board of  Excise  and  Customs

 SUB:-  Depreciation admissible in respect of Capital Goods to EOU/EHTP/STP

I am directed to invite your attention to the Notifications Nos 52/2003-Cus and 22/2003-CE both dated the 31st March, 2003 governing duty free import and procurement by EOUs and units in EHTP/ STP. In the said notifications , it has been provided that  in respect of clearance of capital goods  by EOU/EHTP/STP units depreciation at the rate of 20% per annum of the original value of computer and computer peripherals items and 10% per annum in case of other capital goods would be admissible. In the notifications( refer Explanation to para 4 of the notification No 52/2003-Cus  and Explanation to para 8 of the notification No 22/2003-CE) it has been also provided that depreciation shall be allowed  for the period from date of commencement of commercial production of the unit or where such goods have been received  after such commencement, from the date such goods have come into use for commercial production, till date of  payment of such duty. The Board vide circular 29/2003-Cus dated 3-4-2003 , also has clarified  that depreciation could be allowed upto 100%.

2. It has  come to the notice of the Board that  divergent practices are being followed while allowing depreciation to EOU/EHTP/STP units. In the field formations, in some Commissionerates,  depreciation is being  calculated for full  years only.

3.  The matter has been examined by the Board. In terms of the above stated notification depreciation is admissible till the date of payment of duty. Therefore, there is no basis for  contending that depreciation would be allowed for full year or quarter year only. The depreciation is allowed in straight line method and would be allowed till the date of payment of duty.  For the part years or months, depreciation would be computed proportionally.

4.  Difficulty, if any, faced in implementation of the above said instruction, may please be brought to the notice of the Board at the earliest.

5.  Wide publicity may please be given to the above said instruction by way of issuance of public notice.

6. Kindly acknowledge the receipt of this circular.

7.  Hindi version follows.

Technical Officer( FTT)
Telephone No: 23093859

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