Use of duty free raw material for capital goods manufactured within EOU for captive use – CBEC Clarifies
An Export Oriented Unit has represented regarding difficulties faced in grant of exemption from Customs & Central Excise duty on raw materials common for manufacture of both finished goods and capital goods (e.g. jigs, moulds, dies etc) within the EOU for captive use.
CBEC Clarifies:
Raw materials for making capital goods for use within the unit is allowed vide Sl. No. 16 of Annexure-I of notification No. 52/2003- Cus dated 31.03.2003. Capital goods manufactured out of duty free inputs for use within the EOU are required to be accounted for and bonded as per the usual bonding procedure. While following the into-bond procedure, the value of such capital goods would be assessed by following the computed value method in terms of the Customs valuation Rules, which would inter alia account for the raw material captively consumed in manufacture of capital goods. Such goods would be liable to duty as applicable in case of clearance outside the unit or debonding or exit from EOU scheme. Exemption from payment of duty of excise leviable under section 3 of the Central Excise Act, 1944 vide notification No. 24/2003-CE dated 31.03.2003 shall not be applicable in such cases.
The Board has prescribed that the value of the capital goods should be assessed by computed value method under Customs Valuation rules. What will be the value of the capital goods removed after, say 10 years of their use? Duty has to be paid on the full value assessed without any depreciation? When an issue is clarified, why don't they foresee such simple issues?
CBEC Circular No. 22/2009- Cus ., Dated: August 19, 2009