Depreciation - Depreciation to be allowed for used motor vehicles imported into India- instructions - Review of.

Document Text

Valuation (Customs) of second-hand motor vehicles-Depreciation for: F. No. 495/16/93-Cus.VI, dated 26-5-1993. Government of India, Central Board of Excise & Customs, New Delhi. Subject: Depreciation to be allowed for used motor vehicles imported into India- instructions - Review of – Regarding: The question of prescribing of fixed scale of depreciation to be allowed for valuation of imported second-hand motor vehicles has been under consideration of the Board. This was considered necessary so as to avoid disputes in the valuation of imported second-hand motor vehicles and subsequent delays in their clearance. 2. As per the existing Instructions, the scale of depreciation for old and used cars is as under: 1. for every quarter during the 1st year - 4% 2. for every quarter during the 2nd year - 3% 3. for every quarter during the 3rd year - 2.50% 4. for every quarter during the 4th year - 2% If the motor vehicles are more than 4 years old, depreciation is allowed on merit after inspection of the motor vehicles, subject to a maximum limit of 70%. 3. In order to avoid possible disputes on the depreciation allowed on motor vehicles which are more than 4 years old, it has been decided by the Board that the scale of depreciation on used motor vehicles henceforth will be on the same basis as for the imported second-hand machinery. As such, the scale of depreciation for valuation of imported second-hand motor vehicles will be as under: (i) (ii) (iii) (iv) for every quarter during 1st year - 4% for every quarter during 2nd year - 3% for every quarter during 3rd year - 2.50% for every quarter during 4th year - 2% and thereafter subject to an overall limit of 70%. 4. The above instructions may be brought to the notice of all Assessing Officers. The instructions will apply from the date of their issue and would apply to all pending assessment. For subsequent modifications/developments, see Circular No. 643/34/2002-CX., dated 1-7-2002. JUDICIAL ANALYSIS C.B.E & C Circular F. No. 495/16/93-Cus., dated 26-5-1993 was referred by the assessee before the Tribunal. Appeal was disposed of relying upon the cited case of S.R. Chanan v. Collector -1996 (87) E.L.T. 147 (Tribunal) wherein it was held that - "Subsequent instruction of the Ministry in increasing the level of maximum depreciation beyond 46% in respect of Cars also can be applied for past cases". - Elisua Antony v. Collector - 1999 (108) E.L.T. 108 (Tribunal). C.B.E. & C Circular F. No. 495/16/93-Cus. VI, dated 26-5-1993 was relied upon by the Revenue and followed by the Tribunal in the context of the case. - M. lrshad Ali v. Commissioner- 2001 (137) EL.T. 1041 (Tri. - Chennai).

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