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
Depreciation to be allowed for used motor vehicles Subject
: 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 :
4% - (i) for every quarter during the 1st year
3% - (ii) for every quarter during the 2nd year
2.50% - (iii) for every quarter during the 3rd year
2% - (iv) for every quarter during the 4th year
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 :
4% for every quarter during 1st year - (i)
3% for every quarter during 2nd year - (ii)
- 2.50% for every quarter during 3rd year (iii)
2% and thereafter for every quarter during 4th year
- (iv)
subject to an overall limit of 70%
The above instructions may be brought to the notice of 4.
all Assessing Officers. The instructions will apply from the date of their issue
and would apply to all pending assessment.
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. Irshad Ali v. Commissioner — 2001 (137) E.L.T. 1041 (Tri. -
Chennai).