Circular No. : 493/124/86-Cus, VI Dated : 19/11/1987
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
NEW DELHI, THE 19th NOVEMBER. 1987.
All Collectors of Customs
All collectors of Customs and Central Excise
Subject :Valuation of second-machinery and fixation of Scale of depreciation.
- The question of prescribing a fixed scale of depreciation to be allowed for valuation of imported second-hand machinery has been under consideration of the Ministry. This is considered necessary so as to avoid dispute in the valuation of imported second-hand machinery and consequent delays in their clearance.
- It has been decide that depreciation may be allowed for arriving at the assessable value of second-hand machinery on the following scale : -
(i)For every quarter during first year4%16
(ii)For every quarter during 2ndyear..3%12
(iii)For every quarter during 3rdyear.2.50%10
(iv)For every quarter during 4th year..2%8
Subject to an overall limit of70%46
- It may be pointed out that under the Import Policy, importers of second-hand machinery are required to produce a certificate from a professional independent chartered engineer or any equivalent institute in the country of supply of the machinery. This certificate, inter alia, indicates the currency, C.I.F value of the machinery, if purchased now, year of manufacture of the machinery and the sale price of the suppliers besides present condition of the machinery and nature of reconditioning or repairs, if any, carried out. This information if otherwise found acceptable would enable the officers to determine the original value of the machinery for purpose of allowing depreciation on the scale mentioned above. The cost of reconditioning done to the machinery (which would be available in the chartered engineers certificate) may be added to the depreciated value for the relevant year in which reconditioning was done. The depreciation will be calculated on the original value of the machinery under import.
- The above instruction would apply to import of second-hand machinery, including machinery being imported by project exporters.
- Please acknowledge receipt of this letter.
UNDER SECRETARY TO THE GOVERNMENT OF INDIA