What I understand from the further details furnished is as follows:
- Customs permitted the sending of the machinery for repair treating it as nonexport based on the GR waiver by Bank. While doing so, Customs have noted certain unique features of the machinery so sent to the supplier abroad so that they can verify it when it is reimported. Now due to extensive repairs, Importer, ie yourselves not in a position to prove before Customs about the identification mark of the initial equipment exported without GR for repairs.
- Due to the repairs/upgradation, you want to add such cost to the OCP viz. capitalize the charges and take advantage of depreciation so that your P&L Account does not take full hit during the year of full payment and your profitability is not affected.
My clarification would be as follows:
Point 1: There may not be specific guidelines in such circumstances, as such occurrences are not common and do not happen often requiring guidelines to be written. I am sure, Customs Authorities must have dealt with similar cases over the years, albeit now and then.
Ultimately after all things considered, it boils down to the fact that Customs should be satisfied that it is a reimport and not a fresh import. To the extent up-gradation has taken place, which escalated the cost of the machine now, needs to be looked into whether such partial up-gradation whether to be treated as a fresh import. These matters only Customs Department Officials only can clarify/reply. I am of the view that if you approach Customs giving full details and seek their guidance as to how to prove that the machinery sent out is in fact is being reimported, of course with value addition of upgradation. In such cases, to what extent is treated as fresh import, and to what extent it is treated as reimport. For treating it as reimport either partly or fully, what certificate and from whom Customs Department requires to prove that it was the same machine that was sent out for repairs now being received back for which earlier unique identification marks are no longer available.
My advice would be to find out a good Consultant, well versed in the clearance of goods from Customs, ensure that such person understands all the facts duly assimilating the issues, and approach Customs Department with such Consultant who knows and have contacts as to whom to approach and how to get things done.
Point 2: It is a matter of accounting. Your Chartered Accountant should be able to help you, by taking up with the Income Tax Department, if necessary.