2017 (9) TMI 1338 - AT - Customs

Project Import - reinforced/filled thermo plastic compound - eligibility for the purpose of availing benefit of project import to be considered as a project import falling under Chapter 9801 and read with Project Import Regulations, 1986 - Held that - the provisions of the PIR 1986 themselves do not bar the import of machine in question - the chapter is to be taken to apply to all goods which satisfy the conditions prescribed therein even though they should be covered by a more specific heading elsewhere in the schedule. Chapter Note 2 lays down that Heading 9801 is to be taken to apply to all goods which are imported in accordance with PIR. The Project Import Regulations are beneficial provisions to facilitate persons for setting up substantial expansion of an existing unit. The definition of industrial plant excluding industrial system having a single machine or a composite machine is relevant. True, the definition is to identify whether industrial plant project per se falls within scope and purpose of CTH 9801 and the PIR 1986. Certainly, that is not the dispute here. There is no allegation that the project per se cannot be industrial plant project because there will be installation of only one machine or a composite machine - what is relevant is whether the goods imported are for a project having only a single machine or a composite machine. Such an allegation is not forthcoming from the records. In any case, the importers as evidenced from the replies during the adjudication proceedings etc. have been crying hoarse that importer had already made an investment of ₹ 8.32 crores in plant and machinery before the importation. The imported machinery is only meant for substantial expansion of installed capacity to the extent of 100% as certified by the Chartered Engineer. The imported goods qualified for classification under CTH 9801 and read with PIR 1986 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Eligibility of goods for project import benefit under Chapter 9801 and Project Import Regulations, 1986.

Analysis:
The case involves the appellant, Hydro S & S Industries Ltd., importing a Twin screw Extruder ZSK 58 MEGA Compounder for a substantial expansion project. The lower authority denied project import benefit, classifying the goods under CTH 84772000 instead of CTH 9801. The appellant argued that the imported machinery qualified for project import benefit as it was for the expansion of an existing unit of their factory. The department contended that a single machine is not eligible for project import benefit under PIR 1986. The core issue revolved around whether the imported goods were eligible for project import benefit.

The Tribunal examined the provisions of PIR 1986, noting that it facilitates import under specific contracts for entire projects. Regulation 3(a)(ii) excludes import of a single or composite machine. The relevant CTH 9801 covers machinery for initial setup or expansion of industrial plants. The Tribunal found that the imported Extruder was for extrusion purposes only, and the appellant admitted to procuring the rest of the machinery locally. The Tribunal confirmed that the appellant had registered a project contract with the Custom House for a substantial expansion project, supporting the import's purpose. The Tribunal concluded that the provisions of PIR 1986 did not prohibit the import of the machine in question.

Regarding the classification under CTH 9801, the Tribunal emphasized that the Project Import Regulations aim to facilitate substantial expansions. The definition of industrial plant excludes systems with single or composite machines. However, the Tribunal found no evidence that the project involved solely a single machine. The appellant had invested significantly in plant and machinery before the import, and the imported machinery was for a substantial capacity expansion. Therefore, the Tribunal ruled that there was no bar for the imported goods to be classified under CTH 9801 and granted the appeal, setting aside the impugned order.

In conclusion, the Tribunal allowed the appeal, finding that the imported goods qualified for project import benefit under Chapter 9801 and Project Import Regulations, 1986. The judgment was pronounced on 18.09.2017.