Registration of contracts - CBEC's Customs Manual 2023 - Customs

3. Registration of contracts: 3.1 In terms of Regulation 4 of the Project Import Regulations, 1986 (PIR), the basic requirement for availing the benefit of assessment under Tariff Heading No. 98.01 is that the importer should have entered into one or more contracts with the suppliers of the goods for setting up a project. Such contracts should be registered, prior to clearance, in the Custom House through which the goods are expected to be imported. The importer shall apply for such registration in writing to the proper officer of Customs. 3.2 Regulation 5 provides in the manner of registering contracts, which is as follows: (i) Before any order is made by the proper officer of Customs permitting the clearance of the goods for home consumption; (ii) In the case of goods cleared for home consumption without payment of duty subject to re-export in respect of fairs, exhibitions, demonstrations, seminars, congresses and conferences, duly sponsored or approved by the Government of India or Trade fair Authority of India, as the case may be, before the date of payment of duty. 3.3 To expedite registration, the importers are advised to submit the following documents along with the application for registration: (i) Original deed of contract together with true copy thereof. (ii) Industrial License and letter of intent, SSI Certificate granted by the appropriate authority with a copy thereof. (iii) Original Import licence, if any, with a list of items showing the dimensions, specifications, quantity, quality, value of each item duly attested by the Licensing Authority and a copy thereof. (iv) Recommendatory letter for duty concession from the concerned Sponsoring Authority, showing the description, quantity, specification, quality, dimension of each item and indicating whether the recommendatory letter is for initial set-up for substantial expansion, giving the installed capacity and proposed addition thereto. (v) Continuity Bond with cash security deposit equivalent to 2% of CIF value of contract sought to be registered subject to the maximum of Rs. 50 lakhs and the balance amount by the bank Guarantee backed by an undertaking to renew the same till finalization of the contract. The said Continuity Bond should be made out for an amount equal to the CIF value of the contract sought to be registered. (vi) Write up, drawings, catalogues and literature of the items under import. (vii) Process flow chart, plant layout, drawings showing the arrangement of imported machines along with an attested copy of the Project Report submitted to the Sponsoring authorities, Financial Institution, etc. (viii) Two attested copies of foreign collaboration agreement, technical agreement, knowhow, basic/detailed engineering agreement, equipment supply agreement, service agreement, or any other agreement with foreign collaborators/suppliers/ persons including the details of payment actually made or to be made. (ix) Such other particulars, as may be considered necessary by proper officer for the purpose of assessment under Heading No. 9801. 3.4 In regard to the requirement of registration of the contract (or contracts) and production of the original deed of contract , the Board noted that as per Section 10 of the Indian Contract Act, 1872 a valid contract contains certain essential elements viz. (a) it is entered into by free consent of parties competent to contract; (b) there should be lawful consideration; (c) there should be a lawful object; and (d) it is not expressly declared to be void under the statute. It is therefore decided that a purchase order that contains all the essential ingredients of a valid contract must be treated as one under the Indian Contract Act, 1872 . Thus, such a purchase order can be accepted as a deed of contract for the purpose of Regulation 5 of Project Import Regulations, 1986 . [Refer Circular No. 31/2013-Cus. dated 6-8-2013 ] 3.5 After satisfying that goods are eligible for project imports benefit and importer has submitted all the required documents, the contract is registered by the Custom House and as a token of registration the provisional duty bond is accepted by the Assistant/ Deputy Commissioner of Customs, Project Import Group. The details of the contracts are entered in the register kept for the purpose and a Project Contract Registration Number is assigned and communicated to the importer. The importer is required to refer to this number in all subsequent correspondence.