Project import benefit survives stricter licence description where extra components are needed for registered project completion.

Additional imported components required for completion of a registered project import may still qualify for benefit under Heading 98.01 even if they are not separately described in the licence or packing list, where the facts show they formed part of the project, were needed because of design changes, and there is no evidence of deliberate misuse. The policy relaxation for capital goods under para 45 of the Import and Export Policy 1988-91 was applied to avoid hardship in project implementation. The project import benefit was therefore allowed, while the valuation and duty consequences on the undeclared quantity were left for fresh determination after hearing.

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Issues: Whether the import of additional heater units, though not separately covered in the licence and packing list, was nevertheless entitled to project import benefit under Heading 98.01; and whether confiscation, redemption fine, penalty, and the valuation consequences could be sustained.

Analysis: The imported goods formed part of a new project for which the contract had been registered before clearance. The record showed that the equipment was part of the PVC resin drying section and that, due to design changes during detailed engineering, two additional heater units were required for the project. The policy relaxation for capital goods under para 45 of the Import and Export Policy 1988-91 was considered applicable in the peculiar facts, and the object of project import treatment was to avoid hardship in setting up the project. The absence of evidence of deliberate misuse, together with the project-specific nature of the import, led to the conclusion that the importer was entitled to the project import benefit. However, the declared value covered only two heaters while four were imported, so the duty consequence on the undeclared value required determination by the adjudicating authority after hearing.

Conclusion: The project import benefit under Heading 98.01 was allowed, the redemption fine and penalty were set aside, and the valuation of the four heaters was remitted to the adjudicating authority for fresh determination after hearing; duty was payable at the appropriate rate on the undeclared value.

Ratio Decidendi: Where additional imported components are shown to be required for project completion in a registered project import, a strict licence description will not defeat project import benefit if the facts show no deliberate contravention and the import falls within the policy flexibility for expeditious completion of the project.

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