Modernisation of an existing plant was not substantial expansion for project import benefit under customs tariff law.

Conversion and modernisation of an existing sulphuric acid plant from single absorption to double catalyst-double absorption was held not to amount to "substantial expansion" of an existing unit for project import benefit under Heading 84.66 of the Customs Tariff Act, 1975. The Tribunal applied the principle that substantial expansion requires enlargement of the unit itself on a scale comparable to setting up a new unit, not merely increased production capacity, modernisation, or revamping. The contrary authority relied on by the importer was distinguished, and the settled line of authority was followed against the claimed concessional treatment.

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Issues: Whether conversion and modernisation of an existing sulphuric acid plant from single absorption to double catalyst-double absorption amounted to "substantial expansion of an existing unit" so as to qualify for project import benefit under Heading 84.66 of the Customs Tariff Act, 1975.

Analysis: The imported goods were intended for modification and modernisation of an existing plant. The decisive question was whether such work constituted substantial expansion of the unit, as contemplated by Heading 84.66 of the Customs Tariff Act, 1975. The Tribunal followed its earlier view that the expression refers to expansion of the unit itself on a scale comparable to setting up a new unit, and not merely to increase in production capacity or to modernisation and revamping. The earlier decision relied upon by the appellant was distinguished, and the contrary line of authority was treated as settled law against the claimed benefit.

Conclusion: The conversion project did not amount to substantial expansion of an existing unit. The claim for project import benefit failed.

Final Conclusion: The appeal was unsuccessful and the order denying registration and concessional treatment was sustained.

Ratio Decidendi: Modernisation or revamping of an existing plant, without an expansion of the unit on a scale comparable to the setting up of a new unit, does not constitute "substantial expansion" for project import benefit.

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