Nil customs duty for refinery expansion turns on proof that the project actually set up a new refinery.

Nil customs duty under Notification No. 23/98-Cus depended on whether the imported goods were used for setting up a refinery. Registration of the project as a substantial expansion did not, by itself, defeat the exemption claim, and use of existing infrastructure was not automatically fatal if a new refinery was otherwise established. The record before the lower authorities was inconclusive on whether the imported and indigenous goods had in fact been used for a new refinery, so the matter was remanded for fresh field-level verification and a decision on eligibility.

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Issues: Whether the imported goods were eligible for the benefit of nil rate of customs duty under Notification No. 23/98-Cus dated 2-6-98 on the footing that the appellant's expansion project constituted setting up of a refinery.

Analysis: The notification granted exemption to goods required for setting up a refinery, and the question was whether the appellant had in fact established a new refinery so as to attract the benefit. The fact that the project had been registered under Project Import Regulations for substantial expansion did not by itself disqualify the claim. However, the record before the lower authorities did not conclusively establish that the imported and indigenous goods had been used to set up a new refinery, and the materials later produced needed verification at the field level. The use of existing infrastructure was not, by itself, fatal if a new refinery was otherwise established.

Conclusion: The matter was remanded to the original authority for fresh verification and decision on whether the appellant had set up a new refinery and was entitled to the exemption.

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