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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether diesel generator sets imported for a nuclear power project were eligible to be treated as part of the project import and to receive exemption under Sr. No. 401 of Notification No. 21/2002-Cus.
Analysis: The import was made for the initial setting up of a nuclear power plant, and the record showed that uninterrupted power supply was necessary to satisfy safety and regulatory requirements before the plant could be made operational. The emergency power arrangement was therefore not a separate stand-by facility in the ordinary sense, but a functional component required for commissioning and clearance of the project. The distinction drawn by the lower authority from cases involving captive power plants for general industrial use was held inapplicable on the facts, because here the DG sets were required as part of the initial project set-up and for safe operation of the plant.
Conclusion: The DG sets were held to be part of the project and eligible for the benefit of Sr. No. 401 of Notification No. 21/2002-Cus.; the impugned order was set aside and the appeal was allowed.
Ratio Decidendi: Where emergency power equipment is required as an essential component of the initial set-up and safe commissioning of a regulated project, it forms part of the project import and is eligible for the corresponding exemption.
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