Imported goods qualify for project import benefit under Chapter 9801, Tribunal rules in favor.

Hydro S & S Industries Ltd. Versus Commissioner of Customs (Seaport-Imports)

Hydro S & S Industries Ltd. Versus Commissioner of Customs (Seaport-Imports) - 2018 (364) E.L.T. 499 (Tri. - Chennai) Issues:
Eligibility of goods for project import benefit under Chapter 9801 and Project Import Regulations, 1986.

Analysis:
The case involves the appellant, Hydro S & S Industries Ltd., importing a Twin screw Extruder ZSK 58 MEGA Compounder for a substantial expansion project. The lower authority denied project import benefit, classifying the goods under CTH 84772000 instead of CTH 9801. The appellant argued that the imported machinery qualified for project import benefit as it was for the expansion of an existing unit of their factory. The department contended that a single machine is not eligible for project import benefit under PIR 1986. The core issue revolved around whether the imported goods were eligible for project import benefit.

The Tribunal examined the provisions of PIR 1986, noting that it facilitates import under specific contracts for entire projects. Regulation 3(a)(ii) excludes import of a single or composite machine. The relevant CTH 9801 covers machinery for initial setup or expansion of industrial plants. The Tribunal found that the imported Extruder was for extrusion purposes only, and the appellant admitted to procuring the rest of the machinery locally. The Tribunal confirmed that the appellant had registered a project contract with the Custom House for a substantial expansion project, supporting the import's purpose. The Tribunal concluded that the provisions of PIR 1986 did not prohibit the import of the machine in question.

Regarding the classification under CTH 9801, the Tribunal emphasized that the Project Import Regulations aim to facilitate substantial expansions. The definition of industrial plant excludes systems with single or composite machines. However, the Tribunal found no evidence that the project involved solely a single machine. The appellant had invested significantly in plant and machinery before the import, and the imported machinery was for a substantial capacity expansion. Therefore, the Tribunal ruled that there was no bar for the imported goods to be classified under CTH 9801 and granted the appeal, setting aside the impugned order.

In conclusion, the Tribunal allowed the appeal, finding that the imported goods qualified for project import benefit under Chapter 9801 and Project Import Regulations, 1986. The judgment was pronounced on 18.09.2017.