Project import concession for staged industrial setup upheld; mandatory contract registration applies when the application is in order.

Empty gas cylinders imported in phased consignments for new industrial units were treated as goods for the initial setting up of the unit under Heading 84.66, because "initial setting up" was construed to cover completion of the first establishment and not to require simultaneous arrival of all imports. The concessional project-import treatment was therefore available despite staged implementation. The contract registration rule was also treated as mandatory: once the prescribed application was in order, the proper officer was bound to register the contract under the Project Imports Regulations, and refusal to do so was unsustainable.

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Issues: (i) Whether empty gas cylinders imported in stages for new industrial units were covered by Heading 84.66 of Section XVI of the Customs Tariff Act, 1975 as goods required for the initial setting up of a unit. (ii) Whether the proper officer was bound to register the contract under the Project Imports (Registration of Contract) Regulations, 1965 once the application was in order.

Issue (i): Whether empty gas cylinders imported in stages for new industrial units were covered by Heading 84.66 of Section XVI of the Customs Tariff Act, 1975 as goods required for the initial setting up of a unit.

Analysis: The expression "initial setting up" was construed as including the completion of the first setting up of the unit, and not as requiring all imported goods to arrive at one time. The unit could be established in stages, and the fact that the cylinders were brought in phased consignments did not detract from their use for the first establishment of the industrial units. The provision, being one granting concessional duty to encourage industrial activity, was read liberally and in a manner consistent with its object.

Conclusion: The imports qualified for assessment under Heading 84.66, and the benefit of the concessional rate could not be denied on the ground that the units were implemented in stages.

Issue (ii): Whether the proper officer was bound to register the contract under the Project Imports (Registration of Contract) Regulations, 1965 once the application was in order.

Analysis: Regulation 4 required the proper officer, upon being satisfied that the application was in order, to register the contract. The language was mandatory, not discretionary. A refusal to register despite compliance with the prescribed requirements would defeat the project import procedure and was inconsistent with the scheme of the regulations and the endorsement already made by the sponsoring authorities.

Conclusion: The refusal to register the contract was unsustainable, and the contract was required to be registered.

Final Conclusion: The impugned refusal was set aside and the petitioner was held entitled to the concessional project import treatment claimed.

Ratio Decidendi: A concessional project-import entry intended to promote industrialization must be construed liberally, and where the prescribed application is in order the registering authority has a mandatory duty to register the contract.

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