Project Import benefit applies to test-working inputs used during initial installation, not to post-erection maintenance goods.

Import of a small quantity of graphic art films was treated as covered by the Project Import scheme because they were used for test-working machinery during the initial setting up of the project. Tariff Heading 84.66(i)(d) was applied to goods required for initial installation, while 84.66(ii) was distinguished as relating to spare parts, raw materials, or consumable stores for maintenance. The films were found not to be essential for post-erection maintenance, but their limited quantity, use in testing after erection, and the technical verification certificate supported their character as installation-stage inputs. They therefore qualified for Project Import benefit.

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Issues: Whether the import of a small quantity of graphic art films was entitled to benefit under the Project Import scheme under Tariff Heading 84.66 of the Customs Tariff Act, 1975.

Analysis: Tariff Heading 84.66(i)(d) covers auxiliary equipment and components or raw materials required for the initial setting up of an industrial plant, while Tariff Heading 84.66(ii) covers spare parts, other raw materials, or consumable stores essential for maintenance of the plant or project. The imported graphic art films were found not to be essential for maintenance of the plant, and test-working of machinery was distinguished from maintenance. At the same time, the small quantity imported, its use for testing the machinery after erection, and the technical verification certificate were treated as significant indicators that the films were required for the initial setting up of the unit and not for manufacture of final products.

Conclusion: The graphic art films qualified as part of the initial setting up of the project and were entitled to Project Import benefit. The decision is in favour of the assessee.

Ratio Decidendi: Goods imported in a small quantity for test-working machinery during initial setting up of a project may fall within Project Import coverage where they are integral to the installation stage and the technical verification supports that use, even if they are not essential for post-erection maintenance.

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