Tariff Heading 98.01 includes transmission and distribution power projects, while substantial expansion still needs factual proof of capacity increase.

Tariff Heading 98.01 was held to cover machinery imported for a power project engaged not only in generation but also in transmission and distribution of electricity, rejecting the narrower view that it applied to generation alone. Eligibility based on substantial expansion still depended on a factual finding whether the imported goods increased the capacity of the existing network by more than twenty-five per cent, and that issue required fresh examination on evidence. The interpretation issue was decided in favour of the appellant, but the matter was remanded for determination of the expansion requirement.

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Issues: (i) whether Tariff Heading 98.01 covered machinery imported for a power project engaged in transmission and distribution of electricity as well as generation; (ii) whether the matter had to be remanded for determination whether the imports resulted in substantial expansion of the appellant's network.

Issue (i): whether Tariff Heading 98.01 covered machinery imported for a power project engaged in transmission and distribution of electricity as well as generation.

Analysis: Tariff Heading 98.01 applies to machinery required for the initial setting up of a unit or the substantial expansion of an existing unit of a specified power project. The expression "power project" was held to include not only a project generating electricity but also one transmitting and distributing electricity. The earlier view limiting it to generation alone was rejected.

Conclusion: The expression "power project" under Tariff Heading 98.01 includes transmission and distribution projects as well as generation projects.

Issue (ii): whether the matter had to be remanded for determination whether the imports resulted in substantial expansion of the appellant's network.

Analysis: The Tribunal had not examined whether the imported goods would bring about a substantial expansion, namely more than twenty five per cent, in the capacity of the appellant's network. That factual aspect required consideration by the Tribunal on evidence.

Conclusion: The order was set aside and the matter was remanded to the Tribunal for fresh consideration on the substantial expansion question.

Final Conclusion: The appellant succeeded on the interpretation of Tariff Heading 98.01, but the dispute was sent back for determination of the substantial expansion requirement.

Ratio Decidendi: For Tariff Heading 98.01, a power project includes projects for transmission and distribution of electricity, and eligibility on the ground of substantial expansion depends on a factual finding whether the imports increase capacity by more than twenty five per cent.

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