Project-import classification requires direct nexus to plant setup; customs authorities must independently verify tariff eligibility.

Project-import classification under Heading 84.66 requires a direct nexus between the equipment and the initial setting up or substantial expansion of the industrial plant itself. Equipment used for a port facility conveying system, designed only for unloading raw materials and loading finished product for export, lacks that direct connection to the plant's mining, refining, or manufacturing operations. Under the Project Imports Regulations, 1965, customs officers must independently satisfy themselves that the goods fit the tariff description, and an import licence or departmental endorsement cannot by itself determine classification under the Customs Act, 1962.

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Issues: Whether equipment imported for the Visakhapatnam port facility conveying system was covered by Item (i)(D) of Heading 84.66 of the Customs Tariff Act, 1975 as auxiliary equipment required for the initial setting up of a unit of a specified industrial plant, and whether the customs authorities were bound by the import licence or departmental endorsement treating the goods as project import.

Analysis: The tariff entry was held to require a direct nexus between the equipment and the initial setting up or substantial expansion of an industrial plant. The port facility system was designed only for unloading raw materials from ships and loading finished alumina for export, and it had no direct bearing on the mining, refining, or manufacturing operations of the industrial plant. The earlier decisions under the Central Sales Tax Act were distinguished because they turned on different statutory language. The Project Imports Regulations, 1965 required the proper officer to be satisfied independently that the goods answered the tariff description, and the licensing authority's endorsement could not control classification under the Customs Act, 1962.

Conclusion: The equipment for the port facility conveying system did not fall under Heading 84.66, and the customs authorities were not bound to grant project import registration merely because of the licence or departmental recommendation.

Final Conclusion: The appeals failed and the refusal of project import benefit for the port facility equipment was upheld.

Ratio Decidendi: Goods qualify as project-import auxiliary equipment only when they are required for the initial setting up or substantial expansion of the industrial plant itself, and the customs authority must independently satisfy itself on that criterion notwithstanding any licensing endorsement.

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