Imported auxiliary machinery for initial fertiliser plant setup, later-use doubts rejected; project import benefit under Heading 98.01/84.66 allowed.

The dominant issue was whether imported auxiliary machinery, fully utilised for initial setting up of a specified fertiliser project, qualified for assessment under the Project Import Scheme in Heading 98.01/84.66 CTA despite a possibility of later use elsewhere. The Tribunal held that once the fertiliser plant falls within the specified industrial plants, all auxiliary equipment required for initial setting up is covered, as "auxiliary" includes equipment that aids the project and need not become an integral part of the plant or be incapable of subsequent use. In the absence of evidence that the goods were diverted to any other project, denial of project import benefit was held unsustainable, and the benefit was allowed; the other referred issue was treated as academic and not decided.

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Issues involved:
The classification of machinery and equipment imported by M/s. Toyo Engineering India Ltd. under Heading 98.01 of the Customs Tariff Act, 1975 for the benefit of Project Import under the Project Import Regulation.

Details of the Judgment:

Issue 1: Denial of benefit under Project Import Scheme
The appeal was filed against the denial of classification under Heading 98.01 for imported machinery and equipment. The imported goods were used in the initial setting up of a fertiliser plant. The Assistant Collector and the Collector (Appeals) rejected the request for registration under Project Import Regulation, stating that the imported goods would remain the property of the importer and could be used for other projects. The Tribunal held that the machinery imported for the specified project qualifies for classification under Heading 98.01 as auxiliary equipment required for the initial setting up of the unit. The Tribunal emphasized that the mere fact that the equipment could be used elsewhere later does not disqualify them from being covered by Heading 98.01.

Issue 2: Contract Registration and Compliance
The Revenue argued that the absence of a specific registered contract for the import of construction material disqualifies the goods from classification under Heading 98.01. They referred to Chapter 98 Note (2) and Regulation 4 of the Project Imports Regulations, 1986. However, these arguments were raised for the first time before the Tribunal, and it was held that new pleas cannot be considered at the appeal stage. The Tribunal found no evidence that the imported goods were used for any other project after the initial setting up, thus confirming the eligibility of the appellants for project import under Heading 98.01.

Conclusion:
The Tribunal ruled in favor of M/s. Toyo Engineering India Ltd., stating that the machinery imported for the fertiliser plant project qualifies for classification under Heading 98.01 as auxiliary equipment for the initial setting up of the unit. The denial of the benefit of project import was overturned, and it was established that the appellants are eligible for project import of the goods under Heading 98.01. The second question referred regarding the use of imported goods for other projects was deemed of academic interest and not answered in the present matter.

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