Captive power plant imports denied project import benefit where the unit was too small to qualify as a power generation project.

Goods imported for a 1 MW captive power plant were held not to qualify for project import benefit under Heading 98.01 or exemption under Serial No. 399(iv) of Notification No. 21/2002-Cus. The Tribunal treated the decisive factor as the nature of the undertaking and the intended use of generated power: State permission allowed only captive consumption with no third-party sale, and a small plant was distinguished from a power generation project, which the Tribunal viewed as a larger and more extensive undertaking. The exemption claim therefore failed.

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Issues: Whether goods imported for setting up a 1 MW power plant were eligible for project import benefit and exemption under Serial No. 399(iv) of Notification No. 21/2002-Cus. as a power generation project, notwithstanding the plant being intended for captive use and supply to a sister concern.

Analysis: The goods were claimed under Heading 98.01 of the Customs Tariff Act, 1975 and under the exemption entry for power generation projects. The determining factor was the nature of the undertaking and the use of the generated power. The permission granted by the State authorities showed that the plant was for captive consumption, with no third-party sale permitted. The Tribunal also relied on the distinction between a power plant and a power project, holding that a project denotes something more extensive than a small plant. Since the appellant's plant had only 1 MW capacity and was meant for captive use, it could not be treated as a power generation project within Serial No. 399(iv).

Conclusion: The appellant was not entitled to project import benefit or exemption under Serial No. 399(iv), and the claim failed.

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