Project import exemption for integral plant equipment cannot be denied by reclassifying it as a separate captive power unit.

Under the project import scheme, a fertiliser unit's substantial expansion was treated as a composite project, so an imported Steam Turbine claimed as an integral project item could not be isolated and reclassified as a separate captive power plant. The sponsoring Ministry's essentiality certificate is a material basis for determining eligibility, and once the item is shown as capital goods required for the project, customs authorities cannot dissect the project approval to deny exemption on a different footing. The commentary concludes that a revenue-oriented refusal is inconsistent with the project-import framework and that the project import exemption was available.

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Issues: Whether the petitioner was entitled to customs duty exemption for the imported Steam Turbine as part of a fertiliser project under the project import scheme, and whether the sponsoring Ministry could deny the essentiality certificate by treating the Turbine as a separate captive power plant.

Analysis: The import was part of a substantial expansion of the fertiliser unit, and the Steam Turbine was claimed as an integral item of the project. Under the project import scheme, assessment is made for the project as a composite unit, not by isolating individual items and reclassifying them separately. The sponsoring Ministry's essentiality certificate is material for determining eligibility, and once an item is treated as capital goods required for the project, the Revenue cannot dissect the project approval and deny the benefit on a different footing. The impugned refusal rested on a revenue-oriented approach and did not properly account for the project-import framework.

Conclusion: The petitioner was entitled to the benefit of project import exemption, and the refusal to grant the essentiality certificate was unsustainable.

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