Water purification project exemption applies where imported machinery supports industrial-use water treatment under the notification.

An exemption under Notification No. 14/2004-Cus. was available where imported machinery formed part of a reverse osmosis membrane filtration system used to produce water fit for industrial use. The notification covered water supply projects under Tariff Heading 9801, including plants for desalination, demineralisation, purification or similar processes intended to make water fit for agricultural or industrial use. The sponsoring authority's essentiality certificate supported the project's character as a covered water supply project, and the project therefore qualified for the exemption benefit.

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Issues: Whether the respondent was entitled to exemption under Notification No. 14/2004-Cus. dated 08.01.2004 for the imported project claimed as a water supply project.

Analysis: The notification extended exemption to a water supply project under Tariff Heading 9801 and its explanation included a plant for desalination, demineralisation or purification of water or any similar process intended to make water fit for agricultural or industrial use. The imported machinery formed part of a reverse osmosis membrane filtration system used to obtain water for industrial use, and the essentiality certificate issued by the sponsoring authority supported the classification of the project within the notification. The project therefore answered the description of a water supply project covered by the exemption.

Conclusion: The respondent was eligible for the benefit of the exemption notification.

Ratio Decidendi: Where the imported machinery is used in a plant that purifies water for industrial use and the sponsoring authority's certificate supports such use, the project falls within an exemption notification covering water supply projects and similar water-purification processes.

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