Project import concession denied where no registrable contract existed and heat treatment was not manufacture or production.

A proforma invoice was held insufficient to satisfy the contract-registration requirement under the Project Imports (Registration of Contract) Regulations, 1965, because the scheme contemplates a formal registrable contract and not a preliminary commercial document. Heat treatment of components was also found not to amount to manufacture or production, as no new and distinct article emerged with a different name, character or use; the activity remained job work rather than an industrial plant. On that basis, the unit did not qualify for project import concession under Heading 84.66, which requires an industrial plant engaged in manufacture or production.

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Issues: (i) Whether a proforma invoice could be treated as a contract for registration under the Project Imports (Registration of Contract) Regulations, 1965. (ii) Whether heat treatment activity constituted manufacture or production so as to qualify the unit as an industrial plant eligible for project import concession under Heading 84.66.

Issue (i): Whether a proforma invoice could be treated as a contract for registration under the Project Imports (Registration of Contract) Regulations, 1965.

Analysis: The scheme of project imports requires registration of a contract and the application must satisfy the requirements of Rule 3(3). The contract contemplated by the regulations is a formal contract and not merely a proforma invoice or similar preliminary commercial document. The record showed no proper contract in the required sense.

Conclusion: The proforma invoice could not be accepted as a contract, and the issue was against the assessee.

Issue (ii): Whether heat treatment activity constituted manufacture or production so as to qualify the unit as an industrial plant eligible for project import concession under Heading 84.66.

Analysis: The activity carried on was heat treatment of components to achieve specified physical, chemical and metallurgical properties, but no new and different article emerged with a distinct name, character or use. The unit therefore remained a job-work establishment and not an industrial plant engaged in manufacture or production. Since the initial setting up or substantial expansion contemplated by Heading 84.66 presupposes an industrial plant, the claim for project import concession was not made out.

Conclusion: Heat treatment in the facts of the case did not amount to manufacture or production, and the assessee was not entitled to project import concession.

Final Conclusion: The appeal failed because neither the contractual requirement nor the substantive eligibility condition for project import benefit was satisfied.

Ratio Decidendi: For project import concession, there must be a duly registrable contract and an industrial plant engaged in manufacture or production; a process that merely improves components without bringing into existence a new and different article does not satisfy that requirement.

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