Transport equipment for moving raw materials to a project site is not auxiliary equipment under project import classification.

Wheel sets and railway wagons imported for moving raw materials to a fertilizer project were not "auxiliary equipment" under Heading 98.01 of the Customs Tariff Act, 1975. The stated principle was that project import benefit covers equipment with direct use in the initial setting up or substantial expansion of the project, not transport equipment operating outside the factory premises. Applying the earlier Larger Bench view, transport items such as wagons, trucks and similar vehicles were held outside Heading 98.01, and the importer's relied-upon authorities were treated as factually distinguishable. Project import concession was therefore unavailable.

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Issues: Whether wheel sets and railway wagons imported for transporting raw materials to a fertilizer project qualified as "auxiliary equipment" under Heading 98.01 of the Customs Tariff Act, 1975 for project import benefit.

Analysis: The claimed goods were not equipment installed at the project site for the initial setting up or substantial expansion of the unit, but transport equipment used outside the factory premises for carrying raw materials from the port to the factory. The expression "auxiliary equipment" was confined to equipment having direct use in setting up the project, and transport items such as wagons, trucks and other vehicles were not covered. The earlier Larger Bench view that transport equipment does not fall within Heading 98.01 governed the dispute, and the cases relied upon by the importer were found distinguishable on facts.

Conclusion: The imported wheel sets and wagons did not qualify as auxiliary equipment under Heading 98.01, and the project import concession was not admissible.

Final Conclusion: The appeal failed, and the customs authorities' denial of project import treatment was upheld.

Ratio Decidendi: Transport equipment used for moving goods to a project site is not "auxiliary equipment" for project import classification unless it has direct use in the setting up of the specified project.

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