Project import concession denied for dies and spares imported after production began, as they were meant only for indigenisation

Concessional project import treatment under Tariff Heading 98.01 is unavailable where dies and spares are imported after production has begun and are intended only for progressive indigenisation of components, not for initial setting up or substantial expansion of the unit. The heading applies only to machinery, equipment, components or raw materials required for an initial project setup or a substantial expansion. A precedent involving imports needed to reach full licensed capacity was distinguished on its facts. Project import benefit was therefore denied.

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Issues: Whether import of dies and spares for manufacture of rotors and stators qualified for concessional duty under Tariff Heading 98.01 as goods required for initial setting up of the project or for substantial expansion of the unit.

Analysis: Tariff Heading 98.01 extends concessional duty only to machinery, equipment, components, or raw materials required for the initial setting up of a specified project unit or for its substantial expansion. The appellant's unit had already commenced production before the request for registration of the contract for dies and spares. The record also showed that the goods were sought for progressive indigenisation of components already being sourced, and not to establish the unit initially or to enlarge its installed capacity. The cited precedent was distinguishable because, there, the imported goods were necessary for the unit to attain its full licensed capacity, whereas that requirement was absent here.

Conclusion: The import of dies and spares did not fall within the scope of Tariff Heading 98.01, and the denial of project import benefit was ; the appeal failed.

Final Conclusion: Concessional project import treatment was unavailable because the goods were not meant for initial setting up or substantial expansion of the existing unit.

Ratio Decidendi: Goods imported after commencement of production, and meant only for indigenisation of components rather than for initial setting up or substantial expansion, do not qualify for project import concession.

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