Power project imports failed substantial expansion test where transmission upgrades did not increase generation capacity.

Imported power transformers and circuit breakers used only to improve transmission and distribution networks in major cities did not qualify as goods imported for substantial expansion of an existing power project. Because generation capacity remained unchanged, the imports failed to satisfy the requirement for coverage under Tariff Heading 98.01 and the Project Import Regulations, 1986. The reference to the definition of power project in Notification No. 67/87-C.E., as amended, did not change that result. The lower appellate authority's order was set aside and the Revenue's appeal was allowed.

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Issues: Whether imported power transformers and circuit breakers used for improving the transmission and distribution network in major cities were covered by Tariff Heading 98.01 and the Project Import Regulations, 1986 as goods imported for substantial expansion of an existing power project.

Analysis: The imported goods were admitted to be meant only for improvement of the transmission and distribution system. There was no increase in generation capacity, which remained unchanged. On these facts, the imports did not satisfy the requirement of substantial expansion of the existing power project. The reliance placed on the definition of power project in Notification No. 67/87-C.E., as amended by Notification No. 330/88-C.E., did not alter that conclusion.

Conclusion: The imports were not covered by Tariff Heading 98.01 and the Project Import Regulations, 1986. The order of the lower appellate authority was set aside and the appeal of the Revenue was allowed.

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