++ Objective of scheme not achieved in certain cases - Project import scheme has been formulated with the aim of not requiring the importers (who are either setting up a new project / plant or substantially expanding an existing project / plant) to classify individual items and assess them accordingly. In case of such initial setting up or substantial expansion, all the imported goods can be classified under this single heading 9801. Concessional rate of basic customs duty (BCD) and additional duty of customs (CVD) has been specifically provided for many of such projects / plants under Notification No.12/2012-Cus dated 17.02.2012. Such plants / projects include mega power project, nuclear power projects, drinking water projects, etc.. Sl. No. 510 of this notification caters to all projects / plant which have not been so specifically provided elsewhere in the notification (Residuary Entry). This Sl. No. however only provides for concessional rate of BCD, therefore, the importers are required to determine the individual classification of each of the imported product for CVD purposes. Therefore, a merit rate may be provided for CVD as well for overcoming this problem.
++ Transfer of goods imported under the project imports scheme by a bonafide importer - After installation and use, when a bonafide transferor is transferring the imported machinery (which has become either obsolete or has worn out) to some third party in India, the authorities demand customs duty for violation of the Project Import Regulations (PIR). Such demands have been confirmed at the appellate stage wherein it has been held that goods imported under the project import scheme cannot be transferred post importation into India. [Reference - Jacsons Thevara vs. Collector of Customs and Central Excise, - 2002-TIOL-213-SC-CUS and Bharat Bijlee Ltd. vs. Commissioner of Customs (Import), Mumbai, - 2014-TIOL-374-CESTAT-MUM. The understanding that goods imported under the project imports scheme can never be transferred will hamper technological advancement of the industries availing benefit under this scheme. In this era where the technology is continuously upgrading the importers cannot be saddled with the obligation to use goods imported under the scheme and not transfer them. At the same time, when imported goods have worn out, the importer cannot be expected to use it and not transfer the imported machines to a third party to get additional funds for procuring new machines. Therefore, it is suggested that a suitable amendment should be done in the PIR allowing transfer of goods imported under the project import scheme post their utilization for the intended use when they have either become obsolete or have worn out.
++ Timeline for registration of supply contract - Regulation 5 of the PIR provides for registration of contract with the foreign supplier, under which goods are to be imported into India. The provision provides for registration of supply contract ' on or before their importation '. The controversy which surrounds this clause is that whether the supply contract should be registered before warehousing of the subject goods by filing of into-bond bill of entry. Customs authorities have entertained a view that contract should be registered before the goods are warehoused in India. This view has been negated by the Hon'ble Tribunal in plethora of cases, wherein after analysing the concept of 'importation' as laid down by the Hon'ble Supreme Court in the case of M/s. Garden Silk Mills Ltd. vs. Union of India, - 2002-TIOL-19-SC-CUS-LB, it has been held that contract can be registered any time before the subject goods are allowed clearance for home consumption by the customs officer. The same can be registered even after warehousing the subject goods, but before clearance for home consumption. Reference can be made to the case of M/s. Essar Project India Limited vs. Commissioner of Customs (Port), Kolkata, - 2015-TIOL-1877-CESTAT-KOL. Despite such clear judicial pronouncements, registration is refused in many cases at the port when the goods have been imported and warehoused by filing an into bond bill of entry but before clearance for home consumption. It is suggested that either a suitable clarification be issued or explanation be added to Regulation 5 of the PIR to clarify that supply contract can be registered any time before an order is passed by the proper officer allowing the goods to be cleared for home consumption.
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