1998 (3) TMI 420 - AT - Customs

Summary

Issues:
1. Denial of registration of contract for import of goods under entry 9801 of the Customs Tariff.
2. Interpretation of tariff entry 98.01 of Customs Tariff regarding project import eligibility.
3. Determining if the imported equipment is for initial setting up or substantial expansion of an existing power project.

Analysis:
The appellant appealed against the order-in-appeal denying registration of a contract for importing goods under entry 9801 of the Customs Tariff. The appellants sought registration under project import for equipment to minimize transmission loss of electrical energy. The Assistant Collector of Customs initially denied registration, and the appeal was dismissed. The appellant argued that tariff entry 98.01 covers machinery, apparatus, and control gear for transmission equipment, including those for research and development in power projects. They contended that the term "power project" is not defined in the Customs Act or Tariff but generally relates to power generation or distribution. They claimed eligibility for registration under Heading 98.01 of the Customs Tariff.

The Collector of Customs (Appeals) held that the imported equipment aimed to minimize transmission loss and ensure power supply continuity by eliminating faulty branches. The explanation to Notification No. 67/87 Cus. defines a Power Project as one producing power as its output or end-product, implying a manufacturing or generating process. The equipment's function did not involve generating electricity by itself but only marginal Reactive Power. Consequently, the equipment did not constitute a Power Project for initial setup or substantial expansion of an existing project. The Collector concluded that since the power project already existed and the equipment was not for initial setup or expansion, the impugned order was upheld, and the appeal was dismissed.

In summary, the judgment focused on the interpretation of tariff entry 98.01 of the Customs Tariff regarding project import eligibility for equipment aimed at minimizing transmission loss in an existing power project. The decision hinged on whether the equipment was for initial setup or substantial expansion of the power project, with the Collector determining that the equipment did not qualify as a Power Project under the given tariff entry.