SERIVE TAX REGULATIONS

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8th Interactive workshop on

SUCCESSFUL EPC CONTRACTING IN INDIA

KEY EXCISE AND CUSTOMS DUTY ISSUES

November 30, 2010 | Hotel ITC Grand | Mumbai

Sujit Ghosh | Partner | BMR Legal

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DISCLAIMER
This presentation provides general information existing as at the time of preparation. The presentation is meant for general Insert picture from stock here guidance and no responsibility for loss arising to any person acting or refraining from acting as a result of any material contained in this publication will be accepted by BMR Advisors. It is recommended that professional advice be taken based on the specific facts and circumstances. This presentation does not substitute the need to refer to the original pronouncements

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CUSTOM DUTY CONCESSIONS PROJECT IMPORT SCHEME

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PROJECT IMPORT SCHEME

To facilitate setting up of/ substantial expansion of a unit of industrial, infrastructure and other projects

A project falls qualifies as substantial expansion if the installed capacity is increased by not less than 25 %

Seeks to achieve simplification of assessment by levy of a flat rate of duty

Imports classified under tariff heading 9801 of the Customs Tariff

Project owner or Contractors

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Duty concessions can be availed by the

PROJECT NOT COVERED UNDER THE SCHEME

Project imports scheme is not available to the following class of projects:

Hotels; Hospitals; Photographic studios; Photographic film processing laboratories; Photocopying studios; Laundries; and Garages and workshops

The benefit is also not available to a single or composite machine

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KEY STEPS

Project Finalization & Refund of Deposit (Customs)

Project Registration (Customs)

Letter of Recommendation (Sponsoring Authority)

Plant Site Verification & Installation Certificate (Central Excise)

Classification of Imported goods & Clearance (Customs)

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PROJECT IMPORT SCHEME AUXILIARY EQUIPMENT

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PROJECT IMPORTS
Initial set-up or substantial expansion of following projects eligible for project import and linked concessions:

Industrial plant Power Mining Irrigation Oil and gas exploration Others

Eligible imports

All items of machinery (required for above) including prime movers, instruments, apparatus, appliances, control gear, transmission equipment, auxiliary equipment, equipment required for research and development, equipment for testing and quality control, components, raw materials for the manufacture of above items and spare parts not exceeding 10% of the value of the goods specified above
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AUXILIARY EQUIPMENT
No statutory definition/ criterion exists for auxiliary equipment Legal meaning of the term auxiliary
aiding or supporting, subsidiary Blacks law dictionary giving additional help; supplemental or subsidiary; an item not directly a part of a specific component or system but required for its functional operation - Words and Phrases of Excise and Customs by S.B. Sarkar one that aids or helps; an assistant; a confederate Assisting or supporting Advanced Law Lexicon
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ELIGIBILITY OF AUXILIARY EQUIPMENT FOR PI SCHEME?

Qualification as auxiliary equipment

Does generic meaning imply that equipment meant for any supporting infrastructure for the plant being set up would qualify? SC in CCE V. Paradeep Phosphates [2006 (200) ELT 515] - Mobile Continuous Ship Unloader required for initial setting up of a fertilizer plant is covered by the expression auxiliary equipment and hence is classifiable under CTH 9801 SC in CIMMCO Ltd V. CCE [2002 (139) ELT A308] - Components and raw material for manufacture of wagons used for transportation of coal from coal mines to thermal plant not auxiliary equipment AAR in AES Chattisgarh Energy Pvt Ltd [2009 (246) ELT 801] goods required for setting up captive coal mine, dedicated coal transportation facility, dedicated water intake and pumping system, all as part of integrated power project, not eligible; dedicated power evacuation system eligible Tribunal in K M Sugar Mills V. CCE [2000 (119) ELT 170] - Empty gas cylinders being auxiliary equipment for manufacture of gas directly connected with initial setting up of plant hence entitled to benefit of project import under heading 9801

Benefits advanced under PI Scheme on a selective basis

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ELIGIBILITY OF AUXILIARY EQUIPMENT FOR PI SCHEME? (CONT)

Treatment of construction equipments as auxiliary equipment

Whether ownership of equipments so imported necessarily needs to be passed on to the Project Authority for falling within realm of auxiliary equipments? Diversion of auxiliary equipment possible, if to be imported under the PI scheme?

SC in CC V. Toyo Engineering India Ltd [2006 (201) ELT 513] concluded in favour of the taxpayer holding that mere possibility of its being used subsequently for other project would not be a bar from availing facility of project import Also held that it is not essential that title in the imported equipment has to transfer to the project owner

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RELEVANCE IN PROJECT PLANNING

Shifting focus, beyond machinery/ equipments that actually form part of the plant/ main plant, for PI benefits Larger relevance for rail, road, bridge projects Contractors ability to import high end equipment in India at concessional rate of duty and servicing multiple projects thereafter

Given varying positions, prior or advance ruling may be sought in complicated cases, for upfront clarity
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BENEFIT OF PROJECT IMPORTS FOR CIVIL MATERIALS

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PROJECT IMPORTS FOR CIVIL MATERIALS

Projects like mega power projects, drinking water supply projects, coal mining projects and fertilizer projects entitled to customs duty exemption/concession Covers all items of machinery including

Prime movers, instruments, apparatus and appliances,

Control gear and transmission equipment,

Auxiliary equipment (including those required for R & D testing and quality control) All components (whether finished or not) or raw materials for the manufacture of the aforesaid items and their components
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required for setting up & substantial expansion of the project

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PROJECT IMPORTS FOR CIVIL MATERIALS (CONT)

Availability of exemption for steel and cement used for civil construction?

Coverage of 9801 machinery, equipment and raw materials and components for their manufacture
Definitions under Blacks Law Dictionary:
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Machinery - A device or apparatus consisting of fixed and moving parts that work together to perform some function Also termed as apparatus; device Equipment - The article or implements used for a specific purpose or activity

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The Supreme Court, in the case of Commissioner of Income Tax v. Mir Mohd. Ali (AIR 1964 SC 1693) relied upon the following definition of machinery:

PROJECT IMPORTS FOR CIVIL MATERIALS (CONT)

The word machinery when used in ordinary language prima facie, means some mechanical contrivances which by themselves or in combination with one or more other mechanical contrivances, by the combined movement and interdependent operation of their respective parts generate power, or evoke, modify, apply or direct natural forces with the object in each case of effecting so definite or specific a result

Civil material like cement and steel may not qualify as machinery or equipments
The phrase - Components or raw material also used in 9801 Components or raw material qualify only when the same is used in the manufacture of machinery and equipments not applicable for Cement and Steel to be used for civil construction Thus, customs duty exemption/concessions may not be available for Cement and Steel to be used for civil construction
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PROJECT IMPORTS FOR CIVIL MATERIALS (CONT)

Pertinent to note how this issue manifests itself under Excise for Mega and Ultra-Mega Power Projects (UMPPs)

Excise exemption for a Mega and Ultra Mega Power Project is subject to customs duty exemption
As discussed, customs duty exemption doubtful for steel and cement for civil works Accordingly, even excise exemption for steel and cement for civil works jeopardized It is pertinent to note that for UMPPs, format of certification from Chief Engineer in the Central Electricity Authority specifically includes Cement and Steel for civil works greater clarity required
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PROJECT IMPORTS FOR CIVIL MATERIALS (CONT)

Possible to say that a civil structure is an integral part of plant and therefore eligible for PI benefits?

What if sponsoring authority approves essentiality of civil materials for completion of the respective plant?

Though not in context of civil materials, SC in CCE V. Paradeep Phosphates [2006 (200) ELT 515] approved the principle that once goods approved as essential requirement for completion of the plant by the sponsoring ministry, the PI benefits would be available

Eligibility for importing micro-silica (sand), under the PI Scheme, for construction of spillway structure of the dam prima facie merits seen in the case and matter remanded de novo Tehri Hydo Development Corpn Ltd V. CCE [ 2007 (212) ELT 366]

Test of functionality to be proved - SC in CIT V. Taj Mahal Hotel [1971 (82) ITR 44] reasonable level of complexity
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Difficulty in importing civil materials against advance licence also, as arguably not used in manufacture of goods

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RECENT EXTENSION OF CONCESSIONS BROWNFIELD EXPANSION OF MEGA POWER PROJECTS

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BROWNFIELD EXPANSION OF MPPs

A concessional basic customs duty of 2.5 percent to be applicable on imports for brown field expansion of existing mega projects under the PI scheme. All other benefits under mega power policy available to greenfield projects would also be available to an expansion unit provided the size of expansion units is not less than that provided in the earlier phase No excise exemption for indigenous supplies to the project but deemed export benefits available

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BROWNFIELD EXPANSION ISSUES

The expression brown-field expansion not defined either through the Mega Power Policy or under the customs law resulting in lack of clarity on following issues:

What qualifies as expansion? Essential for the new facility to be dependent on existing capacity or can it be a standalone unit and still qualify as a brown-field expansion? Mere co-location sufficient? Very commonly seen since due to availability of large tracts of land As per MPP, size of expansion units not to be less than the size of existing units. PI Scheme also states that project will qualify as expansion only if capacity enhancement more than 25 percent both conditions to be fulfilled? Treatment of brown-field project of 1000 MW or more ?

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DEEMED EXPORTS
Concept & Benefits

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DEEMED EXPORTS CONCEPT

Deemed Exports

goods supplied do not leave the country; and goods must be manufactured in India payment received either in INR or in free foreign exchange

Deemed Exports eligible for certain export related facilities and benefits Ten categories of supply of goods by main /sub- contractors which qualify as Deemed Exports
(a) Supply of goods against Advance Authorization (c) Supply of capital goods to holder of EPCG Authorization
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(b) Supply of goods to EOUs/ STPs/ EHTPs/ BTPs

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DEEMED EXPORTS CONCEPT (CONT)

(d) Supply of goods to projects financed by multilateral or bilateral agencies/ funds typically covers infrastructural projects

(e) Supply of capital goods, to fertilizer plants

(f) Supply of goods to any project or purpose in respect of which the MOF, by a notification , permits import of such goods at zero customs duty covers mega power projects and UMPPs (g) Supply of goods to power projects and refineries not covered by above category covers non-mega power and MPP expansion projects (h) Supply of marine freight containers by 100% EOUs (i) Supply to projects funded by UN Agencies
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(j) Supply of goods to Nuclear Power Projects through competitive bidding as opposed to ICB

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DEEMED EXPORTS CONCEPT (CONT)

Essential for the goods supplied to be manufactured in India Benefits of deemed exports under paras (d), (e), (f) and (g) only if the supply is made under procedure of ICB

Exception for Mega Power Projects

Following lines added However, in regard to mega power projects, the requirement of ICB would not be mandatory, if the requisite quantum of power has been tied up through tariff based competitive bidding or if the project has been awarded through tariff based competitive bidding

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Deemed exports governed by chapters 8 of the Foreign Trade Policy (FTP) and the corresponding Handbook of Procedures (HoP)

DEEMED EXPORTS BENEFITS

Benefits under Deemed Exports Summing up
Advance Authorization/ Advance Authorisation for annual requirement/ Duty free import Authorisation (DFIA) Pre-export benefit Allows duty free import of inputs for manufacture of the goods to be exported Fuel, oil, energy, catalysts and mandatory spares upto 10%, Deemed Export Drawback Enables draw back of excise, customs and service tax paid on inputs used in manufacture of goods meant for deemed exports Benefit can be claimed only if CENVAT credit/rebate has not been availed by the applicant Exemption / Refund from terminal excise duty Enables manufacturers to supply goods free of output excise duty Supplies should be made against ICB In other cases, refund of terminal excise duty will be given Benefit can be claimed only if CENVAT credit/rebate has not been availed by the applicant Benefit on output leg
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DEEMED EXPORTS BENEFITS TO SUB CONTRACTOR

Thus, for deemed exports, the OEM can claim benefits on both input as well as output side The above benefits are available to the OEM as well as his subcontractors subject to conditions under para 8.6.2 of the FTP as under:

being mentioned specifically as a sub-contractor (either initially or subsequently) in the contract between project owner and the EPC contactor; the sub-contractor ships the goods directly to the project site; and Project authority certificate and payment certificate is issued by project owner to the main contractor and by the main contractor to the sub-contractor
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Thus the deemed export benefits can flow down through the supply chain and proper planning through out the supply chain would significantly reduce the costs of the project
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DEEMED EXPORTS BENEFITS TO SUB CONTRACTOR (CONT)

HC in Dee Development Engineers Ltd V. UOI [2010-TIOL-491HC], was appraising the issue to extending benefits to sub-contractor for goods supplied to a project funded by notified agencies Facts The eligible project awarded supply contract to M/s Thermax Babcock & Wilcox Ltd, Pune and issued necessary certificate in its favour so as to enable availment of duty benefits Thermax Babcock & Wilcox Ltd in turn sub-contracted part of supplies to the Assessee

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Assessee supplied the goods directly to the project site under excise exemption on grounds that valid certificate in favour of Thermax Babcock & Wilcox Ltd existed at material times, who has placed supply orders on the Assessee

DEEMED EXPORTS BENEFITS TO SUB CONTRACTOR (CONT)

Revenues case Exemption benefits extends to only those parties in whose favour a valid certificate has been issued and not otherwise HC Decision The court held that:
as no certificate was issued by the Project Implementing Authority approved by the Government of India in favour of the assessee, therefore, it (assessee) cannot claim exemption from duty on the basis of certificate (Annexure A2) issued in favour of the supplier M/s Thermax Babcock & Wilcox Limited, Pune

Comments Evidently, the denial of benefits by the court were preceded by lack of planning in the whole arrangement
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PROCEDURAL ISSUES IN CERTAIN CASES

Period of limitation for claiming duty drawback or TED refund in case of supplies under para 8.2 (d), (e), (f), (g), (h), (i) and (j)

Claims should be filed within a period of twelve months from date of receipt of supplies by project authority or from date of receipt of the payment as per the option of applicant, either against a particular project or all the projects

No clarity of construction of the expression a particular project or all the projects

Claims may also be filed where part payments have been received. 100 percent TED refund may be allowed after 100 percent supplies have been made physically and payment received at least up to 90 percent

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Implication whether refund would not be forthcoming before completion of project and 90 percent payment?

Potential impact on reserve payments in some cases

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ICB AND LINKED EXCISE DUTY BENEFITS

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CONTROVERSIES SURROUNDING ICB

Many projects brought into existence through EPC contracts have no output excise/ service tax liability like power projects

Hence, excise duty on the procurement side becomes a cost

Notification 6/ 2006 CE, vide entry 91, provides for an exemption from excise duty to goods supplied against International Competitive Bidding (ICB)

Above exemption subject to Customs Duty exemption

The phrase goods supplied under ICB however is not defined ie ICB to be undertaken at what stage IPP or Concession/ EPC/ OEM? reasonable clarity that at IPP\EPC\PPA level should suffice

Goods supplied to mega power projects from which the supply of power has been tied up through tariff based competitive bidding or a mega power project awarded to a developer on the basis of such bidding
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Resultant ambiguities best exemplified by power projects till recently issue resolved for Mega Power projects vide introduction of entry 91B in Budget 2010?

MEGA POWER PROJECT ICB WHETHER STILL NEEDED?

Application for MPP status typically disposed off in two stages ie the in-principle approval and the final clearance All notified/ prescribed benefits to MPPs available only after final clearance

Alternative for the interim period?

Advance Authorization could be used in interim period to minimize the temporary outflows on customs and excise duty on procurements by the contractor (subject to ICB)

Such benefit available irrespective of project having been accorded MPP status
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MEGA POWER PROJECT ICB WHETHER STILL NEEDED? (CONT)

Key conditions (amongst others) for grant of the Mega Power Project status?

Either project should have been awarded on basis of competitive bidding; or supply of power has been tied up through tariff based competitive bidding Hence most times, ICB may not be critical

Exceptions to above State Utilities

Typically the IPP or the project award stage does not arise as generation utility of the state responsible to undertake the project As per the Tariff Policy, state utilities need not tie up sale of power on a competitive bidding basis

If ICB followed to award the EPC contract, for corresponding supplies/ works, benefits will still be available
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Given the above, a state utility may undertake a project without following both the attendant conditions fate of deemed export benefits (especially excise duty exemption)?

DEEMED EXPORTS - OTHER ISSUES

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DEEMED V. PHYSICAL EXPORTS CENVAT IMPLICATIONS

Reasonable degree of debate on whether deemed export supplies trigger restrictive implications under Rule 6 of the Cenvat Credit Rules, 2004 (Credit Rules) in hands of the local manufacturersupplier

Ie cenvatability of corresponding input credits (excise duty/ service tax) in such cases?

The Revenue contentions

Distinction between physical and deemed exports

Benefits (by way of cenvat credit) advanced in case of physical exports cannot be made available to deemed exports

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DEEMED V. PHYSICAL EXPORTS CENVAT IMPLICATIONS (CONT)

Recent Development Credit Rule 6(6) amended to include the following:
all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under sub-section (1) of section 3 of the said Customs Tariff Act when imported into India and are supplied, (a) against International Competitive Bidding; or (b) to a power project from which power supply has been tied up through tariff based competitive bidding; or (c) to a power project awarded to a developer through tariff based competitive bidding, in terms of notification No. 6/2006-Central Excise
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Implication Legislative intent to provided tax benefits to deemed exports ratified

Welcome amendment amicable resolution of the dispute!!

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TED EXEMPTION OR REFUND?

Para 8.3 (c) of FTP provides as under:
Exemption from terminal excise duty where supplies are made against ICB. In other cases, refund of terminal excise duty will be given

In other cases connotation?

Cases in which ICB has not been followed; and / or Cases in which no central excise exemption notification (for eg supply to Advance Authorization or EPCG authorization holder)

Doctrine of unjust enrichment applicable [Sahakari Khand Udyog

Mandal Ltd vs CCE, 2005 - TIOL- 48 SC LB]

duty payments to be reflected as Receivables; and

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Ability to satisfactorily prove that the amounts being claimed as refund have not been passed on to the ultimate consumers

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TED EXEMPTION OR REFUND? (CONT)

Refund of Excise duty technically unavailable for non-mega power projects unlike mega power projects and UMPPs

Para 8.4.4 (iv) reads as under:

Supply of Capital goods and spares upto 10% of FOR value of capital goods to power projects in terms of paragraph 8.2(g) shall be entitled for deemed export benefits .. Supplier shall be eligible for benefits listed in paragraph 8.3(a) and (b) of FTP, whichever is applicable. However, supply of goods required for setting up of any mega power projects ., shall be eligible for deemed exports benefits as mentioned in paragraph 8.3(a), (b) and (c) of FTP, whichever is applicable

Further, supply of goods required for the expansion of existing mega power project .. shall also be eligible for deemed export benefits as mentioned in paragraph 8.3 ( a), (b) and (c) of FTP, whichever is applicable.,.

Attempts at refund still made basis paragraph 8.4.4 (i) of FTP read with 8.3.1 (iv) of the HOP interpretative issue
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TED EXEMPTION OR REFUND? (CONT)

Paragraph 8.4.4 (i) of FTP
In respect of supplies made under paragraphs 8.2(d), (f) and (g) of FTP, supplier shall be entitled to benefits listed in paragraphs 8.3(a), (b) and (c), whichever is applicable

Thus as per the above paragraph, all the deemed export benefits will be available for supplies to mega as well as nonmega power plants contradiction with Para 8.4.4 (iv) Paragraph 8.3.1 (iv) of HOP
In respect of supplies under categories mentioned in paragraphs 8.2(d), (e), (f), (g), (h), (i) and (j) of FTP, claim may be filed either on the basis of proof of supplies effected or payment received100% TED refund may be allowed after 100% supplies have been made physically and payment received at least upto 90%.

However, paragraph 8.4.4 (iv) being more specific to power projects appears to be the more appropriate paragraph in which paragraph excise exemption / refund is not available for non-mega power projects
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ONSITE ACTIVITIES MANUFACTURE?

Nil input and output indirect tax cost for a deemed exporter who is eligible for all three deemed export benefits

Viz. advance authorization or deemed export drawback on the input side and excise duty exemption or refund on the output side)

For those ineligible for excise duty exemption or refund on the output side, output excise duty becomes a cost

Manufacture in India key requirement for deemed export benefits

Manufacture under FTP wider than under Central Excise laws Certain activities may amount to Manufacture under FTP (and enjoy deemed export benefits) but not amount to Manufacture of excisable goods under Central Excise laws (and not suffer Excise duty)
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ONSITE ACTIVITIES MANUFACTURE? (CONT)

Manufacture under FTP:
Manufacture means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, re-packing, polishing, labelling, Re-conditioning repair, remaking, refurbishing, testing, calibration, re-engineering. Manufacture, for the purpose of FTP, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining

Bringing into existence immoveable property through onsite fabrication or assembly = manufacture under FTP? Circular F. No. Misc.8/AM-2001/DBK Cell, dated December 5, 2000 issued by the Directorate General of Foreign Trade (DGFT) pertinent

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ONSITE ACTIVITIES MANUFACTURE? (CONT)

The circular: relevant excerpt
It is noted that it is not possible for a single contractor to manufacture himself all the items required for completion of such projects and hence certain itemshave necessarily to be procured from other sources. These items are often directly supplied to the project for assembly, commissioning, erection, testing etc at site. It is, therefore, clarified that for all such directly supplied items whether imported or indigenous as are used in the project, the condition of manufacture in India, a pre-requisite for grant of deemed export benefits, is satisfied in view of the fact that the aforesaid activities being undertaken at the project site constitute manufacture

Bringing into existence a project (a power project, for example) or part thereof constitutes manufacture under FTP?
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If yes, handing over the project to owner = deemed export?

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ONSITE ACTIVITIES MANUFACTURE? (CONT)

If yes, entitled for deemed export benefits on the input side and no excise duty on the output side?

May be explored by those ineligible for excise duty exemption or refund on the output side
Technical issues:

All deemed export categories require supply of goods Such interpretation will equalize indirect tax benefits for mega and nonmega power projects against policy framework

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MINOR PROCESSING MANUFACTURE?

As discussed earlier, for those ineligible for excise duty exemption or refund on the output side, output excise duty becomes a cost

Broad definition of Manufacture under FTP:

Manufacture means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, re-packing, polishing, labelling, Re-conditioning repair, remaking, refurbishing, testing, calibration, re-engineering. Manufacture, for the purpose of FTP, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining

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Minor processing may amount to Manufacture under FTP but not under Central Excise laws

MINOR PROCESSING MANUFACTURE? (CONT)

Importing equipments and polishing or labeling or repacking them constitutes manufacture under FTP?

If yes, supply of such polished/ labeled/ repacked equipments to owner = deemed export?
If yes, entitled for deemed export benefits on the input side and no excise duty on the output side? May be explored by those ineligible for excise duty exemption or refund on the output side Technical issues:

manufacture = new, marketable product/good must emerge

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Such interpretation will equalize indirect tax benefits for mega and nonmega power projects against policy framework

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PROJECT IMPORTS & DEEMED EXPORT BENEFITS TO POWER PROJECTS

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NON-MEGA POWER PROJECT

Benefit
Project Import linked customs duty concession* Excise Duty Exemption Advance Authorization* # Deemed Export Drawback# Terminal Excise Duty Refund# ^ * In-principle availability indicated, may not be available for certain supplies
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Initial Set Up

Expansion

# ICB pre-condition for advancement of benefit ^ Also, refer the earlier discussions in this regard

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MEGA POWER PROJECT

Benefit
Project Import linked customs duty exemption/ Concession* Excise Duty Exemption Advance Authorization* # Deemed Export Drawback# Terminal Excise Duty Refund#

Initial Set Up

Expansion

* In-principle availability indicated, may not be available for certain supplies

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# ICB pre-condition for advancement of benefit or if supply of power, there from, tied or project itself awarded on a tariff based competitive bidding (only in case of initial set up)

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ULTRA MEGA POWER PROJECT

Benefit
Project Import linked customs duty exemption/ Concession* Excise Duty Exemption^ Advance Authorization* # Deemed Export Drawback# Terminal Excise Duty Refund# * In-principle availability indicated, may not be available for certain supplies
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Initial Set Up

Expansion

^ If supply of power tied, there from, through a tariff based competitive bidding # ICB pre-condition for advancement of benefit or supply of power tied, there from, through a tariff based competitive bidding (only in case of initial set up)

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ANNEXURES

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PROJECT IMPORT SCHEME

9801 00

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All items of machinery including prime movers, Instruments, Apparatus, Appliances, Control gear, Transmission equipment, Auxiliary equipment, Equipment required for research and development, Equipment for testing and quality control, Components, raw materials for the manufacture of above items and Spare parts not exceeding 10% of the value of the goods specified above Required for initial setting up of a plant or substantial expansion (installed capacity increases by at least 25%) of a unit of an existing unit , of a specified Industrial plant, irrigation project, power project, mining project, project for oil & mineral exploration or such other projects which the Central Government may notify

CUSTOMS TARIFF CLASSIFICATION

--9801 00 11 9801 00 12 9801 00 13 9801 00 14 9801 00 15 9801 00 19 9801 00 20 ---------------------

Machinery :
For industrial plant project For irrigation plant For power project For mining project

Project for exploration of oil or other minerals

For other projects

Components (whether or not finished or not) or

raw materials for the manufacture of aforesaid items required for the initial setting up of a unit or the substantial expansion of a unit

semi-finished materials or consumable stores for the maintenance of plant or project

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9801 00 30 ---

Spare parts and other raw materials (including

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