PROJECT IMPORTS

Project Imports are covered under chapter 98 of ITC HS Classification and cover all goods, which are being imported for initial setting up of a unit or substantial expansion of an existing unit. All goods can be assessed under one customs tariff heading thus obviating any disputes with customs with regard to their classification. 

Industrial Plants, Irrigation Projects, Power Projects, Mining Projects, Oil Exploration Projects and certain other projects as notified by the government are covered under the scheme. 

Concessional Duty : Effective duties under Project Imports are lower than the normal and depends on the kind of Project. For Industrial Projects/ Non Mega Power Projects etc., all items covered under the Project Imports now attracts only 5% Basic Customs Duty. In addition CVD + ACVD + CESS is leviable which makes the total duty to approx. 23.416% as against a normal total of 26.428% is payable on the Capital Goods alone. The scheme thus offers a saving of approx. 3.012%. 

EPCG: can also be availed of along with the Project Imports. This simultaneous availment of two schemes can lower the export obligations under EPCG scheme.

The Procedure: Projects need to be approved by the Ministry of Industry or any other concerned Administrative ministry to be eligible under the scheme. After this they need to be registered with customs where most of the imports are to take place, along with the import license if applicable. Cash security along with Bank Guarantee/Bond needs to be submitted, which gets redeemed after completion of imports. 

What We Do :- We can assist you in complete planning, documentation, application preparations, representation and coordination with the Ministry of Industry or the concerned Government Departments till you finally get the approval. Upon receipt of approval we can assist in getting the same registered with the relevant customs house. Upon completion of Import we can assist in redemption of the Bonds/BG given at the customs. In addition if EPCG is also envisaged we can assist in getting the same issued from DGFT office. 

We also undertake the turnkey jobs of a particular project in association with our associates. This may include logistics, customs clearances, licensing, approvals Duty benefit schemes like EPCG and related requirements. This helps the client in interacting with only one agency, and a much better planning, documentation sequencing and utilization of benefits, and helps in substantial cost reductions.

Project Import Regulations and the EPCG schemes:-

There will be no export obligation under Project Import Regulations, whereas under EPCG scheme, export obligation will be imposed.

In the recent Budget, the duty under Project Import Regulations has been reduced to 5 per cent, the same as under EPCG scheme. What is the difference between the two schemes?

Under Project Import Regulations, Additional Duties of Customs are payable, where as under EPCG scheme, they are not payable. Therefore, the aggregate duty under Project Import Regulations will be 25.57 per cent, out of which 19.97 per cent can be taken as Cenvat Credit and 5.60 per cent cannot be taken as Cenvat Credit.

Under EPCG scheme, the aggregate duty payable will be 5.15 per cent only. So, the cash outlay under Project Import Regulations will be more and the non-Cenvatable duty component will also be higher by 0.45 per cent.

There will be no export obligation under Project Import Regulations, whereas under EPCG scheme, export obligation will be imposed.

Project Import Regulations concessions are available for initial setting up of a Project or for substantial expansion that would result in capacity enhancement by at least 25 per cent. Moreover, import of a single machine is not allowed under Project Import Regulations. Under EPCG scheme, there are no such restrictions.

The Project Import Regulations procedures require you to get recommendations from the sponsoring authority, get the purchase contracts registered, give provisional duty bond along with revenue deposit of 2 per cent of the value of the goods (maximum Rs 50 lakh), submit a reconciliation statement, get site verification done by the custom and then get the assessment finalised and the bond and revenue deposit released.

Under EPCG scheme, you have to obtain EPCG authorisation from the Regional (Licensing) Authority, get the licence registered, execute a bond for due fulfilment of export obligation (along with bank guarantee, if you are not eligible for waiver of that), obtain installation certificate, fulfill export obligation, submit necessary documents to get export obligation discharge certificate from the Regional Authority and submit the same (along with whatever the Customs ask) to the Customs and get the bond and bank guarantee released.

Service providers, except some like video recording units etc., are not eligible under Project Import Regulations, whereas they are eligible under EPCG scheme.

Raw materials for manufacture of machinery to be installed can be imported under the Project Import Regulations, whereas, that is possible only through the scheme of procurement from domestic manufacturers under the EPCG scheme.

These are some of the notable differences between the two schemes. For other minor differences, you may refer to text of the relevant notifications.

In the recent Budget, service providers have been allowed to take Cenvat Credit on the basis of challan/bill/invoice issued by their other offices. Does it mean that we can transfer Credit from any office to any other office?

Rule 7A is inserted in the Cenvat Credit Rules, 2004 to prescribe a procedure to enable the provider of output services to take Credit on the inputs and capital goods on the basis of an invoice, bill or challan issued by its other office. It is not a blanket permission to transfer unutilised Credit from one office to another.