Project Imports Scheme is a concept, unique to Indian Customs, wherein all the goods imported to the setup of an Industrial Project or substantial expansion of existing industrial projects are subjected to single classification under Custom Tariff Act, 1975.

The Project Import Scheme’s primary objective is to simplify the assessment of import of capital goods and all the related items required for setting up of a project by the levy of a flat rate of duty.

To facilitate smooth and quick assessment by a simplified process of classification and valuation, the goods imported under the Project Import Scheme are placed under a single Tariff in the Customs Tariff Act, 1975. This scheme facilitates assessment and ensures faster clearances of goods.

The essential requirements to be fulfilled for being eligible for concessional rate of duty under the project import scheme are as follows:

• Goods should have been imported against a specified contract registered with the appropriate Customs House
• Such registration should have been made in the manner prescribed by the regulations
• Registration of the contract should have been obtained before the order (granting permission for clearance of the goods) was passed

The goods are subjected to single classification under  Chapter 98 of the Custom Tariff Act, 1975.

Under Projects Imports, the following goods are allowed to be imported at concessional rate of duty:

• All items of machinery including
  • Prime movers
  • Instruments
  • Apparatus and appliances
  • Control gear and transmission equipment
• Auxiliary equipment (required for research and development purposes, testing, and quality control
• All components (whether finished or not) or raw materials for the manufacture of the aforementioned items and their components, required for the initial set up of a unit, or the substantial expansion of an existing unit
• Spare parts, other raw materials. (Including semi-finished material) or consumable stores not exceeding 10% of the value of the goods specified above
• Spare parts, raw materials, or consumable stores can be imported if these are essential for the maintenance of the plant or project

A project will fall under the category of ‘substantial expansion’ if the installed capacity of the unit is increased by above 25%, as per the Project Import Regulations.

Under the Scheme of Project Import, the following projects are covered:-

• Industrial Plant
• Irrigation Project
• Power Project
• Mining Project
• Project for the exploration of oil or other minerals

The benefit under the Scheme is not available to hotels, photographic studios, hospitals, photographic film processing laboratories, laundries, photocopying studios garages, and workshops. This benefit is also not available to a single or composite machine

• As per the Project Imports Scheme, the construction equipment as auxiliary equipment can be imported only if it’s essentially required for initial setting up or substantial expansion of registered projects.
• The construction equipment may be permitted to be transferred to another registered project, after completion of its intended use, on recommendations of sponsoring authority.

Note: The ‘Plant Site Verification Certificate’ (PSVC) required to be submitted for finalization of the project

The concessional rate of duty under the Project Import Scheme applies only to specified projects sponsored by specified sponsoring authorities with a detailed itemized list of goods. Under this scheme, the goods will only be imported after duly attested by the sponsoring authority and imported under specific contracts registered before the import of the goods.

Visit this link to know more about the sponsoring authority specific to the projects.

For availing the benefit of assessment under this scheme, the importer should have entered into one or more contacts with the suppliers of the goods for setting up a project.

o expedite registration, the importers are needed to submit the following documents along with the application for registration

• The original deed of contract together
• Industrial Licence and letter of intent
• SSI Certificate granted by the appropriate authority
• Original Import license with a list of items showing the dimensions, specifications, quantity, quality, value of each item duly attested by the Licensing Authority
• Recommendatory letter for duty concession from the concerned Sponsoring Authority,
• Process flow chart, plant layout, drawings showing the arrangement of imported machines
• Project Report submitted to the Sponsoring authorities, Financial Institution, etc
• Continuity Bond with specified security. The said continuity Bond should be made out for an amount equal to the CIF value of the contract sought to be registered
• Write up, drawings, catalogues, and literature of the items under import
• Foreign collaboration agreement, technical agreement, basic/detailed engineering agreement