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.
Assessment under one heading : thus obviating all disputed with the customs regarding tariff classification.
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 IGST is leviable which makes the total duty to approx. 24.07 % as against a normal total of 27.1% payable on the Capital Goods alone. The scheme thus offers a saving of approx. 3%.
Export Promotion Capital Goods Scheme (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.
There is an elaborate procedure to get the approval from the ministry and customs clearance to be able to get the benefit. EPCG if availed along with Project Import needs to be taken from the DGFT office