This Tax Alert summarizes recent Notification [1] issued by the Central Board of Indirect Taxes and Customs (CBIC) amending Project Imports Regulations,1986.
Concessional rate of duty for Import of goods in respect of specified projects is prescribed under Chapter Heading 9801 of the Customs Tariff Act, 1975 (Project Imports). The said benefit is allowed subject to the condition that the goods are imported in accordance with Project Imports Regulations,1986.
Prior to the amendment, the entry in the Regulations covered “All Power Plants and Transmission Projects” for which approvals were required to be sought from notified sponsoring authority.
The present Notification excludes solar power plants and solar power projects from the above entry. It has come into force from 20 October 2022.
Comments:
- Through the said notification, Government intends to withdraw Project Imports benefit for solar power plants.
- It is pertinent to note that Customs Authority for Advance Ruling recently held that solar power plants were eligible for Project Imports.
- Earlier, CBIC had issued the Instruction restricting the eligibility of solar power generating units under the Manufacture and Other Operations in Warehouse (no.2) Regulations, 2019 (MOOWR) scheme. The same has been challenged before the Delhi High Court.
- Considering the amendment, one may need to analyze the impact on future imports under different scenarios like cases where contracts have been already registered, approvals from sponsoring authority were granted but pending for registration, applications are pending for approval from sponsoring authority and so on.
