Project Imports is a special advantageous scheme for import of capital goods, which are being imported for the initial setting up of a unit, projects or substantial expansion of an existing unit. All eligible goods are covered under chapter 98 of ITC HS Classification.
Industrial Plants, Irrigation Projects, Power Projects, Mining Projects, Oil Exploration Projects, Metro projects, Airport development project and certain other projects as notified by the government are covered under the scheme.
Benefits / Advantage of Import under Project Import Scheme:
- Assessment under one heading: thus obviating all disputes with the customs regarding tariff classification.
- Concessional Duty: Effective duties under Project Imports are lower than normal and depends on the kind of Project. For Industrial Projects/Non-Mega Power Projects etc., all items covered under the Project Imports attracts only 5%/7.5% Basic Customs Duty under the exemption notification. In addition, IGST is leviable which makes the total duty to approx. 24.49 % as against a normal total of 27.73% payable on the Capital Goods alone. The scheme thus offers a minimum saving of approx. 3.24%.
- Then there are certain items used in a project that are levied a duty of 10%, 15% etc. In case of projects like Solar Power it can go upto 40%. Substantial duty savings can be planned using Project Import route for such projects. Benefit of Project Import has been withdrawn for Solar Power projects recently.
- There are certain changes as per the Budget 2022, and now this concessional duty of 5% +IGST is available only to Projects registered on or before 30th Sept 2022 and for the imports before 30th Sept 2023 under such registered projects. After this the duty of 7.5% + IGST would be applicable. Even then Project imports can be a beneficial scheme for several projects.
- Further, EPCG can also be availed of along with Project Imports. This simultaneous availment of two schemes can lower the export obligations under EPCG scheme.
The project needs approval from the relevant ministry or department (depending upon the kind of project), after which it needs registration at customs along with necessary bond and BG. Customs clearance under the scheme then enables the benefit.
EPCG if availed along with Project Import needs to be taken from the DGFT office.
After import, proper record keeping is needed so that a proper reconciliation can be done at the time of closure of Project Import and release of Bond/BG.
Role of Andees Team
Role of Andees Team: It is very important to note in the above process, that foresight and experience can play a big role in not only getting permission from the relevant ministry but also registration and monitoring the documentation at each point. Further, in case of delay in projects, timely actions can save a lot of problems and liability in future. Finally, proper documentation and representation at the time of redemption can ensure a smoother and optimum closure, also other schemes, compliances etc.
Andees has been assisting clients and has extensive experience for the whole process of managing the imports under Project Imports and closure of the same for the last more than 15 years. Sound knowledge of Policy & Procedures along with a very qualified and experienced team, Andees has handled lots of complicated matters related to Project Import, saving crores for clients that are MNCs, Indian Corporates, or PSUs. While proper planning during the entire life cycle has helped smooth operations, several complicated matters even at the last stage have been saved by the Andees team from substantial liabilities.