Court rules that benefit under Customs Tariff Heading 98.01 applies only to goods imported after project contract registration; Section 18A empowers revision of Bills of Entry post-clearance despite Section 149 restrictions.
In a significant decision impacting importers engaged in large public projects, the Madras High Court, on September 28, 2026, partially allowed a writ petition filed by M/s. Vatech Wabag Limited challenging the Assistant Commissioner of Customs' denial of concessional customs duty benefits under Heading 98.01 of the Customs Tariff Act, 1975. The judgment clarifies critical aspects concerning eligibility under the Project Import Regulations, 1986, and the scope of revising Bills of Entry after the clearance of imported goods.
Vatech Wabag Limited, a company specializing in total water management, was awarded a contract by the Chennai Metropolitan Water Supply and Sewerage Board to execute a 400 MLD seawater reverse-osmosis desalination plant at Perur. For the project, the company imported several consignments of equipment and materials on different dates. While some consignments were imported after the project contract was formally registered with Customs on June 5, 2025, others were imported prior to registration. The goods were cleared on payment of the standard customs duty at 15%.
The petitioner sought to avail concessional customs assessment under Heading 98.01, which provides for project imports linked to registered contracts, thereby reducing the duty burden. The Customs Department rejected the claim on the ground that the importation was based on purchase orders placed before the contract registration, contending that this precluded eligibility.
The Court, presided over by Justice Hemant Chandangoudar, rejected the Department's narrow interpretation that the purchase order date alone determines eligibility. The Court emphasized the legal definition of "import" under Sections 2(23) and 2(27) of the Customs Act, stating that importation refers to the physical bringing of goods into India, not the commercial transaction of ordering. It relied on the Supreme Court's decision in Garden Silk Mills Ltd. v. Union of India (1999) to underline that the date of importation, not the purchase order, is the relevant factor.
The Court interpreted Regulations 4 and 5 of the Project Import Regulations, 1986, to mean that eligibility for concessional duty depends on whether the goods were imported after the registration of the project contract and before clearance for home consumption, not merely on when purchase orders were placed. Accordingly, consignments imported on August 13, 2025, after registration on June 5, 2025, qualified for the benefit, while earlier consignments did not.
A crucial aspect of the ruling addressed the petitioner's attempt to revise Bills of Entry post-clearance to claim the concessional assessment. While Section 149 of the Customs Act generally prohibits amendment of Bills after clearance, the Court highlighted Section 18A, inserted in March 2025, which contains a non obstante clause allowing revision of entries even after clearance, subject to prescribed conditions. This provision overrides the restriction under Section 149.
The Court directed the Customs Department to consider the petitioner's request to revise the two relevant Bills of Entry under Section 18A and grant the benefit of Heading 98.01, including processing any refund claims for differential duty paid. However, the claims relating to the other three consignments imported before contract registration were dismissed.
This judgment provides valuable clarity for importers engaged in public projects regarding the timing of contract registration and importation, and affirms the legal mechanism for revising customs declarations post-clearance. It also underscores the importance of adhering to procedural requirements under the Customs Act and Project Import Regulations for availing duty concessions.
Bottom Line:
Customs - Project Import Regulations, 1986 - Benefit of Heading 98.01 depends on date of importation and registration of contract, not merely on date of purchase order - Bills of Entry relating to goods imported after registration of project contract can be revised after clearance under Section 18A of Customs Act, 1962, notwithstanding bar under Section 149.
Statutory provision(s):
Customs Act, 1962 Sections 2(23), 2(27), 18A, 149; Customs Tariff Act, 1975 Heading 98.01; Project Import Regulations, 1986 Regulations 4 and 5
