Purchase Order Date Cannot Determine Import Date For Project Import Duty Benefit: Madras High Court

The Madras High Court has ruled that a purchase order placed with a foreign supplier before registration of a project contract does not, by itself, determine whether imported goods qualify for the Project Import benefit.

The relevant date is when the goods are imported into India, subject to the other requirements under the Project Import Regulations, 1986.

“The mere fact that a purchase order was placed before registration of the project contract cannot, by itself, determine the date of importation. A purchase order placed with a foreign supplier is only a commercial transaction. It does not, by itself, constitute importation of the goods into India. The date relevant for the purposes of the Project Import Regulations is the date of importation of the goods,” Justice Hemant Chandangoudar ruled.

The court passed the order while partly allowing a writ petition filed by Vatech Wabag Limited. The company had sought assessment under Heading 98.01 of the Customs Tariff Act for goods imported for a 400 MLD seawater reverse-osmosis desalination plant at Perur.

The company claimed that the goods were eligible for the Project Import benefit. Customs rejected the claim because the project contract had been registered only after the purchase orders were placed.

The project contract was registered with Customs on June 5, 2025. The company argued that the two consignments covered by the August 13, 2025, Bills of Entry were imported after registration and that it was therefore entitled to the Heading 98.01 benefit for them.

Customs argued that the purchase orders had been placed before registration of the project contract. It also contended that the Bills of Entry could not be amended after clearance of the goods for home consumption under Section 149 of the Customs Act.

The court referred to Sections 2(23) and 2(27) of the Customs Act. It noted that “import” means bringing goods into India from outside India, while “India” includes its territorial waters.

It then examined Regulations 4 and 5 of the Project Import Regulations. Regulation 4 provides for assessment under Heading 98.01 for goods imported against specific contracts registered with the appropriate Customs House. The contract must be registered before an order permitting clearance for home consumption is made.

Regulation 5 requires an importer seeking the benefit to apply for registration of the contract on or before importation. The court held that the relevant question was whether the goods were imported after registration of the contract and before the order permitting clearance for home consumption was made. The purchase-order date was not, by itself, determinative.

The two August 13, 2025, consignments were imported after the contract was registered on June 5, 2025. The petitioner was therefore entitled to seek assessment under Heading 98.01 for those consignments, subject to the other requirements under the Regulations.

The remaining three consignments had been imported before registration of the contract. The court rejected the claim for the Heading 98.01 benefit in their respect.

The court also considered whether the two Bills of Entry could be revised after clearance. It noted that Section 149 generally deals with amendment of documents after their presentation before Customs, while its proviso restricts amendment of a Bill of Entry after clearance for home consumption.

However, Section 18A, which came into effect on March 29, 2025, specifically enables an importer or exporter to revise an entry relating to goods even after clearance. The revision remains subject to the prescribed requirements and conditions.

“In view of the specific provision contained in Section 18A, the bar contained in the proviso to Section 149 cannot, by itself, prevent the petitioner from seeking revision of the Bills of Entry dated 13.08.2025,” the court ruled.

The court set aside the June 2, 2026 proceedings insofar as they concerned Bills of Entrys dated August 13, 2025. It directed the Assistant Commissioner of Customs to consider and permit their revision under Section 18A, subject to the applicable statutory requirements and prescribed conditions.

Following the revision, and if otherwise permissible under law, Customs was directed to give the company the lower customs duty available for goods imported under the Project Import scheme.

It was also directed to process the company's claim for a refund of the excess duty already paid. The writ petition was allowed in part, with no order as to costs.

For Appellant: Advocate K. Suresh Kumar

For Respondent: Standing Counsel G. Meganathan