Tag: #NBCC (India) Ltd.

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 08.10.2026

CESTAT Delhi: Customs Cannot Deny Project Import Duty Benefit Without Establishing Delay in Contract Finalisation

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside the denial of concessional customs duty benefits claimed by M/s NBCC (India) Ltd., holding that the Customs Department failed to establish non-compliance with Regulation 7 of the Project Import Regulations, 1986.

In its decision dated 6 October 2026, the Division Bench comprising Dr. Rachna Gupta, Officiating President, and Ms. Hemambika R. Priya, Member (Technical), allowed three connected customs appeals arising from a common Order-in-Appeal dated 17/18 October 2019.

The Tribunal found that the Department had failed to establish the date of clearance of the last consignment, which was essential for calculating the prescribed three-month period for submitting documents required for finalisation of a project import contract.

The Tribunal also noted that NBCC had sought an extension of time, that there was no evidence of rejection of the extension request, and that the requisite documents had been furnished before the issuance of the show cause notices.

The decision is significant for importers claiming concessional duty benefits under the project import framework, particularly where disputes concern delayed submission of reconciliation statements, installation certificates and other documents required for contract finalisation.

Background and Facts of the Case

• NBCC (India) Ltd., formerly known as National Buildings Construction Corporation Ltd., had applied to the Commissioner of Customs, Project Import Cell, New Customs House, New Delhi, for registration of a contract under the Project Import Regulations, 1986.
• The registration concerned the import of certain operators and machines for the substantial expansion of a thermal power plant.
• The project involved an inter-state thermal power plant of 1,000 MW or more in Madhya Pradesh.
• NBCC submitted a certification letter dated 5 November 2008 from the competent authority and executed an indemnity bond of ₹69,79,000.
• The project import contract was registered under Registration No. 02 of 2012.
• Subsequently, NBCC filed Bill of Entry No. 6595784 dated 20 April 2012, and the imported goods were cleared at nil customs duty.
• However, the Customs Department later alleged that NBCC had failed to comply with the documentation requirements prescribed under Regulation 7 of the Project Import Regulations, 1986.

The Department specifically alleged non-submission of the reconciliation statement and supporting documents, including:

• Plant-site verification report;
• Documentary proof of initial setting up of the project;
• Final payment certificate from the supplier or bank;
• Installation certificate from an authorised Chartered Engineer; and
• Other documents required for finalisation of the registered project import contract.

Consequently, the Department initiated proceedings proposing denial of the nil-duty benefit and recovery of customs duty with applicable interest.

Show Cause Notices and Departmental Proceedings

The Customs Department issued three show cause notices concerning the connected appeals.

Appeal number	Show cause notice	Date
Customs Appeal No. 50209/2020	SCN No. 88/2015	24 February 2015
Customs Appeal No. 50210/2020	SCN No. 87/2015	24 February 2015
Customs Appeal No. 50211/2020	SCN No. 89/2015	Not separately specified in the order

• The show cause notices proposed denial of the project import duty benefit and recovery of the applicable customs duty under Section 18 of the Customs Act, 1962, along with interest referred to in the notices under Section 28.
• The adjudicating authority confirmed the proposals through common Order-in-Original Nos. 56–58 of 2016 dated 31 January 2017.

NBCC challenged the adjudication order before the Commissioner of Customs (Appeals).

However, the Commissioner (Appeals) rejected the appeals through common Order-in-Appeal No. CC(A) CUS/D-I/385 to 387/2019-20 dated 17/18 October 2019.

Aggrieved by the appellate order, NBCC approached CESTAT in 2020.

Proceedings Before CESTAT

• The Tribunal recorded that NBCC had been granted numerous opportunities to appear and pursue its appeals.
• Despite repeated adjournments and warnings, no representative appeared on behalf of NBCC on the final hearing date of 17 September 2026.
• The Tribunal referred to the Supreme Court’s decision in Balaji Steel Rolling Mills v. Commissioner of Central Excise & Customs, 2014 (310) E.L.T. 209, and proceeded to determine the appeals on their merits after hearing the Departmental Representative and examining the appeal records.
• The decision is therefore important because the Tribunal considered the documentary evidence and legal grounds notwithstanding the appellant’s absence at the final hearing.

Customs Department’s Arguments

• The Department argued that NBCC had failed to submit the documents required under Regulation 7 within the prescribed period.
• According to the Department, Regulation 7 required an importer to furnish the reconciliation statement, quantity details and supporting documents within three months from clearance of the last consignment or within an extended period expressly allowed by the proper officer.
• The Department submitted that NBCC’s letter dated 11 December 2012 requesting an extension because installation activities were continuing could not be treated as permission granting additional time.
• It further argued that subsequent submission of documents could not cure the original non-compliance.
• The Department relied upon CBEC Circular No. 14/2006 dated 17 April 2006 and Circular No. 22/2011 dated 4 May 2011.
• It also cited the Supreme Court’s decision in Mihir Textiles Ltd. v. Collector of Customs, Bombay, 1997 (92) E.L.T. 9 (S.C.), to argue that conditions attached to concessional customs duty benefits must be fulfilled.
• Accordingly, the Department sought dismissal of the appeals.

Principal Legal Issue Before the Tribunal

• The Tribunal framed the central issue as whether NBCC had failed to comply with Regulation 7 of the Project Import Regulations, 1986 and, if so, whether such non-compliance justified denial of the concessional or nil customs duty benefit.
• The dispute therefore concerned the procedural requirements for finalisation of a registered project import contract, rather than a substantive dispute over the tariff classification of the imported machinery.

Regulation 7 of the Project Import Regulations, 1986

• Regulation 7 governs finalisation of project import contracts.
• It requires the importer to submit a statement containing details of imported goods, supported by documents establishing their value and quantity, within three months from the date of clearance for home consumption of the last consignment or within such extended period as the proper officer may allow.
• The Tribunal noted that the Project Import Regulations, 1986 govern the assessment and clearance of goods falling under Customs Tariff Heading 9801.
• Regulations 4 and 5 deal with registration of the relevant project import contract, while Regulation 7 concerns its finalisation.
• The Tribunal emphasised that the three-month period under Regulation 7 is calculated from the clearance date of the last consignment, not automatically from the date of registration of the contract or clearance of an earlier consignment.
• This distinction became decisive in the present case.

CESTAT’s Findings and Observations

1. Department Failed to Establish the Date of Last Clearance

• The Tribunal observed that the relevant starting point for calculating the three-month period was the date of clearance for home consumption of the last consignment.
• However, the Department had failed to establish that date.
• The Tribunal held that the burden of proving the relevant date rested upon the Department.
• In the absence of evidence identifying the last clearance date, the Department could not substantiate its allegation that NBCC had failed to submit the documents within the period prescribed under Regulation 7.
• This finding directly undermined the Department’s basis for denying the project import benefit.

2. Extension Request Was Never Shown to Have Been Rejected

• The Tribunal recorded that NBCC had submitted a letter dated 11 December 2012 requesting an extension of time.
• Importantly, the record did not establish that the competent authority had rejected the request.
• The Tribunal considered this omission significant because the Department had proceeded on the assumption that the importer had failed to obtain an extension.
• The Tribunal drew support from the Madras High Court’s decision in Commissioner of Income Tax v. S. Rangasamy Nadar & Co., T.C. No. 36 of 1999, decided on 2 December 2002.
• In that case, the High Court recognised that where an application for extension of time remains undisposed of, the applicant may, in appropriate circumstances, proceed on the basis that the requested extension has been allowed.
• Applying this principle, CESTAT held that NBCC’s subsequent submission of documents should not be treated as unauthorised or belated merely because the authority had not expressly disposed of the extension request.
• The ruling does not establish that every unanswered extension request is automatically approved. The conclusion was reached in the context of the particular facts and documentary record before the Tribunal.

3. Requisite Documents Were Furnished Before Issuance of Show Cause Notices

• The Tribunal also found that the requisite documents had been submitted before the show cause notices were issued.
• A handwritten endorsement on the show cause notice itself supported this fact.
• The Tribunal treated the endorsement as significant evidence contradicting the Department’s allegation of non-submission.
• The finding demonstrated that the Department’s conclusions were not consistent with the material available on record.

4. Commissioner (Appeals) Failed to Consider Relevant Correspondence

• The Tribunal noted that the impugned appellate order failed to adequately address NBCC’s submissions concerning its letters dated 16 March 2016 and 4 July 2016, along with the supporting documents submitted through those communications.
• The Tribunal also recorded that the Department had acknowledged relevant facts in its written submissions dated 16 September 2026.
• Consequently, the Tribunal held that the Department had wrongly recorded that NBCC had neither sought an extension nor furnished the reconciliation statement.
• The grounds supporting rejection of the benefit were therefore inconsistent with the documentary record.

5. CBEC Circular and NBCC’s Public Sector Undertaking Status

• The Tribunal further observed that the authorities had failed to properly consider the effect of CBEC Circular No. 14/2006 dated 17 April 2006.
• The Tribunal referred to the circular’s clarifications concerning project imports and noted that certain requirements had been relaxed for public sector undertakings.
• NBCC, being a public sector undertaking under the Ministry of Housing and Urban Affairs, was considered in that context.
• The Tribunal found that the relevant circular and NBCC’s status had not been properly evaluated by the authorities while denying the benefit.
• This finding must be read in the context of the circular and the specific facts of the case. It should not be interpreted as creating a general exemption from customs duty for all public sector undertakings.

Judicial Precedents Referred to in the Judgment

Case	Citation	Relevance
Balaji Steel Rolling Mills v. CCE & Customs	2014 (310) E.L.T. 209	Considered in relation to deciding the appeal on merits despite the appellant’s absence
Mihir Textiles Ltd. v. Collector of Customs, Bombay	1997 (92) E.L.T. 9 (S.C.)	Relied upon by the Department regarding compliance with conditions for concessional duty benefits
Commissioner of Income Tax v. S. Rangasamy Nadar & Co.	T.C. No. 36 of 1999, decided on 02.12.2002	Relied upon by CESTAT concerning an extension request remaining undecided by the competent authority

The Tribunal distinguished the Department’s strict-compliance arguments from the actual evidentiary position and found that the allegations of procedural non-compliance had not been established.

Final Decision of CESTAT

• After examining Regulation 7, the documentary evidence, the extension request and the Department’s submissions, CESTAT concluded that the impugned appellate order could not be sustained.
• The Tribunal held that the Department had relied upon incorrect factual premises concerning the alleged failure to seek an extension and furnish the reconciliation statement.

Accordingly, CESTAT:

1. Set aside the common Order-in-Appeal dated 17/18 October 2019.
2. Allowed Customs Appeal Nos. 50209, 50210 and 50211 of 2020.
3. Rejected the Department’s basis for denying the project import duty benefit in the circumstances of the case.

The order consequently granted relief to NBCC in all three connected appeals.

Legal Significance of the Judgment

• The decision has several important implications for importers, infrastructure contractors and businesses involved in project imports.
• First, the relevant date for Regulation 7 compliance must be correctly established. Customs authorities cannot presume delay without identifying the clearance date of the last consignment from which the prescribed period begins.
• Second, extension requests must be properly examined. Where an importer has submitted a request for additional time and the authority has not communicated any rejection, the consequences of that administrative inaction require consideration.
• Third, documentary evidence cannot be disregarded. Reconciliation statements, installation-related documents and correspondence must be examined before concluding that an importer has failed to comply with the project import requirements.
• Fourth, departmental findings must be consistent with the record. An adjudication order founded upon incorrect assumptions concerning submissions or correspondence may be vulnerable to appellate challenge.
• Fifth, applicable CBEC/CBIC circulars must be considered in their proper context. Authorities must examine relevant administrative clarifications, including any applicable relaxation, before denying benefits.
• The ruling reinforces the importance of evidence-based customs adjudication and proper consideration of procedural compliance under the project import framework.

Practical Compliance Lessons for Project Importers

Importers undertaking projects involving machinery, equipment and capital goods should maintain comprehensive documentation throughout the import and contract-finalisation process.

Particular attention should be given to the following:

• Maintaining a complete statement of all Bills of Entry and their clearance dates.
• Identifying the clearance date of the final consignment.
• Preserving the registered project import contract and amendments.
• Maintaining reconciliation statements covering the imported goods.
• Retaining installation certificates, payment records and project-related supporting documents.
• Submitting extension requests before expiry of the applicable period wherever necessary.
• Obtaining acknowledgments of all correspondence submitted to Customs.
• Preserving evidence of documents furnished during assessment and adjudication proceedings.

These measures can assist importers in demonstrating compliance and responding effectively to disputes concerning project import contract finalisation.

Conclusion

The CESTAT New Delhi decision in M/s NBCC (India) Ltd. v. Commissioner of Customs (Imports) is an important ruling concerning the interpretation and application of Regulation 7 of the Project Import Regulations, 1986.

The Tribunal held that denial of concessional customs duty benefits could not be sustained where the Department failed to establish the relevant date for calculating the prescribed period, disregarded an undecided extension request and proceeded on factual assumptions contradicted by the documentary record.

By setting aside the common Order-in-Appeal and allowing all three appeals, the Tribunal reaffirmed the importance of proper factual verification, fair consideration of extension requests and reasoned adjudication in customs disputes. For importers involved in infrastructure, power, manufacturing and other project-based investments, the judgment provides useful guidance on the evidentiary and procedural requirements governing project import contract finalisation.

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Source: CESTAT Delhi

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Ravi Shekhar Jha – Advocate, Bar Council of Delhi