Purchase Order Date Cannot Determine Importation: Madras High Court on Project Import Benefit Under Heading 98.01
Background and Overview
The Madras High Court recently delivered a significant ruling in Vatech Wabag Limited Vs Assistant Commissioner of Customs, partly allowing a writ petition challenging proceedings dated 02.06.2026 that had denied the assessee the benefit of assessment under Heading 98.01 of the Customs Tariff Act, 1975, read alongside the Project Import Regulations, 1986.
The case revolves around a fundamental question in customs law: whether the date on which a purchase order is placed with a foreign supplier can be treated as the date of importation for determining eligibility under the Project Import Regulations. The Court answered this in the negative, drawing upon settled statutory interpretation and Supreme Court precedent.
Who Is the Assessee and What Was the Project?
Vatech Wabag Limited is a company engaged in the domain of total water management. It was awarded a contract by the Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB) for the execution of a 400 MLD seawater reverse-osmosis desalination plant at Perur.
To implement this project, the assessee imported five consignments comprising fasteners and a filter cartridge, filed under five Bills of Entry bearing dates 30.10.2024, 08.02.2025, 13.08.2025, 19.03.2025, and 13.08.2025. Customs duty was paid at the rate of 15% at the time of clearance.
Since the goods were imported for a public infrastructure project, the assessee sought assessment under Heading 98.01 of the Customs Tariff Act, 1975, which provides concessional duty treatment under the Project Import Regulations. This claim was rejected by the impugned proceedings on the ground that the purchase orders had been placed prior to the registration of the project contract with the Customs Department.
The Core Dispute: Purchase Order Date vs. Date of Importation
Position of the Assessee
The project contract was registered with the Customs Department on 05.06.2025. The assessee argued that two of the five Bills of Entry — both dated 13.08.2025 — pertained to consignments imported after such registration. Accordingly, these two consignments satisfied the eligibility conditions under the Project Import Regulations, 1986, and ought to be assessed under Heading 98.01.
The assessee also raised a separate argument that even after clearance of goods, the Bills of Entry could be revised under Section 18A of the Customs Act, 1962, which was inserted with effect from 29.03.2025.
Position of the Revenue
The Revenue maintained that since the purchase orders had been placed before the registration of the project contract, all five consignments — including those imported after registration — were ineligible for the project import benefit. Additionally, the Revenue argued that since the goods had already been cleared for home consumption, amendment of the Bills of Entry was barred under Section 149 of the Customs Act, 1962.
Court's Analysis: What Constitutes "Importation"?
Purchase Order Is a Mere Commercial Transaction
The Court categorically held that placing a purchase order with a foreign supplier is only a commercial transaction. It does not, in and of itself, amount to the importation of goods into India. The date relevant for the purposes of the Project Import Regulations is the date of actual importation, not the date of the purchase order.