Machinery, appliances, instruments, apparatus etc. required for initial setting up of a unit or for substantial expansion of an existing unit of a specific category can be imported at a flat rate of duty. This will enable assessment of varieties of industrial goods falling under different chapters of Customs Tariff as if they fall under a single heading.

Only contracts which are registered with the Custom house of import will be eligible for assessment under Heading No.98.01. This registration must have been obtained before an order of clearance for home consumption is passed by a proper officer of customs. If goods imported for trade fairs, exhibitions, seminars etc, which are already cleared without payment of duty this registration may be done before the date of payment of duty.

The applicant has to apply for registration of contract at the port of importation before the actual import. In case clearances have to be made from a port other than the port of registration, the importer has to produce all information from the customs house of registration, as may be sought by the proper officer at the custom house of clearance of goods.

The application for registration must specify the following particulars:

1. Location of plant or project.
2. Description of article to be manufactured, produced, mined or explored.
3. Installed or designed capacity of the plant or project.
4. In case of substantial expansion of an existing plant or project, the installed capacity and the proposed addition thereto.
5. If the imports require licence, licence must also be produced.
6. List of items approved by the sponsoring authority. Table annexed to the Regulations lists sponsoring authorities for various class of projects
7. Other necessary information sought by the proper officer.

Original deed of contract and a true copy must be enclosed to the application. No form of application has been prescribed for this purpose. The reference to "original deed" implied that a formal contract must be entered into with the supplier and registration cannot be allowed based on a mercantile purchaser order.

If the application is in order, the contract and its particulars will be entered in a register kept for this purpose . A number is assigned in token of registration and will be communicated to the importer. After this stage, original documents will be returned to the importer.

If the registered contract undergoes amendment, separate application has to be made for registration of amendments. Original deed and licence must accompany an amendment application. These amendments are also recorded in the register of project imports maintained at the custom house.

Imports may be made in one or more consignments over a period of time. Within three months of clearance of last consignment of the contract, the importer has to submit a statement reconciling the details of imports with the contract and submit documentary proof as to value and quantity.

Under Project Imports Regulation, 1986, the importer has to deposit cash equal 2% value of goods as security deposit. Based on the representations that in capital intensive industries, this will be quite huge burden, it has been decided that wherever this deposit amount exceeds Rs.50 lakh, importer will be given the option of making cash deposit of Rs.50lakhs and balance by way of issuing a bank guarantee, backed by an undertaking to renew it until the finalisation of the contract. In all cases, where the cash deposit requirement is below Rs.50 lakh, cash deposit alone will be accepted. In respect of fertilizer projects liable to zero rate of duty, the Commissioners should take only 0.5% cash security to a maximum of Rs.20 lakh.