Regulations explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Regulations 1 to 4 of the Project Imports Regulations, 1986 decide who can use the project imports route. They fix the date of effect, say that the regulations apply to goods under heading 98.01 of the First Schedule to the Customs Tariff Act, 1975, define an industrial plant, a sponsoring authority, substantial expansion and a unit, and make assessment under the heading available only to goods imported against a contract registered with the Custom House on time.
The regulations apply to assessment and clearance of goods under heading 98.01. Assessment under that heading is available only to goods imported, in one or more consignments, against one or more specific contracts that were registered with the appropriate Custom House before the order permitting clearance for home consumption, or, for goods cleared without payment of duty for fairs and exhibitions, before the date of payment of duty. Substantial expansion means a rise in installed capacity of not less than 25 per cent.
Position of the text: as amended up to Notification No. 49/2025-Customs dated 28 November 2025. Later notifications should be checked; no official consolidated text exists. The amendments since 2022 changed the Table of sponsoring authorities (covered in our article on the Table), not regulations 1 to 4.
The regulations were made by Notification No. 230/86-Customs dated 3 April 1986 under section 157 of the Customs Act, 1962, in supersession of the Project Imports (Registration of Contract) Regulations, 1965, except as respects things done or omitted before the supersession. The duty rate for goods under heading 98.01 sits in the tariff and in exemption notifications, not in these regulations, so this article states none. A background guide to the scheme is in our post on project imports and the concessional duty procedure. Businesses planning a project import can get advice from our compliance advisory team.
Regulation 1: title and commencement
The short title is the Project Imports Regulations, 1986. They came into force on 3 April 1986.
Regulation 2: application
The regulations apply for assessment and clearance of goods falling under heading No. 98.01 of the First Schedule to the Customs Tariff Act, 1975. They are the procedural side of that tariff heading; they do not create a separate duty.
Regulation 3: definitions
Regulation 3 was substituted by Notification No. 153/95-Customs dated 27 October 1995.
| Term | Meaning |
|---|---|
| Industrial plant | An industrial system designed to be employed directly in the performance of any process or series of processes necessary for manufacture, production or extraction of a commodity |
| Sponsoring authority | An authority specified in the Table annexed to the regulations |
| Substantial expansion | An expansion which will increase the existing installed capacity by not less than 25 per cent |
| Unit | Any self-contained portion of an industrial plant, or of a project specified under heading 98.01, having an independent function in the execution of the project |
What an industrial plant does not include
The definition of industrial plant excludes two things:
- Establishments designed to offer services of any description, such as hotels, hospitals, photographic studios, photographic film processing laboratories, photocopying studios, laundries, garages and workshops. An Explanation says that this exclusion does not cover video recording or editing units, cinematographic studios, cinematographic film processing laboratories, and sound recording, processing, mixing or editing studios. Those are not excluded, so they remain eligible as industrial plants.
- A single machine or a composite machine, within the meaning in Notes 3 and 4 to Section XVI of the First Schedule. A project import is for a plant or project as a system, not for one machine.
The "unit" definition matters because a project can be imported in self-contained parts that each have an independent function in executing the project.
Regulation 4: eligibility
Assessment under heading 98.01 is available only to goods that:
- are imported, whether in one or in more than one consignment;
- are imported against one or more specific contracts; and
- are covered by a contract or contracts registered with the appropriate Custom House in the manner specified in regulation 5.
The registration must be done at one of two points in time:
| Case | Registration must be done |
|---|---|
| (i) Ordinary case | Before any order is made by the proper officer permitting clearance of the goods for home consumption |
| (ii) Goods cleared for home consumption without payment of duty, subject to re-export, for fairs, exhibitions, demonstrations, seminars, congresses and conferences duly sponsored or approved by the Government of India or the Trade Fair Authority of India | Before the date of payment of duty |
Registration of the contract is the gate. Goods that come in without a registered contract are not entitled to assessment under the heading, and the text does not give a way to register after clearance for home consumption in the ordinary case. The registration procedure itself is explained in our article on regulations 5 to 7.
A worked example
Sunrise Beverages plans a new bottling plant, with a total capacity of its own and machinery arriving from several suppliers under a single supply contract. The plant is an industrial system for manufacture, so it qualifies as an industrial plant. It is not a service establishment, and it is not a single machine. The importer registers the contract with the Custom House before the proper officer allows clearance of the first consignment for home consumption. Later consignments under the same contract are assessed under heading 98.01 as well. Had Sunrise instead imported a single filling machine, it would fall outside the definition of an industrial plant because of the single machine exclusion.
A second case: an existing biscuit factory plans to raise installed capacity by 20 per cent. That is below the 25 per cent threshold, so it is not a substantial expansion as the regulations define it.
Common points to check
- Is the project under heading 98.01 and listed in the Table with a sponsoring authority?
- Is the item a plant system rather than a single or composite machine?
- Is the contract registered before clearance for home consumption?
- For fair and exhibition goods, is registration done before the date of payment of duty?
Need help with a project import?
If you plan a plant or project import under heading 98.01 and want to check the eligibility conditions and the order of steps before the first consignment, our compliance advisory team can review the contract and the registration plan.
Key takeaways
- The regulations apply to assessment and clearance of goods under heading 98.01 of the First Schedule to the Customs Tariff Act, 1975.
- Industrial plants exclude service establishments and single or composite machines; video, film and sound studios are not excluded.
- Substantial expansion means an increase in installed capacity of not less than 25 per cent.
- Eligibility needs imports against registered specific contracts, registered before clearance for home consumption (or before payment of duty for fair and exhibition goods).
Read next
- Regulations 5-7 of the Project Imports Regulations, 1986: registration, amendment and finalisation of contracts
- Table to the Project Imports Regulations, 1986: eligible projects and sponsoring authorities
- Project imports: concessional duty procedure
Disclaimer: Based on the customs regulations named above as published on the CBIC Tax Information Portal or in the Gazette and, for sets amended since 2023, the amending notifications (read through a TaxClue consolidated reading text; no official consolidated text exists), as consulted on 3 October 2026. Later notifications, fees and the Customs Act, 1962 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.