K.K.USHA,J - (1.)The issue raised in this appeal at the instance of the importer is whether they are entitled to claim exemption from Customs duty under Notification No. 11/97 dated 1.3.97 in respect of 120 MT AC -395 Demag Crane imported under Bill of Entry dated 13.8.98 under the provisions of the Project Import Regulations, 1986.
(2.)The appellant was granted a letter of Intent by the Government of India on 16.1.84 to put up a natural gas based fertilizer plant. In order to erect the manufacturing unit, the appellant had to import plant and machinery from abroad. Import of such items of machinery was covered by Chapter 98, Heading 98.01 of the First Schedule to the Customs Tariff Act, 1975. The assessment and clearance of the items of machinery were governed by the Project Imports Regulations, 1986 framed under Section 157 of the Customs Act, 1962.
(3.)After commissioning of the first plant the appellant undertook an expansion project titled as Gadepan -II Fertilizer Plant. One of the equipments required for Gadepan -II Project was 120 -AC 395 Demag Crane which was imported against invoice dated 30.6.98 and cleared under Bill of Entry dated 13.8.98. The appellant took the stand that the said crane would also enjoy zero duty benefit under Heading 98.01 which reads as follows:
"98.01 -All items of machinery including prime movers, instruments, apparatus and appliances, control gear and transmission equipment, auxiliary equipment (including those required for research and development purposes, testing and quality control), as well as all components (whether finished or not) or raw materials for the manufacture of the aforesaid items and their components, required for the initial setting up of a unit, or the substantial expansion of an existing unit, of a specified:

(1) industrial plant, (2) irrigation project, (3) power project, (4) mining project, (5) project for the exploration for oil or other minerals, and (6) such other projects as the Central Government may, having regard to the economic development of the country notify in the Official Gazette in this behalf; and spare parts, other raw materials (including semi -finished material) or consumable stores not exceeding 10% of the value of the goods specified above provided that such spare parts, raw materials or consumable stores are essential for the maintenance of the plant or project mentioned in 1 to 6 above."