Blitz India Business
NEW DELHI: For an importer building a plant, the Project Imports Scheme is one of the best deals in the customs code. The auditor has found that nobody ever told him when the deal ends.
The Comptroller and Auditor General’s Performance Audit Report No. 27 of 2026 on the Project Imports Scheme — Union Government, Department of Revenue (Indirect Taxes — Customs), for the year ended 31 March 2024 — was presented to Parliament on 12 August 2026. It carries 36 observations, 11 recommendations, a revenue implication of ₹128.58 crore and procedural irregularities involving ₹2,979.33 crore.
Why this report matters to a finance function
Under the Project Import Regulations, 1986, a company setting up an industrial project registers the whole contract and imports the entire consignment under one classification at one rate. The saving is real and the administrative relief is larger. But the contract must eventually be finalised against an Installation Certificate, a Plant Site Verification, a reconciliation statement and the supporting documents — and until it is, bonds and bank guarantees stay live on the balance sheet.
Audit found that in 57 of 383 finalised cases examined — 14.88 per cent, on Blitz’s computation — across eight Commissionerates, contracts had been closed without those mandatory documents (paragraphs 2.11 and 2.12). It found bonds and bank guarantees not renewed while finalisation remained pending (paragraph 4.1), bills of entry finalised late or prematurely in relation to contract closure (paragraph 3.3), and clearance delays running from 3 to 1,149 days, against the objectives of the National Trade Facilitation Action Plan (paragraph 3.1).
Every one of those is a working-capital fact before it is an audit fact. A guarantee that stays live is a limit that stays used. A contract that stays open is a contingent liability that stays disclosed. And 1,149 days is more than three years of a plant waiting on a consignment.
The root, and the remedy
The auditor traces most of it to a single absence: the 1986 Regulations prescribe no timeline for registering a project or for completing imports under a registered contract (paragraphs 2.1 and 2.2). The Board is accordingly asked to prescribe a time frame for completing registration, and to amend the Regulations to set a time limit for completing imports and closing projects.
The other nine recommendations are all versions of the same instruction: move the control into ICES. Automated document validation at registration. System-based validation blocking finalisation until the Installation Certificate and Plant Site Verification are uploaded and verified. Automatic flagging of ineligible contract registrations by date and classification. Dwell-time monitoring for every project-import bill of entry. A linkage so that closing a contract validates its bills of entry, with alerts on overdue ones. Alerts on bonds and guarantees nearing expiry. Automatic referral of related-party imports to the Special Valuation Branch. A centralised digital tracker of confirmed demands and recovery action. And digital Project Import Registers, monitored under the framework already prescribed in Circular No. 22/2011-Customs of 4 May 2011, with an automated pendency dashboard developed by the Directorate General of Performance Management.
Responses from the Central Board of Indirect Taxes and Customs and its field formations were received, considered and included in the report before it was finalised. This is a report the Department has already answered.
The constructive close
Read commercially rather than forensically, this is a good report to have. It asks for nothing that would narrow the concession and everything that would speed it up: a deadline, a validation rule and a dashboard. An importer loses nothing by being told when his project must close; he gains a date to plan against and a guarantee he can release.
The one addition Blitz would suggest is publication. Once the ICES pendency dashboard the auditor recommends exists, a periodic public statement of project-import contracts registered, finalised and pending by Commissionerate would let a company see its own file in the national queue. Firms chase what they can see. That is the least expensive compliance mechanism the Board has available to it, and it is already, in effect, built.