2011 (6) TMI 276 - AT - Customs

Import of helicopter - non-scheduled air transport services (passenger) - Misuse of helicopter - Held that - The assessee neither provided non-scheduled (passenger) services as defined under Explanation to Condition No. 104 of Notification No. 21/02-Cus., dated 1-3-2002 (347B) as amended by Notification No. 61/07-Cus., dated 3-5-2007 nor provided non-scheduled (charter) services as defined under the said Explanation, by using the helicopter. - Though the assessee complied with clause (i) of the Condition No. 104 ibid, they violated the post-importation condition viz. Clause (ii) of the said Condition No. 104. They also violated similar condition of Notification No. 6/06-C.E., dated 1-3-2006 (entry No. 54A) as amended by Notification No. 6/07-C.E., dated 1-3-2007. - On account of the above violation, the assessee is not eligible for exemption from BCD under Notification No. 21/02-Cus. (entry No. 347B) as amended by Notification No. 61/07-Cus or for exemption from CVD under Notification No. 6/06-C.E., dated 1-3-2006 (entry 54A) as amended by Notification No. 6/07-C.E., dated 1-3-2007. Consequently, they cannot, also, claim the benefit of Notification No. 20/2006-Cus., dated 1-3-2006 (entry No. 1) in respect of SAD. - Assessee is liable to pay duties of customs - penalties levied u/s 112 confirmed - decided against the assessee.

Issues Involved:

1. Demand of duty and penalties imposed on the assessee.
2. Confiscation of the helicopter.
3. Interpretation of Condition No. 104 of Notification 21/2002-Cus. as amended.
4. Jurisdiction of Customs authorities vs. Civil Aviation authorities.
5. Applicability of the extended period of limitation.
6. Relevance of amendments to Condition No. 104 by Notification 21/2011-Cus.
7. Precedential value of the co-ordinate Bench decision in Sameer Gehlot's case.

Issue-wise Detailed Analysis:

1. Demand of Duty and Penalties Imposed on the Assessee:

The assessee, M/s. King Rotors & Air Charter Pvt. Ltd., challenged the demand of duty of Rs. 8,68,53,254/- confirmed by the Commissioner of Customs for a Bell Helicopter imported under exemption notifications. The assessee also contested the penalties imposed under Section 112 of the Customs Act. The Tribunal found that the assessee violated the post-importation condition of using the helicopter exclusively for non-scheduled (passenger) services, as per the undertaking given at the time of import. The Tribunal upheld the demand for duties and penalties, concluding that the assessee had not complied with Condition No. 104 of Notification 21/2002-Cus. as amended.

2. Confiscation of the Helicopter:

The helicopter was confiscated under Section 111(d) and (o) of the Customs Act due to the violation of the import conditions and the lack of an import license from DGFT. The Tribunal upheld the confiscation, noting that the helicopter was used in a manner that violated the terms of the DGCA's permit, rendering it liable to confiscation.

3. Interpretation of Condition No. 104 of Notification 21/2002-Cus. as Amended:

The main issue was whether the assessee complied with Condition No. 104, which required the helicopter to be used only for non-scheduled (passenger) or non-scheduled (charter) services. The Tribunal found that the assessee's use of the helicopter for charter services under an NSOP (passenger) violated the condition. The Tribunal held that the terms "non-scheduled (passenger) services" and "non-scheduled (charter) services" were mutually exclusive and that the assessee's operations did not meet the definitions provided in the notification.

4. Jurisdiction of Customs Authorities vs. Civil Aviation Authorities:

The Tribunal asserted the independent jurisdiction of the Customs authorities to determine compliance with the conditions of the exemption notification, regardless of the DGCA's interpretations or clarifications. The Customs authorities were within their rights to monitor the post-importation use of the helicopter and ensure compliance with the conditions of the exemption.

5. Applicability of the Extended Period of Limitation:

The show-cause notice was issued beyond the normal limitation period, invoking the extended period under the proviso to Section 28(1) of the Customs Act due to alleged willful misstatement and suppression of facts by the assessee. The Tribunal found no firm contest from the assessee against the invocation of the extended period and upheld the demand as not time-barred, referencing judicial precedents that allowed for such demands in cases of post-importation condition violations.

6. Relevance of Amendments to Condition No. 104 by Notification 21/2011-Cus.:

The Tribunal concluded that the amendments brought by Notification 21/2011-Cus., which allowed interchangeable use of aircraft for non-scheduled (passenger) and non-scheduled (charter) services, were not applicable to the case at hand. The amendments were prospective and did not retroactively apply to the import in question.

7. Precedential Value of the Co-ordinate Bench Decision in Sameer Gehlot's Case:

The Tribunal decided not to follow the co-ordinate Bench decision in Sameer Gehlot's case, finding it distinguishable on facts and rendered per incuriam. The Tribunal noted that the previous decision did not adequately consider the post-importation conditions and the independent jurisdiction of the Customs authorities.

Conclusion:

The Tribunal upheld the demand of duties and penalties, confirmed the confiscation of the helicopter, and dismissed the appeals, concluding that the assessee violated the conditions of the exemption notification and the terms of the DGCA's permit. The Tribunal emphasized the independent jurisdiction of the Customs authorities to enforce compliance with the conditions of the exemption notification.

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