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2017 (11) TMI 1188 - AT - CustomsConfiscation of aircraft taken on lease - redemption fine - penalty - The department is of the view that duty is payable retrospectively w.e.f. 20.2.2008 when the lease agreement was entered into by M/s. Futura Travels for the aircraft. Held that - The aircraft imported by EIHL on 21.10.2007 stands exported on 14.4.2008, within the period of six months as per the provisions of Rule 58(6) ibid. There is nothing on record to show that EIHL has filed any application to register the aircraft in India. Hence we are convinced that EIHL cannot be held liable for contravention of Rule 58(6) ibid. Consequently there is no justification to order confiscation of the aircraft and demand of customs duty from EIHL. FTL imported the same aircraft in Mumbai. Hence Commissioner(Cus) Delhi does not have the jurisdiction to demand customs duty from FTL. There is also no basis for raising duty demands jointly and severally from two legal persons. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Applicability of Customs Duty and its retrospective effect. 2. Compliance with Rule 58(6)(a) of Indian Aircraft Rules, 1920. 3. Jurisdiction of Commissioner of Customs, New Delhi. 4. Joint and several liability for Customs Duty. 5. Eligibility for duty drawback. Detailed Analysis: 1. Applicability of Customs Duty and its Retrospective Effect: The department contended that customs duty should be levied retrospectively from 21.10.2007, the date when the aircraft first entered India. The adjudicating authority initially demanded customs duty from 20.2.2008, the date of the lease agreement between FTL and Cessna Finance Corporation. The Tribunal found that the aircraft was imported by EIHL on 21.10.2007 and exported within six months, complying with Rule 58(6) of the Aircraft Rules. Therefore, no duty was payable for this period. The subsequent import by FTL on 19.4.2008 was a separate event and customs duty was duly paid. Hence, the Tribunal ruled that there was no justification for retrospective duty demand from 21.10.2007. 2. Compliance with Rule 58(6)(a) of Indian Aircraft Rules, 1920: The aircraft was initially imported by EIHL under Rule 58(6)(a), which allows duty-free import if the aircraft is not intended to be registered in India and is removed within six months. The aircraft was indeed exported within this period. The department argued that the Essar Group always intended to register the aircraft in India, violating Rule 58(6)(a). However, the Tribunal found no evidence of any application for registration by EIHL, and hence, no violation of Rule 58(6)(a) was established. 3. Jurisdiction of Commissioner of Customs, New Delhi: FTL argued that the Commissioner of Customs, New Delhi, lacked jurisdiction since the aircraft was imported at Mumbai. The Tribunal agreed, stating that FTL and EIHL are separate legal entities, and any issues related to the import by FTL should be adjudicated by the Customs Authorities at Mumbai. The Tribunal found that the Commissioner of Customs, New Delhi, did not have the jurisdiction to demand customs duty from FTL for the import at Mumbai. 4. Joint and Several Liability for Customs Duty: The adjudicating authority had demanded customs duty jointly and severally from EIHL and FTL. The Tribunal held that customs duty can only be demanded from the person liable for the import. Since EIHL and FTL are distinct legal entities, joint and several liability was not applicable. The Tribunal emphasized that each entity should be held accountable for its own actions. 5. Eligibility for Duty Drawback: FTL argued that if customs duty were to be paid retrospectively, they would be entitled to a duty drawback as the aircraft was subsequently exported. The Tribunal noted that since the duty demand itself was not sustainable, the issue of duty drawback did not arise. However, it acknowledged the principle that duty drawback would be applicable if duty was paid and the aircraft was exported within the stipulated period. Conclusion: The Tribunal set aside the impugned order, ruling that there was no justification for confiscating the aircraft or demanding customs duty from EIHL. It also found that the Commissioner of Customs, New Delhi, did not have jurisdiction over the import by FTL at Mumbai. The appeals filed by FTL and their Directors were allowed, and the Revenue's appeals were dismissed.
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