9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (9) TMI 807 - AT - CustomsSeeking provisional release of confiscated goods - levy of redemption fine and penalty - Aircraft - whether the use of aircraft imported by the appellant with benefit of exemption from customs duty under serial 347B of notification no. 21/2002-Cus dated 01.03.2002, as amended by notification no. 61 of 2017 dated 03.05.2007, the exemption notification, for providing passenger air transport service to its group company by carrying personnel of the group company for remuneration would amount to violation of Condition No.104 of the said exemption notification? - whether it is open to Customs to contend that such use in not in accordance with the permit for non-scheduled (passenger) services granted by Director General of Civil Aviation, DGCA when the DGCA has not found such use to be in violation of such permit and had renewed the permit from time to time? HELD THAT - Aircrafts and helicopters are classified under Customs Tariff Heading 88 of the First Schedule to the Customs Tariff Act, 1975. The tariff rate of duty till 28.02.2007 on the import of aircraft was 3% / 12.5%. Subsequently, pursuant to the proposal made in the Finance Bill 2007, exemption notification no. 20/2009 dated 01.03.2007 was issued inserting Entry 346B and Condition No. 101 in the earlier exemption notification dated 01.03.2002, whereby, the effective rate of duty on import of aircraft for scheduled air transport service was made nil . No exemption was, however, granted to non-scheduled air transport service and private category aircraft. However, with the issuance of the exemption notification dated 03.05.2007, the effective rate of duty on the import of aircraft for non-scheduled air transport service was made nil . This exemption notification was as a consequence of the statement made by the Hon ble Finance Minister in the Parliament. The exemption notification dated 03.05.2007 inserted Condition No. 104 which requires at the stage of import, an approval from MCA to import the aircraft for non-scheduled (passenger) service and an undertaking by the importer to the Customs authority that the aircraft would be used only for non-scheduled (passenger) services and that the operator would pay on demand, in the event of his failure to use the aircraft for the specified purpose, an amount equal to the duty payable on the said aircraft but for the exemption under the notification. The use of the aircraft has been in accordance with the scope of non-scheduled (passenger) services and there is no violation of the undertaking to use the aircraft for non-scheduled (passenger) services. It is not possible to sustain the impugned order dated 31.08.2010 passed by the Commissioner in so far as it concerns the appellant. For these reasons, the penalty imposed upon Sudhir Nayak cannot also be sustained - impugned order set aside - appeal allowed.
Issues Involved:
1. Whether the use of aircraft imported by the appellant with the benefit of exemption from customs duty violated Condition No. 104 of the exemption notification. 2. Whether Customs could contend that the use of the aircraft was not in accordance with the permit for non-scheduled (passenger) services granted by DGCA. 3. The permissibility of chartering operations under non-scheduled (passenger) service. 4. The requirement of issuing passenger tickets by a non-scheduled (passenger) service operator. 5. Whether the aircraft's use for carrying personnel of a group company amounts to private use. 6. Whether the Customs authorities have jurisdiction to decide the violation of the exemption notification and demand duty based on the undertaking. Issue-wise Detailed Analysis: 1. Violation of Condition No. 104 of the Exemption Notification: The appellant imported an aircraft claiming an exemption from customs duty under the exemption notification, subject to Condition No. 104, which mandates that the aircraft be used only for non-scheduled (passenger) services. The Commissioner held that the appellant had violated this condition by chartering the aircraft to RIL, not issuing passenger tickets, and using the aircraft for private purposes. However, the Tribunal's Larger Bench in VRL Logistics Ltd. clarified that chartering is permissible under non-scheduled (passenger) service, and there is no requirement to issue passenger tickets. The Tribunal further noted that the appellant's use of the aircraft for transporting personnel of group companies for remuneration does not constitute private use, thereby satisfying Condition No. 104. 2. Customs Contention on Permit Violation: The Commissioner contended that the appellant's use of the aircraft was not in accordance with the permit granted by DGCA. However, the Tribunal emphasized that the DGCA, which is the competent authority, had not found any violation and had renewed the permit periodically. Thus, Customs cannot independently determine a violation of the DGCA permit. 3. Permissibility of Chartering Operations: The Tribunal's Larger Bench in VRL Logistics Ltd. held that non-scheduled (passenger) service operators can conduct charter operations. The definitions of air transport service and non-scheduled (passenger) service do not restrict the mode of service to per-seat basis only. Therefore, the appellant's chartering of the aircraft to RIL was within the permissible scope of non-scheduled (passenger) services. 4. Requirement of Issuing Passenger Tickets: The Tribunal clarified that non-scheduled (passenger) service operators are not mandated to issue passenger tickets. The Policy Guidelines for Starting Scheduled/Non-Scheduled Air Transport Services explicitly state that non-scheduled operators are not permitted to publish time schedules and issue tickets to passengers. Therefore, the appellant's non-issuance of passenger tickets does not constitute a violation of the exemption notification. 5. Use for Carrying Personnel of Group Company: The Tribunal found that the use of the aircraft to transport personnel of group companies for remuneration does not amount to private use. The aircraft was used for providing air transport services for remuneration, which falls within the scope of non-scheduled (passenger) services. The DGCA's renewal of the permit further supports this position. 6. Jurisdiction of Customs Authorities: The Tribunal held that the Customs authorities could only demand duty based on the undertaking if the DGCA, the competent authority, found a violation of the permit conditions. The DGCA had not found any such violation in the present case. The Tribunal also noted that the decisions of the Division Benches in East India Hotels and King Rotors, which held that Customs authorities could ensure compliance with the undertaking, were incorrect. The jurisdiction to monitor compliance lies with the Civil Aviation Ministry. Conclusion: The Tribunal set aside the impugned order dated 31.08.2010, holding that the appellant had not violated Condition No. 104 of the exemption notification. The penalty imposed on Sudhir Nayak was also unsustainable. Both Customs Appeal No. 640 of 2010 and Customs Appeal No. 642 of 2010 were allowed.
|
