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2023 (5) TMI 49 - AT - CustomsImport of Aircraft - Benefit of exemption - Violation of user condition - Condition No. 104 of N/N. 21/2002-Cus. as amended by N/N. 61/2007-Cus. - Improper availment of benefit of exemption under the said Notification - appellant were granted Non-Scheduled Air Transport (Passenger) - revenue contended that appellants are granted permit for Non-Scheduled Air Transport Service (Passenger), whereas the appellants provided Charter services - demand of differential Customs duty alongwith penalty - HELD THAT - After discussing the relevant provision the Larger Bench of Tribunal in interim order M/S VRL LOGISTICS LTD VERSUS COMMISSIONER OF CUSTOMS, AHMEDABAD 2022 (8) TMI 720 - CESTAT AHMEDABAD (LB) observed that the above exemption notification does not prohibit a non-scheduled (passenger) service permit holder to use the Aircraft for charter operations. By following the above finding of Larger Bench of Tribunal, it is found that contention of revenue in the present case that the appellants were issued a permit for providing non-scheduled (passenger) services but the imported aircraft has been put to non-scheduled (charter) services and therefore, the exemption should be denied is without substance. When exemption is available for use under either category, such an objection by the Department is without merit particularly when evidence has been provided by the Appellants that the Civil Aviation Requirements (CAR) permit such use vide DGCA s clarifications and the DGCA authorities have not taken any action against such use. The letter dated 08.08.2008 issued by DGCA states that a non-scheduled (passenger) permit holder can conduct charter operation and such operation would be within the purview of the non-scheduled (passenger) services permit holders. Whether use of Aircraft for the period involved was partly without remuneration and is not public transport hence, for private use? - HELD THAT - The appellant had published tariff for charter service, the appellant has produced advertisement in various media and invoices raised on various customers for use of aircraft to support its case that the aircraft was used for remuneration and was used for providing Air Transport Service . This is not a case where aircraft is not allowed to be used for any remuneration or whatsoever which is duly supported by the invoices produced by the appellant - the aircraft is permitted to be used from the date of its import till the date for Non-Scheduled chartered operations and permission granted to the appellant is being renewed from time to time till date. This also supports our views that aircraft is not used for private use. The question whether Air Transport Undertaking by the appellant is public transport or private has to be determined with reference to the appellant s status as Air Transport Undertaking and not in reference to the certain non-remuneration flights undertaken during certain period i.e. 05.01.2008 to 04.04.2008 and May to August 2008. The appellant s status of Air Transport Undertaking is not in dispute. In view thereof, it cannot be held that use of aircraft by the appellant was a private use because of some of the non remuneration flights claimed to have been undertaken by the appellant during the said period. The aircraft is not used for private purpose in breach of the undertaking and conditions of the notification - the Civil Aviation Authority has not treated the operation of the aircraft for the period 05.01.2008 to 04.04.2008 and May to August 2008 as being private aircraft and in fact issued permit on 04.04.2008 for Non- Scheduled operations in terms of recommendations dated 23.03.2007 and renewed such permits from time to time till date supports the case of the appellant that the aircraft was used for non-scheduled operations for hire or reward. Thus, there is no post import condition in the notification hence, the duty demand, imposition of penalties and confiscation of the aircrafts are not sustainable. The appellants are legally eligible for exemption notification. Accordingly, the impugned orders are set aside - Appeal allowed.
Issues Involved:
1. Admissibility of exemption under Notification No. 21/2002-Cus. 2. Violation of conditions of the exemption notification. 3. Jurisdiction of Customs authorities to decide on the violation of exemption notification conditions. 4. Use of aircraft for private purposes and its implications on exemption eligibility. 5. Requirement of published tariff for non-scheduled (charter) services. 6. Use of aircraft by group companies and its classification as public transport. Summary of Judgment: 1. Admissibility of Exemption under Notification No. 21/2002-Cus: The Larger Bench of the Tribunal addressed the admissibility of the exemption under Notification No. 21/2002-Cus. They concluded that the reference to the Larger Bench was not rendered infructuous and that the appellants did not violate condition (b) of the notification. It was held that aircrafts imported for non-scheduled (passenger) services could be used for non-scheduled (charter) services and cannot be classified as private aircraft. The customs authority cannot question the validity of the DGCA's permission unless it is canceled by the DGCA. It was also determined that it is not mandatory for the importer to issue air tickets for providing non-scheduled (passenger) services. 2. Violation of Conditions of the Exemption Notification: The Tribunal found that the conditions set out in the exemption notification were not violated by the appellants. The notification does not prohibit a non-scheduled (passenger) service permit holder from using the aircraft for charter operations. The Tribunal emphasized that both non-scheduled (passenger) services and non-scheduled (charter) services are eligible for exemption, and there is no restriction in the notification or the Aircraft Rules against such use. 3. Jurisdiction of Customs Authorities: The Tribunal held that the jurisdictional authorities under the Civil Aviation Ministry alone can monitor the compliance of the conditions imposed by the DGCA. The Customs Authorities can take action based on the undertaking submitted by the importer only when the Civil Aviation Ministry finds that the conditions have been violated. The Tribunal referenced several Supreme Court decisions to support this position, including Titan Medical Systems Pvt. Ltd. vs. CCE. 4. Use of Aircraft for Private Purposes: The Tribunal rejected the contention that the aircrafts were used for private purposes, noting that the aircrafts were used for remuneration, which qualifies as public transport under Rule 3(45) of the Aircraft Rules, 1937. Even flights conducted without remuneration would still be considered public transport if conducted by an air transport undertaking. 5. Requirement of Published Tariff: The Tribunal found that the requirement of having a published tariff applies only to non-scheduled (charter) services and not to non-scheduled (passenger) services. The absence of a published tariff does not disqualify the appellants from the exemption, as the definition of non-scheduled (passenger) service does not include such a requirement. 6. Use of Aircraft by Group Companies: The Tribunal concluded that the use of aircraft by personnel of group companies does not constitute private use. Personnel of group companies are considered members of the public, and the aircraft's use for remuneration qualifies as public transport. Conclusion: The Tribunal set aside the impugned orders and allowed the appeals, granting the appellants the benefit of the exemption under Notification No. 21/2002-Cus. The Tribunal found no contravention of the conditions of the exemption notification and confirmed that the appellants were legally eligible for the exemption.
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