2024 (6) TMI 21 - AT - Customs

Violation of Condition No.104 of Notification No.21/2002-Cus. - Permit issued by the DGCA to import the aircraft for providing the NSOP (Passenger) services - Classification of aircraft usage as private or non-scheduled (Passenger) services - Applicability of judicial precedents and statutory provisions - HELD THAT - We find that the aircraft is available not only to the group companies but also to the other customers. In this regard, the observations made by the Larger Bench in M/s.V.R.L. Logistics 1852862 that the definition of Private Aircraft under Rule 3(4) of Aircraft Rules, 1937 does not warrant the view that if the tariff is not published, the use of the aircraft would be private. Further, the testing point enunciated was that if the aircraft is used for carriage of persons for remuneration, it is a public transport aircraft and not a private aircraft. Noticing the facts of the case, there is no dispute that the respondent had used the aircraft for the transport of persons for remuneration as there is no prohibition in the definition of Air Transport Service as defined under Rule 3(9) of Aircraft Rules for transporting the employees/personnel of the group companies. Applying the analogy of the Larger Bench in M/s.V.R.L. Logistics, we find that in terms of the definition of Scheduled Air Transport Service in Rule 3(4), the respondent does not satisfy the conditions enumerated in the definition. Therefore, the services rendered were other than scheduled (Passenger) air transport service and therefore, ipso facto were non-scheduled (Passenger) service as defined in clause (b) of the explanation to Condition No.104 of the exemption notification. Thus, the controversy has been settled by the decision of the M/s.V.R.L. Logistics 1852862 and following the same, we do not find any reason to interfere with the impugned order. The Tribunal concluded that the aircraft was used for providing non-scheduled (Passenger) services as defined in Clause (b) of the Explanation to Condition No.104 of the exemption notification. Consequently, there was no violation of the notification, and the issues of confiscation, interest, and penalty did not survive. The impugned order was affirmed, and all appeals were dismissed.

Summary

Issues Involved:
1. Violation of Condition No.104 of Notification No.21/2002-Cus.
2. Classification of aircraft usage as private or non-scheduled (Passenger) services.
3. Applicability of judicial precedents and statutory provisions.

Summary:

1. Violation of Condition No.104 of Notification No.21/2002-Cus:
The Revenue appealed against the Order-in-Original No.03/Commr./JMS/2009, where the Commissioner dropped the demand initiated u/s 28 of the Customs Act, 1962, for the alleged violation of Condition No.104 of Notification No.21/2002-Cus. The respondent imported an aircraft under Permit No.6/2007 for non-scheduled operator (Passenger) services (NSOP) and was accused of using it for private and charter purposes, thus violating the notification conditions.

2. Classification of Aircraft Usage:
The Tribunal examined whether the aircraft was used for private purposes or non-scheduled (Passenger) services. The respondent argued that the aircraft was used for charter operations, which is permissible under NSOP (Passenger) permits as per CAR, 1999 and CAR, 2000. The Tribunal referred to the Larger Bench decision in M/s. V.R.L. Logistics Ltd., which clarified that non-scheduled (Passenger) operators could conduct charter operations. The Tribunal found that the aircraft was used for public transport and not as a private aircraft, as it was available to group companies and other customers on a commercial basis.

3. Applicability of Judicial Precedents and Statutory Provisions:
The Tribunal relied on the Larger Bench decision in M/s. V.R.L. Logistics Ltd., which addressed similar issues and concluded that non-scheduled (Passenger) services could include charter operations. The Tribunal also considered various judicial precedents affirming this view. The decision in M/s. East India Hotels Ltd. was distinguished as it dealt with non-revenue flights, which was not the case here. The Tribunal affirmed the impugned order, stating that the aircraft was used in compliance with the exemption notification and dismissed the appeals.

Conclusion:
The Tribunal concluded that the aircraft was used for providing non-scheduled (Passenger) services as defined in Clause (b) of the Explanation to Condition No.104 of the exemption notification. Consequently, there was no violation of the notification, and the issues of confiscation, interest, and penalty did not survive. The impugned order was affirmed, and all appeals were dismissed.