2024 (6) TMI 169 - AT - Customs

Demand of differential duty under Section 28 of the Customs Act, 1962 - violation of Condition No.104 of the Notification No.21/2002-Cus.,as amended - Helicopter has been used for NSOP (Charter) whereas Undertaking has been submitted for NSOP (Passenger) and a Permit issued for passenger service is not automatically valid for charter services - appellant has not been issuing any tickets for the passengers - HELD THAT - The issue whether the Permit under NSOP (Passenger) can be used for charter purposes is no longer res integra and has been decided against the Revenue by the Larger Bench of the Tribunal in the case of M/s. V.R.L. Logistics Ltd. Vs. Commissioner of Customs, Ahmedabad 2022 (8) TMI 720 - CESTAT AHMEDABAD (LB) , which has been affirmed by the Gujarat High Court 2023 (1) TMI 1378 - GUJARAT HIGH COURT . The aircraft imported is not a private aircraft. In this regard, the observations made by the Larger Bench in M/s.V.R.L. Logistics 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. In the present case, the appellant had obtained the NSOP(Passenger) permit in respect of helicopter imported but used the same for NSOP (Charter), however, there is no bar on the permit holder of NSOP (Passenger)services to provide charter services, which has been squarely upheld by the Larger Bench on the basis of CAR, 1999 and 2000. The crux of the decision is that NSOP (Passenger) services being a much wider category includes charter operations. In fact, subsequently, the difference between the NSOP(Charter) and NSOP(Passenger) services have been done away with by amalgamating the two services under CAR 2010 and as a result, both NSOP(Charter) and NSOP (Passenger) fall under one single category of non-scheduled transport services - the helicopter was used only for commercial flights for remuneration except the test flights meant for maintenance. Even the use of the helicopter by the officials or the Board of Directors, etc. of the appellant was not without any remuneration. In view thereof, the helicopter falls under the category of Private Aircraft . The aircraft was used only for providing non-scheduled (Passenger) services as defined in Clause (b) of the Explanation to Condition No.104 of the exemption notification and consequently there is no violation thereof. The issue of confiscation, interest and penalty, accordingly do not survive. The impugned order is set aside - The appeal is accordingly allowed.

Summary

Issues Involved:
1. Validity of using a NSOP (Passenger) permit for NSOP (Charter) services.
2. Requirement of issuing passenger tickets for NSOP services.
3. Classification of the helicopter as a private aircraft.
4. Applicability of judicial precedents and statutory provisions.

Detailed Analysis:

1. Validity of Using a NSOP (Passenger) Permit for NSOP (Charter) Services:
The crux of the appeal was whether the appellant violated Condition No. 104 of Notification No. 21/2002-Cus by using a helicopter, imported under a NSOP (Passenger) permit, for charter services. The Tribunal referred to the Larger Bench decision in M/s. V.R.L. Logistics Ltd. Vs. Commissioner of Customs, Ahmedabad, which held that "Non-scheduled (Passenger) operator can carry out charter service." The Tribunal found that the definitions of air transport service and non-scheduled (passenger) service do not restrict services to a per-seat basis and allow chartering. Paragraph 9.2 of CAR 1999 explicitly permits non-scheduled operators to conduct charter operations. Thus, the appellant's use of the helicopter for charter services was permissible under the broader category of NSOP (Passenger) services.

2. Requirement of Issuing Passenger Tickets for NSOP Services:
The Tribunal examined whether the appellant's failure to issue passenger tickets constituted a violation of Condition No. 104. The Larger Bench in M/s. V.R.L. Logistics clarified that non-issuance of tickets does not imply non-compliance with the permit conditions. The Carriage by Air Act, 1972, and CAR 2000 do not mandate ticket issuance for charter operations. Therefore, the Tribunal concluded that the non-issuance of passenger tickets did not violate the conditions of the exemption notification.

3. Classification of the Helicopter as a Private Aircraft:
The Tribunal addressed whether the helicopter could be classified as a private aircraft. It referred to the Larger Bench's observations in M/s. V.R.L. Logistics, which stated that the definition of 'Private Aircraft' under Rule 3(4) of Aircraft Rules, 1937, does not imply that non-publication of tariffs makes an aircraft private. The key point is whether the aircraft is used for remuneration. The Tribunal found that the helicopter was used for commercial flights for remuneration, including by officials and the Board of Directors, thus classifying it as a public transport aircraft, not a private one.

4. Applicability of Judicial Precedents and Statutory Provisions:
The Tribunal relied on multiple judicial precedents affirming the permissibility of using NSOP (Passenger) permits for charter services. These included decisions in M/s. Reliance Commercial Dealers Ltd., M/s. Global Vectra Helicorp Limited, M/s. Taneja Aerospace and Aviation Ltd., M/s. Chimes Aviation Private Limited, and M/s. Ligare Aviation Limited. The Tribunal also noted that the DGCA had clarified the permissibility of charter services under NSOP (Passenger) permits, further supported by judicial pronouncements.

The Tribunal distinguished the present case from the Delhi High Court decision in M/s. East India Hotels Ltd., where the determinative factor was the absence of remuneration. In the present case, the helicopter was used for remunerative services, thus complying with the conditions of the exemption notification.

Conclusion:
Based on judicial precedents and statutory provisions, the Tribunal concluded that the appellant did not violate Condition No. 104 of the exemption notification. The helicopter was used for non-scheduled (Passenger) services, including charter operations, and the issue of confiscation, interest, and penalty did not survive. The impugned order was set aside, and the appeal was allowed.

Order:
The appeal was allowed, and the impugned order was set aside. The Tribunal pronounced the order on 4th June 2024.