2015 (8) TMI 382 - AAR - Customs

Classification of goods Duty Exemption Replacement of Seats Applicant intends to import seats of aircraft for replacing existing seats to providing more comfortable flying experience to fliers; that seats requiring repairing due to wear and tear shall also be replaced Whether new seats that were imported for replacing existing seats were said to be for servicing, repair or maintenance of aircraft under Notification No. 12/2012-Cus Held that - Supreme court opined in Collector of Customs, Bangalore vs. Maestro Motors Ltd. 2004 (12) TMI 86 - SUPREME COURT OF INDIA that exemption notification is to be read strictly and interpreted in terms of its language Notification show that all parts (other than rubber tubes) of aircraft of Heading 8802 were exempted from Customs duty including seats of aircraft Approach of Revenue to apply General Rules for Interpretation for Import Tariff, even for interpretation of notification, was legally incorrect There can be no doubt that seats were integral part of aeroplane Rule 3 (33C) and Rule 60 of Aircraft Rules, 1937, maintenance inter-alia include replacement, modifications, repairs and servicing Thus, new seats that were being imported for servicing, repair or maintenance of aircraft Decided in favour of Assesse.

Issues Involved:
1. Eligibility of the applicant to seek advance ruling.
2. Classification of aircraft seats under the Customs Tariff.
3. Applicability of Notification No. 12/2012-Cus for exemption of customs duty on aircraft seats.
4. Interpretation of terms "servicing," "repair," and "maintenance" under the notification.
5. Compliance with the conditions specified in the notification.

Detailed Analysis:

1. Eligibility of the applicant to seek advance ruling:
The applicant filed for an advance ruling on 28.06.2012, while the first Bill of Entry was filed on 15.01.2013. According to Section 28 I (2) (a) of the Customs Act, 1962, the Authority shall not allow the application where the question raised is already pending before any officer of Customs, the Appellate Tribunal, or any Court. The Authority observed that eligibility to seek advance ruling should be the date of filing the application, as ruled in the case of Guthy Renker Marketing Pvt. Ltd. Therefore, activities subsequent to the filing of the application do not make the applicant ineligible.

2. Classification of aircraft seats under the Customs Tariff:
Revenue contended that aircraft seats should be classified under CTH 9401 10 00, based on the Hon'ble CEGAT's decision in the case of Indian Airlines vs. Collector of Customs, which classified aircraft seats under this heading and not as "Spares/Parts" of aircraft. The applicant did not dispute this classification but argued that seats are integral parts of the aircraft and should be considered under the exemption notification.

3. Applicability of Notification No. 12/2012-Cus for exemption of customs duty on aircraft seats:
Notification No. 12/2012-Cus exempts parts of aircraft under heading 8802 from customs duty, provided they are imported for servicing, repair, or maintenance of aircraft used for operating scheduled air transport service. The applicant argued that seats are integral parts of the aircraft and should be exempted under this notification. The Authority noted that the plain language of the notification exempts all parts (other than rubber tubes) of aircraft of Heading 8802, which includes seats.

4. Interpretation of terms "servicing," "repair," and "maintenance" under the notification:
The terms "servicing," "repair," and "maintenance" are not defined under Notification No. 12/2012-Cus. The applicant referred to the Aircraft Rules, 1937, and Civil Aviation Requirements (CAR) issued by DGCA, which define "maintenance" to include tasks ensuring the continuing airworthiness of an aircraft, including overhaul, inspection, replacement, defect rectification, and modification. The Authority agreed with the applicant's interpretation that the scope of "maintenance" is broad and includes replacement and modifications.

5. Compliance with the conditions specified in the notification:
The applicant satisfied Condition No. 75 of the notification, which requires the importer to be an "operator" engaged in aircraft operation and operating a scheduled air transport service. The Revenue did not challenge the applicant's status as an operator. The Authority also noted that the replacement of seats to enhance comfort and fuel efficiency falls under "maintenance," as defined under the Aircraft Rules.

Conclusion:
The Authority held that the new seats being imported for replacing the existing seats in aircraft are for servicing, repair, or maintenance under Condition No. 21 of Notification No. 12/2012-Cus. Consequently, the applicant is eligible for the exemption from customs duty on the imported seats.

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