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2022 (9) TMI 1300 - AT - CustomsBenefit of the exemption notification no. 61 of 2007 dated 03.05.2007 - import of the Helicopters into India - rate of duty on import of aircraft for non-scheduled (passenger) services as well as non-scheduled (charter) services subject to Condition No. 104 to the exemption notification - HELD THAT - The show cause notice had been issued to the appellant alleging that the Helicopters were not being used for NSOP (passenger) purposes as the appellant had entered into various long-term contracts which amounted to a lease . These allegations were rebutted by the appellant by establishing that no Helicopter was hired exclusively to any one party. The Commissioner agreed with the contention of the appellant that the Helicopters were not leased out to any party and, in any event, a wet lease was permitted. However, the demand was confirmed by the Commissioner on a completely new ground that the appellant had in fact transferred its NSOP to a group company, VAPL, who was not a NSOP holder. This demand is entirely beyond the allegations made in the show cause notice and has, therefore, to be set aside. Thus, the Commissioner could not have confirmed the aforesaid demand since the appellant had not been put to notice on this allegation in the show cause notice. The confirmation of demand by the Commissioner against the appellant for the two Helicopters AZU and AZV and for confiscation of Helicopter AZU with an option to redeem the same on payment of Rs. 5 crores under section 125 of the Customs Act cannot be sustained and is set aside - Appeal allowed.
Issues Involved:
1. Jurisdiction of the Customs Department. 2. Allegation of private use of helicopters. 3. Non-issuance of tickets and non-filing of passenger manifests. 4. Legality of charter operations under NSOP (passenger) permit. 5. Validity of long-term contracts under NSOP (passenger) services. 6. Transaction with VAPL and the nature of the lease. 7. Sale of Helicopter AZV. 8. Confirmation of demand based on allegations not raised in the show cause notice. Detailed Analysis: Jurisdiction: The Customs Department has the jurisdiction to decide the present matter, as supported by the Supreme Court judgment in Shashank Sea Foods vs. Union of India. Allegation of Private Use: The allegation of 'private use' based on the use by a group company cannot be sustained. The Commissioner found that the helicopters were used for commercial purposes only. Non-Issuance of Tickets and Non-Filing of Passenger Manifests: Non-issuance of tickets is not a valid ground to allege that the aircraft was not used for providing non-scheduled (passenger) air transport service. Non-filing of passenger manifests constitutes a violation of Civil Aviation Requirements (CARs) and not a violation under the Customs Act. Charter Operations: When the entire aircraft is chartered, the designations or nature of the passengers traveling is not material. The appellant, having obtained a non-scheduled operators permit for operating passenger services, is not barred from undertaking charter operations. Long-term contracts fall within the purview of charter operations. Validity of Long-Term Contracts: The Commissioner disposed of allegations relating to operations by Oil & Natural Gas Corporation and others, stating that long-term contracts are permissible under charter operations. The allegations regarding Helicopter AZX were not sustainable. Transaction with VAPL: The DGCA clarifications permit the lease of aircraft; however, a 'dry lease' is not permissible and would amount to a violation of the permission granted by the DGCA. The transactions with VAPL were in the nature of a 'dry lease.' For Helicopters AZU and AZV, VAPL operated the helicopters for their clients without a passenger manifest, amounting to a transfer of NSOP permit by the appellant to VAPL, violating the terms of the undertaking. Sale of Helicopter AZV: The condition of no sale is not mentioned in the exemption notification, and therefore, the sale of Helicopter AZV does not amount to a violation. Confirmation of Demand Based on New Allegations: The confirmation of demand regarding Helicopters AZU and AZV was based on a new ground not raised in the show cause notice, which is impermissible. The Commissioner confirmed the demand on the ground that the appellant transferred its NSOP to VAPL, which was not an NSOP holder. This demand is beyond the allegations made in the show cause notice and must be set aside. Conclusion: The confirmation of demand by the Commissioner against the appellant for the two Helicopters AZU and AZV and for the confiscation of Helicopter AZU cannot be sustained and is set aside. Customs Appeal No. 415 of 2009 filed by the appellant is allowed, and the Cross-Objections filed by the Department are rejected. Customs Appeal Nos. 571, 572, 574, 575, 576, 577, 578, and 579 of 2009 filed by the Department against the dropping of demand for Helicopter AZX and the dropping of penalties against individual Directors are dismissed.
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