2023 (3) TMI 595 - HC - Customs

Non-compliance with the conditions of providing non-scheduled (passenger) services as defined in the Explanation to the Condition No.104 of the N/N. 21/2002-Cus. dated 01.03.2002 as amended by the Customs Notification No.61/2007-CUS dated 03.05.2007 - aircraft used for private purposes and not for providing non-scheduled (passenger) services - HELD THAT - The question whether an undertaking, as furnished in terms of the Condition No.104 of the Notification in question is complied with or not is required to be considered by the Custom Authorities. The Custom Authorities are not bound by the decision of the DGCA. It is not disputed that the respondent has provided the said services for remuneration. In the aforesaid view, notwithstanding that the respondent has not published its tariff for providing the said services, it has nonetheless complied with the conditions of providing non-scheduled (passenger) services as defined in the Explanation to the Condition No.104 of the Notification in question. The question as projected by the Revenue, is decided in its favour and the impugned order to the said extent is set aside - Appel disposed off.

Issues:
1. Appeal against order of Customs Excise and Service Tax Appellate Tribunal.
2. Allegations of non-compliance with conditions of Customs Act regarding aircraft use for non-scheduled (passenger) services.
3. Tribunal's decision based on DGCA permit and remuneration for services.
4. Questions raised by Revenue regarding Customs Authority's examination, misinterpretation of notification, charter service, and ticket issuance.

Issue 1: Appeal Against Tribunal's Order
The Revenue appealed against the Customs Excise and Service Tax Appellate Tribunal's order dated 08.09.2022, challenging Customs Appeal No. 640/2010 and Customs Appeal No. 642/2010. The Tribunal had allowed the respondent's appeal against an order-in-original dated 31.08.2010, which raised a substantial demand and penalty under the Customs Act, alleging non-compliance with conditions related to aircraft use.

Issue 2: Allegations of Non-Compliance
The Adjudicating Authority had alleged that the respondent did not adhere to the conditions specified in the Customs Act regarding the use of the aircraft for non-scheduled (passenger) services. The Tribunal, however, found that the aircraft's use was in accordance with the permit granted by the DGCA and for remuneration, thereby concluding that there was no violation of the undertaking regarding the aircraft's usage.

Issue 3: Tribunal's Decision and Interpretation
The Tribunal's decision was influenced by a larger Bench ruling in another case, emphasizing that Customs cannot demand duty unless the DGCA finds a violation of the permit for non-scheduled (passenger) service. The Tribunal held that the respondent's use of the aircraft aligned with the scope of non-scheduled (passenger) services, leading to the setting aside of the impugned order and the penalty imposed.

Issue 4: Revenue's Questions
The Revenue raised questions regarding the Customs Authority's examination of compliance, misinterpretation of the notification, the permissibility of charter services by non-scheduled (passenger) operators, and the obligation to issue tickets to passengers. The Court referred to a recent decision and upheld the Customs Authority's role in assessing compliance with conditions, ultimately ruling in favor of the Revenue on certain aspects while favoring the respondent on others.

In conclusion, the High Court's judgment addressed the Revenue's appeal against the Tribunal's order, analyzed allegations of non-compliance with Customs Act conditions, considered the Tribunal's decision based on DGCA permit and remuneration, and resolved questions raised by the Revenue regarding Customs Authority's examination and compliance issues. The Court's detailed analysis and references to relevant legal precedents provided a comprehensive understanding of the issues at hand and the basis for the final decision.

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