2024 (7) TMI 1079 - AT - Customs

Exemption entry 347B of the N/N. 21/2002-Customs dated 01.03.2002, as amended by notification No.61/2007-Customs dated 03.05.2007 - import of helicopters by the appellants - confiscation - penalty u/s 112 ibid - HELD THAT - This a contractual arrangement between the appellants and the company for providing the facility of helicopter services to them by making available the specified aircraft(s) owned by them and for which they had obtained Non-Scheduled Air Transport Services (Passenger) permit. Further, the undertaking given by the company is for use of aircraft for a minimum of 40 hours per month is a kind of assurance of business given to the appellants as a favourable/regular customer. In respect of the agreement dated 19.09.2006, it transpires that this is another agreement of similar nature wherein the services of hiring helicopter was provided to one another company. In terms of the notification No. 21/2002-Customs dated 01.03.2002 as amended by notification No. 61/2007-Customs dated 03.05.2007, it is provided that import of goods falling under chapter heading 8802 (except 8802 60 00) are exempt from basic customs duty subject to fulfillment of the condition No. 104. Helicopters being classifiable under Customs Tariff Item 8802 1100, 8802 1200 are covered under the above exemption entry and hence the goods under dispute in this case are eligible for exemption by the main entry under Serial No. 347B of the notification dated 03.05.2007 - on the basis of the above factual matrix of the import goods fulfilling all the conditions and covered by the exemption entry, by description and coverage of the customs tariff sub-heading, the import of helicopter by the appellants would be covered by the exemption entry under Serial No. 347B of the notification dated 03.05.2007. It is therefore to be understood that CAR 2010 can be taken as a basis to comprehend the CAR 1999 and CAR 2000. In terms of the definition of nonscheduled air transport service under CAR, this is other than the scheduled air transport service. Thus, this definition provides a meaning that the requirement of publishing a timetable; providing a pattern of regular frequency of flight services in a systematic manner; and the such services being kept open for public, is not required to be followed for non-scheduled air transport service. In view of such a definition provided under CAR/Aircraft Rules, 1937, we come to the conclusion that the findings arrived at in the impugned order for denying the exemption benefit under Serial No. 347B of the notification dated 03.05.2007, only on the basis of explanation under condition No.104 is not legally sustainable. The order of the Tribunal the case of COMMR. OF CUS. (IMPORT) , ACC, MUMBAI VERSUS AIRMID AVIATION PVT. LTD. 2020 (3) TMI 922 - CESTAT MUMBAI , had dealt the genesis of the issue, distinction between definitions provided under the Aircraft Rules and explanation and the interpretation of statutes and exemption notification in detail. Upon such examination the Tribunal has held that exemption is eligible to non-scheduled (passenger) service operator as the peripheral circumstances such as absence of published tariff, non-issue of tickets and carriage of employees of companies, not to be construed as intention for own user by harmoniously interpreting the exemption notification and Aircraft Rules and CAR. The import of Bell Helicopter (Model No.412-EP, Sr. No.36643 registered as VT-HGK) by the appellants vide B/E No.397583 dated 26.12.2007 is eligible for grant of exemption from the whole of the import duties of customs under Serial No. 347B of the Notification No.21/2002-Customs dated 01.03.2002 as amended by Notification No. 61/2007-Customs dated 03.05.2007 - there are no merits in the impugned order, in so far as it has confirmed the demand of customs duty and confiscated the imported goods offering the same on redemption fine and imposed penalties on the appellants. Therefore, by setting aside the impugned order dated 16.03.2009 - appeal allowed.

Summary

Issues Involved:
1. Classification and eligibility for customs duty exemption of the imported helicopter.
2. Alleged misuse of the helicopter and compliance with the conditions of customs duty exemption.
3. Jurisdiction of customs authorities versus DGCA in determining compliance with exemption conditions.
4. Validity of penalties and confiscation imposed by the Commissioner of Customs.

Detailed Analysis:

1. Classification and Eligibility for Customs Duty Exemption:
The appellants imported a Bell Helicopter and claimed classification under Customs Tariff Item (CTI) 8802 12 00, availing exemptions from Basic Customs Duty (BCD), Additional Duty of Customs (CVD), and Special Additional Duty of Customs (SAD) based on various notifications. They supported their claim with a 'No Objection Certificate' (NOC) from the Director General of Civil Aviation (DGCA) and an undertaking to use the helicopter for non-scheduled (passenger) services. The customs authorities initially extended the benefit of exemptions, but later investigations questioned the compliance with the conditions of the exemption.

2. Alleged Misuse of the Helicopter and Compliance with Exemption Conditions:
The customs authorities alleged that the helicopter was not used for the intended non-scheduled (passenger) services but was exclusively chartered to two companies, without a published tariff or ticket issuance, thus violating the exemption conditions. The appellants countered that they held a valid permit from DGCA and used the helicopter for remuneration, fulfilling the conditions of non-scheduled (passenger) services. They cited the Larger Bench decision in VRL Logistics Ltd. which held that customs duty exemption is available to aircraft/helicopters imported by a Non-Scheduled Operator-Passenger (NSOP) permit holder for passenger services, even when used for charter services.

3. Jurisdiction of Customs Authorities versus DGCA:
The Tribunal emphasized that the customs authorities cannot independently determine the violation of exemption conditions without a finding from DGCA. The DGCA, being the competent authority, had not suspended or cancelled the appellants' permit, indicating compliance with the conditions. The Tribunal referred to several decisions, including Reliance Commercial Dealers Ltd. and Global Vectra Helicorp Ltd., which supported the appellants' stance that the customs duty exemption conditions were met as long as the helicopter was used for non-scheduled (passenger) services as per DGCA's permit.

4. Validity of Penalties and Confiscation Imposed by the Commissioner of Customs:
The Commissioner of Customs had confirmed the demand for customs duty, confiscated the helicopter, and imposed penalties on the appellants and their Managing Director. However, the Tribunal found that the conditions for exemption were fulfilled, and there was no willful misstatement or suppression of facts by the appellants. The Tribunal set aside the penalties and confiscation, emphasizing that the customs authorities could only act on the undertaking if DGCA found a violation of the permit conditions.

Conclusion:
The Tribunal allowed the appeal, set aside the impugned order, and granted the appellants the benefit of customs duty exemption under Serial No. 347B of Notification No. 21/2002-Customs, as amended. The Tribunal concluded that the imported helicopter was used in compliance with the conditions stipulated by DGCA for non-scheduled (passenger) services, and the customs authorities had no jurisdiction to independently determine a violation without DGCA's findings.