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TMI Blog2017 (9) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The fuel in the tank is part of aircraft in operation. Fuel cost is calculated, and apparently, forms part of commercial consideration while fixing ticket charges for transporting aircraft. No freight element is attributable to fuel in the tank, the usage of which varies on different parameters. Rule 10(2) was applied by the lower authority on the ground that the freight of ATF is not ascertainable - there is no freight element involved and hence, there is no application for Rule 10 (2). There is no freight involved with reference to left over fuel in the tank of an operating aircraft. Hence, there is no question such freight being “not ascertainable” and hence addition of 20% notional freight. Penalty u/s 112 - Held that: - The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rates. The appellants were maintaining accounts of these transactions and at the end of the month, they submitted detailed flight-wise information including customs duty liability, payment of such duty, flight details including quantity of ATF on which duty has been paid. This practice has been continuing for many years. The dispute in the present case mainly revolves around the valuation of ATF available in the fuel tank of aircraft returning from the foreign trip to continue travel in domestic sector. The appellants were considering the price at which the international Airlines purchases ATF from Indian Oil Corporation. Such price formed the basis of assessable value with addition of 1.125% as insurance charges and 1% as handling charges. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the background explained in the said letter, the procedural provisions relating to the duty payment on left over ATF should be construed liberally. (B) There is no machinery provision laid down to be followed in such situations. In fact, the Mumbai Commissionerate issued detailed procedure for filing bill of entry etc. only on 3.3.2015. (C) The aircraft carries fuel in the form of ATF. It is part and parcel of the aircraft. There is no transportation of ATF as cargo warranting any notional addition of freight of 20% on such ATF. The fuel to be carried by any aircraft is regulated by the Civil Aviation Authorities. Any aircraft will carry sufficient amount of fuel for its propulsion to the predetermined destination, with additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants are eligible for exemption under notification no.151/94-Cus dated 13.07.2014. The Original Authority denied the concession only on the ground that procedural requirement, like filing of bill of entry, was not followed by the appellant. (F) No penalty or demand for extended period is sustainable in the present case. The appellants filed all the required particulars at the time of arrival of aircrafts. There is no suppression or willful mis-statement on the part of the appellant. In fact, they maintained advance deposit with the Customs Authorities against which monthly custom duty liability are adjusted. Complete details of each flight were furnished by the appellant to the Customs Authorities. There is no question of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) is to be added to arrive at the assessable value of ATF. We note that the aircraft requires ATF for its propulsion. As per the Civil Aviation Regulating requirements and also for safety, aircraft caries adequate amount of fuel in its flight. The consumption of fuel depends on various factors. Factually, when the aircraft completes the inward journey to reach the Indian Airport, certain quantity of fuel is left in the tanks. We are not in agreement that there should be a freight element attributable to such fuel in the tank. In other words, the aircraft did not transport the fuel as a cargo or goods for the purpose of freight. Such interpretation will be a result of hyper-technical approach to the facts of the case. Admittedly, the remnant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied to arrive at the value. The endevour is to have closest proximity with the actual price. Dealing with addition of loading and handling charges at 1% on notional basis as per Rule 9 of Valuation Rules, the Apex Court held that when the actual cost towards handling charges are available, notional addition is not legally tenable. It was held to be violative of Article 14 of the Constitution. In the present case, there is no freight involved with reference to left over fuel in the tank of an operating aircraft. Hence, there is no question such freight being not ascertainable and hence addition of 20% notional freight. 9. We also note that as clarified by the Commissioner, Airport, Mumbai vide his instructions dated 20.10.2006 in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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