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TMI Blog2023 (2) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... r transport service other than the air transport service falling within the aforementioned definition. However, it is essential that the aircraft is used for air transport service. A plain reading of Rule 3(9) of the Air Craft Rules, indicates that the term air transport service is defined in wide terms and would cover transport by air of humans, animals, mails or any other things, animate or inanimate. However, it is necessary that the said service be provided for remuneration . The said definition also clarifies that the service may be for any kind of remuneration. However, for a service to fall within the meaning of air transport service as defined in Rule 3(9) of the Aircraft Rules, it is essential that the same is provided for some kind of remuneration. Clearly, flight service for no remuneration at all would not qualify to be considered as air transport service within the meaning of sub-rule (9) of Rule 3 of the Aircraft Rules - In the facts of the present case, the appellant has used the aircraft for its own use without any remuneration whatsoever, either from the passengers transported by it or from any other person. In the circumstances, it would be difficult to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such use of the aircraft in question qualified as providing non-scheduled (passenger) services; therefore, the appellant met the condition for duty exemption under the Notification. Question of Law 4. In the aforesaid context, the question that arises for consideration is whether the learned Tribunal had erred in misinterpreting the Notification and concluding that the appellant had not complied with the conditions for availing duty exemption under the Notification. Factual Background 5. On 25.01.2006, the Director General of Civil Aviation (hereafter DGCA ) issued a permit to the appellant to operate the aircraft for providing non-scheduled (passenger) services. 6. On 25.09.2006, the appellant was granted a No Objection Certificate (NOC) by the Ministry of Civil Aviation for importing Hawker 850 XP (hereafter the aircraft ), as a replacement of an earlier aircraft Hawker- 700 (HS -125-700, VT-OBE) into India for a sum of ₹56.15 crores. 7. On 21.05.2007, the appellant, imported the aircraft and filed a Bill of Entry - Entry No. 21891. 8. In terms of Condition no.104 of the Notification, importers of aircrafts are required to furnish an undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 27.07.2010, passed by the respondent. Thereafter, on 01.04.2011, the learned Tribunal passed a stay order being No. C/162/11 stating that the bank guarantee executed by the appellant on 05.07.2008 (hereafter the bank guarantee ) shall be treated as a pre-deposit under Section 129E of the Customs Act and shall remain valid till the disposal of the appeal. On 27.03.2015, the appellant furnished a fresh bank guarantee (CGANDH502515). 15. On 14.01.2020, the learned Tribunal dismissed the appeal filed by the appellant and held that the appellant had wrongly availed the exemption under the Notification by furnishing a false undertaking in order to evade customs duty and had used the NSOP aircraft for its private use. Aggrieved by the aforesaid order, the appellant has filed the present appeal. Impugned Order 16. The learned Tribunal found that the appellant had not complied with the Condition no.104 of the Notification inasmuch as the appellant had not used the aircraft for providing non-scheduled (passenger) services or non-scheduled (charter) services. The learned Tribunal referred to the Civil Aviation Requirement Rules (CAR) and noted that a non-scheduled operator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the aircraft was registered with DGCA for non-scheduled air transport service under passenger category (NSOP permit) and that DGCA had not raised any issue regarding the use of the aircraft being inconsistent with the NSOP permit. He submitted that it was not open for the customs authorities to question whether the aircraft was used for non-scheduled air transport service, as that question was required to be addressed only by the DGCA. He submitted that the Customs Department was not empowered to examine the validity of any permissions granted by the DGCA. Since the DGCA had not found any irregularity in the use of the aircraft the benefit of the Notification could not be denied to the appellant. 22. He also submitted that the learned Tribunal had erred in relying on the ruling in the case of King Rotors Air Charter P. Ltd. v. C.C in Appeal No.C/363 369-2009 decided on 17.06.2011, as the said case related to the use of a thirteen-seater helicopter; and the CAR, for operating helicopters, was materially different from those applicable in respect of aircrafts. 23. Lastly, he submitted that the Notification recognises only two categories of air transport se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aircraft was used by the Chairman and the officials of the appellant, who frequently travelled to various destinations. Admittedly, the flights operated by the appellant were non-revenue flights. According to the appellant, such non-revenue flights that is, flights operated without generating revenue were also covered under the broad definition of non-scheduled (passenger) services. 27. The key question to be addressed is whether non-revenue flights, operated by a company for transporting its officials, would fall within the scope of providing non-scheduled (passenger) services or non-scheduled (charter) services within the meaning of those terms under the Notification. In terms of explanation (b) to Condition no. 104 of the Notification, the term non-scheduled (passenger) services is defined to mean air transport service other than scheduled (passenger) air transport service as defined in Rule 3 of the Aircraft Rules, 1937 (hereinafter the Aircraft Rules ). It is, thus, necessary to refer to the Aircraft Rules. 28. Rule 3(49) of the Aircraft Rules defines the scheduled air transport service and is set out below:- (49) Scheduled air transport service means an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the operational requirements as well as procedural requirements for grant of Non-Scheduled Operators Permit (NSOP). Paragraph 2.4 and 2.5 of the said CAR (Section 3, Air Transport Series, dated 01.06.2010) are relevant and read as under: 2.4 The carriage of passengers by a non-scheduled operator s permit holder may be performed on per seat basis or by way of chartering the whole aircraft on per flight basis, or both. There is no bar on the same aircraft being used for either purpose as per the requirement of customers from time to time. The operator is also free to operate a series of flights on any sector within India by selling individual seats but will not be permitted to publish time table for such flights. Operation of revenue charters to points outside India may also be undertaken as per paragraph 9.2. 2.5 A non-Scheduled Operator is also allowed to operate revenue charter flights for a company within its group companies, subsidiary companies, sister concern, associated companies, own employees, including Chairman and members of the Board of Directors of the company and their family members, provided it is operated for remuneration, whether such service consists of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for providing non-scheduled (passenger) services within the meaning of Condition 104(i) of the Notification. 39. The contention that it would not be open for the Customs Authorities to question the use of the aircraft as the DGCA has not raised any allegation that the appellant has violated the terms of its permit, is unmerited. The Customs Authorities are required to examine whether the conditions for availing exemption under the Notification are satisfied. In terms of the Notification, the appellant has also furnished an undertaking as required under clause (ii) of Condition no.104 of the Notification. This undertaking has been furnished to the Customs Authorities and we are unable to accept that the Authorities are not entitled to examine whether the said undertaking has been complied with. The Customs Authorities are not required to examine whether the conditions of the permit (NSOP) issued by DGCA have been violated and if so, the consequences of such violation under the Aircraft Act or the Aircraft Rules, as that question would be required to be examined only by the DGCA. But that does not mean that they are disabled in any manner in examining whether the conditions for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not covered under the definition of scheduled air transport service as defined under Rule 3(49) of the Aircraft Rules and thus, were covered within the definition of non-scheduled (passenger) services within the meaning of clause (b) of Explanation II of Condition no.104 of the Notification. 44. The decision rendered by the learned Tribunal in Global Vectra Helicorp Ltd. and Ors. v. Commissioner of Customs (Import) and Ors. (supra) does not support the case of the appellant. In that case the learned Tribunal had noted that non-scheduled (passenger) services must entail transport of persons or things for remuneration. The relevant extract of paragraph 7 of the said decision is set out below: 7. Having considered the rival contentions, we find that there is no violation by the importer-appellant to the post import condition No. 104 of Notification No. 21/07, as amended. Accordingly, under the undertaking given by the importer, it was required to offer only non-scheduled passenger service. Such service has been defined in Explanation (b) of the said Notification as Air Transport Service other than a Scheduled Air Transport (Passenger) Service with reference to Rule 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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