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TMI Blog2023 (4) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... usion in this appeal. In the present case, there is no dispute that the respondent had used the helicopters for air transport services as defined in sub-rule (9) of Rule 3 of the Aircraft Rules, 1937 (Aircraft Rules). Thus, the condition that the helicopters were used for non-scheduled (passenger) services/ non-scheduled (charter) services was satisfied - It is clear from a plain reading of Condition No.104 of the Exemption Notification that the exemption from custom duties would be available in respect of an aircraft used for providing non-scheduled (passenger) services or non-scheduled (charter) services. Accordingly, if the aircraft is used for either of the aforesaid purposes, the Condition No.104 of the Exemption Notification would be satisfied. In East India Hotels Ltd. [ 2023 (2) TMI 47 - DELHI HIGH COURT ], this Court had noted that the term air transport service is defined in wide terms and would cover transport by air of humans, animals, mails or any other thing, animate or inanimate. 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has not complied with the Civil Aviation Requirement, Section 3, Air Transport Service C , Part 3 dated 08.10.1999, which requires the non-scheduled operators to issue passenger tickets in accordance with the provisions of Carriage by Air Act, 1972. It was further alleged that the respondent had charged fixed monthly charges for the period August, 2007 to January, 2008 from M/s Vectra Aviation Pvt. Ltd. (hereafter Vectra ) a group company of the respondent therefore the helicopters were not used for non-scheduled (passenger) services. It was alleged that this was in violation of the Condition No.104 of the Exemption Notification and thus the respondent was liable to pay duty. 6. In respect of another helicopter (Registration No. VT-AZX), it was, inter alia, alleged that the same was given on a long-term lease contract to M/s Dhillon Aviation Pvt. Ltd. and the same was in violation of the Exemption Notification as the permit obtained by the respondent was for non-scheduled (passenger) services. 7. In view of the allegations contained in the show cause notice, the respondent was called upon to show cause as to (a) why the helicopters should not be confiscated under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, accordingly, there was no violation of the Exemption Notification on account of the use of the said aircraft for operations by ONGC. 12. The respondent filed an appeal against the Adjudicating Authority to the extent that it confirmed the demand of custom duty in respect of helicopters bearing Registration Signs VT-AZU and VT-AZV; imposed penalty of ₹5,00,00,000/-; and, levied a redemption fine of ₹5,00,00,000/- under Section 125 of the Customs Act. 13. The Revenue also filed an appeal in respect of the findings of the Adjudicating Authority, which were in favour of the respondent. 14. The Tribunal allowed the appeal filed by the respondent and rejected the cross-objection filed by the Revenue. The Tribunal also rejected the other appeals (which are not the subject matter of the present appeal) preferred by the Revenue by the common impugned order. 15. The principal question before the learned Tribunal was whether the respondent had violated the Condition No.104 of the Exemption Notification. The Tribunal found in favour of the respondent that it had not. The Tribunal held that since the helicopters were used for passenger services for remuneration, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention 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. *** *** *** 24. Thus, for the aforesaid reasons, 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. 25. Customs Appeal No. 415 of 2009 filed by the appellant, therefore, deserves to be allowed and is allowed. Cross-Objections filed by the Department deserve to be rejected and are rejected. 26. Customs Appeal No s. 571, 572, 574, 575, 576, 577, 578 and 579 of 2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on the basis of the undertaking submitted by the importer only when the DGCA holds that the conditions of the permit issued by them have been violated; and 23. The aforesaid issue [question (i) as projected by the revenue] is covered in favour of the Revenue. In East India Hotels Ltd (supra), this Court had held that it would be open for the Custom Authorities to examine whether the conditions of the Exemption Notification are satisfied. The Court further held that the Custom Authorities would not be bound by the decision of the Director General of Civil Aviation (DGCA) in this regard and it is not necessary that the permit granted to the operator be cancelled by the DGCA for the Custom Authorities to take any action for violation of the terms of the Exemption Notification. The Custom Authorities can independently examine whether the conditions of the Exemption Notification have been violated. 24. The other questions, as projected by the Revenue, are covered against the Revenue by the aforesaid decision in East India Hotels Ltd.(supra). 25. In the present case, there is no dispute that the respondent had used the helicopters for air transport services as defined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire of an aircraft to any person, with published tariff, and who is registered with and approved by Directorate General of Civil Aviation for such purposes, and who conforms to the civil aviation requirement under the provision of rule 133A of the Aircraft Rules 1937: Provided that such Air charter operator is a dedicated company or partnership firm for the above purposes. 29. It is clear from a plain reading of the aforesaid Condition of the Exemption Notification that the exemption from custom duties would be available in respect of an aircraft used for providing non-scheduled (passenger) services or non-scheduled (charter) services. Accordingly, if the aircraft is used for either of the aforesaid purposes, the Condition No.104 of the Exemption Notification would be satisfied. 30. The expression non-scheduled (passenger) services is defined to mean air transport services other than the scheduled (passenger) air transport services . 31. The expression air transport services is defined under sub-rule (9) of Rule 3 of the Aircraft Rules, which reads as under: (9) Air transport service means a service for the transport by air of persons, mails or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that non-scheduled (passenger) services would also include non-scheduled (charter) services if provided for passengers. 36. It is also material to note that the Exemption Notification was further amended by Notification No.21/2011-Cus dated 01.03.2011 and the following explanation has been added to Condition No.104 of the Exemption Notification: 2. For the purposes of this exemption, use of such imported aircraft by a non-scheduled (passenger) operator for non-scheduled (charter) services or by a non-scheduled (charter) operator for non-scheduled (passenger) services, shall not be construed to be a violation of the conditions of import at concessional rate of duty. 37. Although, the requirements of Condition No.104 of the Exemption Notification are unambiguous but the aforesaid explanation inserted by way of amendment of Condition No.104 of the Exemption Notification amply clarifies that the exemption condition would be satisfied if the aircraft imported is used for non-scheduled (passenger) services or non-scheduled (charter) services. 38. In view of the above, no substantial question of law arises in the present appeal. 39. The impugned order, to the extent tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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