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TMI Blog2023 (12) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 104 of the notification merely because on one occasion one aircraft had been used without remuneration? - HELD THAT:- In reply to the show cause notice the appellant had pointed out that in regard to the aircraft VT-RAN which was imported on 13.11.2007, the first flight was undertaken on 25.01.2008 and the second flight was undertaken on 27.01.2008. The second flight was for crew familiarization and it had two pilots and Mr. Sunil Godhwani and Mrs. Dhillon, who as prospective users were travelling on the flight only for experiencing the aircraft. The flight was also from Delhi-Raipur-Bagdogra-Delhi with no stoppage time at the airports. Thus, it cannot be urged by the department that Condition No. 104 of the notification had been violated merely because one particular flight was undertaken without any remuneration - the order dated 30.09.2010 passed by the Commissioner confiscating the imported aircrafts/helicopters with an option to the appellant to redeem the same after payment of redemption fine and also confirming the demand of customs duty with interest and penalty cannot be sustained. The appellant would, therefore, be entitled to refund of the redemption fine paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he DGCA granted the no objection certificate for import of aircrafts/helicopters for operating non-scheduled operator services. Permit No. 1/1998 dated 16.01.2006 was issued by the DGCA initially to Ran Air Services Limited and subsequently on change of name of the company, a fresh permit dated 27.03.2009 was issued in the name of Religare Aviation Limited (the appellant). 3. The following aircrafts/helicopters were imported by the appellant but VT-REO at serial no. 4 crashed on 03.08.2008: S. No. Name of the aircrafts/helicopter Registration No. Date 1. 2001 King Air B200 VT-RSM 12.11.2007 2. 2000 King Air B200 VT-REM 12.11.2007 3. Hawker 800 XP VT-RAN 13.11.2007 4. 2000 Bell 430 VT-REO 13.11.2007 5. 1998 King Air B200 VT-RSN 18.03.2008 6. Beechcraft 1900 D VT-REN 19.05.2008 7. Bell 430 VT-RER 22.12.2008 8. Falcon 2000 VT-RVL 08.02.2009 4. The aforesaid aircrafts/helicopters were cleared by the appellant by availing exemption from customs duty under serial no. 347B of the Notification No. 21/2002-Cus dated 01.03.2002, subsequently amended by Notification No. 61/2007-Cus dated 03.05.2007. 5. The exemption notification dated 03.05.2007, on wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raft operation; (b) 'non-scheduled (passenger) services' means air transport services other than scheduled (passenger) air transport services as defined in rule 3 of the Aircraft Rules 1937. (c) 'non-scheduled (charter) services' means services provided by a 'non-scheduled (charter) air transport operator', for charter or hire 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." 6. A perusal of Condition No. 104 would show that at the stage of import, the importer should have an approval from the competent authority in the MCA and the importer should, at the time of importation, also furnish an undertaking to the customs authority that the aircraft will be used for the specified services, namely non-scheduled (passenger) services or non-scheduled (charter) services. The undertaking should also state that the importer shall pay on demand, the duty payable, in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight Report Book, shows that it was a flight from Delhi-Raipur-Bagdogra-Delhi and there was no stoppage time at the airports. 9. The Commissioner, however, by order dated 30.09.2010, confirmed the demand after recording the following findings: (i) Non-scheduled passenger services permit does not automatically qualify as non-scheduled charter services permit; (ii) The appellant does not qualify for providing charter services; and (iii) The aircraft VT-RAN for one instance was used on 27.01.2008 without remuneration but aircrafts otherwise were used by Group Companies for consideration resulting in breach of non-scheduled air transport passenger services. 10. Shri Tushar Jarwal, learned counsel for the appellant assisted by Shri Priyojeet Chatterjee and Shri Rahul Sateeja submitted that the aforesaid findings recorded by the Commissioner in the impugned order are not sustainable in view of the decision of the Larger Bench of the Tribunal in M/s. VRL Logistics Ltd. vs. Commissioner of Customs, Ahmedabad [Customs Appeal No. 74 of 2010 decided on 08.08.2022]. Learned counsel also submitted that non-scheduled (passenger) services can also cover non-scheduled (charter) services in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir transport service' to their group companies by carrying personnel of their group companies is not of any relevance as there is no prohibition in the said definition against any kind of persons to be transported. ***** Non-scheduled (passenger) operator can carry out charter service 62. It would now have to be seen whether there is any restriction or prohibition against providing air transport service by way of charter of aircraft, while providing non-scheduled (passenger) services. 63. As noticed above, the definitions of air transport service and non-scheduled (passenger) service do not stipulate any restriction or impose a condition that such service should be rendered only on per-seat basis and not by chartering nor is there any stipulation in CAR 1999 issued by DGCA for grant of permits to operate non-scheduled air transport (passenger) services. In fact paragraph 9.2 of CAR 1999, which deals with non-scheduled air transport (passenger) services, categorically provides that a non-scheduled operator can conduct charter operations. ***** 65. What needs to be noticed is that the exemption notification does not prohibit a non-scheduled (passenger) service permit h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chedules as the operations are of non-scheduled nature. 68. It is, therefore, clear that an operator providing non-scheduled (passenger) services can always provide such services either on individual seat basis or by chartering the entire aircraft and such a restriction is not contained either in Condition No. 104 or Aircraft Rules or the Civil Aviation Requirements. (emphasis supplied) 14. The Larger Bench also held that personnel of Companies which are Group Companies qualify as members of public and the relevant paragraphs of the decision are reproduced below: Whether the aircraft can be used by members of public 86. The definition of "private aircraft" under rule 3(43) of Aircraft Rules, does not warrant the view that if tariff is not published, the use of aircraft would be private. In terms of rule 3(43), private aircraft is other than public transport aircraft. Public transport aircraft is defined in rule 3 (46) as aircraft which effects public transport and public transport is defined in rule 3(45) to mean all carriage of persons or things effected by aircraft for a remuneration of any nature whatsoever, and all carriage of persons or things effected by aircraft with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -scheduled (passenger) service' do not stipulate any restriction or condition that such service should be rendered only on per-seat basis. Nor is there any stipulation in the said definitions for issuance of passenger tickets. The Policy Guidelines for Starting Scheduled/ Non-Scheduled Air Transport Services issued by the Ministry of Civil Aviation clearly state that non-scheduled operation means an air transport service other than scheduled air transport service and that it may be on charter basis and/or non-scheduled basis and that such operator is not permitted to publish time schedule and issue tickets to passengers. A operator of non-scheduled passenger service is, therefore, not required to issue tickets to passengers. 101. Learned special counsel for the department has, however, placed reliance upon paragraph 9.7 of CAR 1999 to contend that non-issue of passenger tickets would amount to not rendering non-scheduled (passenger) service. 102. This contention cannot not be accepted. Paragraph 9.7 of CAR 1999 provides that non-scheduled operators shall issue passenger tickets in accordance with the provisions of the Carriage By Air Act 1972 and any other requirements which ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheduled (charter) services. He submits that the said question was not covered by the decision in the case of East India Hotels Ltd. (supra). 27. The said contention is not merited. Although Mr Singh is correct that the said question did not arise in East India Hotels Ltd.(supra), the interpretation of Condition No.104 of the Exemption Notification and the Aircraft Rules, 1937, as accepted by the Court in the said decision, would answer question no. (iii) as well. This is briefly explained hereafter. 28. It is relevant to refer to Condition No.104 of the Exemption Notification and the same is set out below: "104. (i) the aircraft are imported by an operator who has been granted approval by the competent authority in the Ministry of Civil Aviation to import aircraft for providing non-scheduled (passenger) services or non- scheduled (charter) services; and (ii) the importer furnishes an undertaking to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, at the time of importation that:- a. the said aircraft shall be used only for providing non-scheduled (passenger) services or non-scheduled (charter) services, as the case may be; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, it is essential that the same is provided for some kind of remuneration. 33. This Court had also referred to paragraphs 2.4 and 2.5 of the Civil Aviation Requirement (CAR), Section 3, Air Transport Series 'C' Part-III issue-II, dated 01.06.2010 issued by the DGCA. The said paragraphs are set out below: "2.4 The carriage of passengers by a non-scheduled operator's permit holder maybe 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are in conformity with the definition of the term 'non-scheduled air transport service', which entails air transport service, for any kind of remuneration. It is clear from paragraph 2.5 that a Non-Scheduled Operator is also allowed to operate revenue charter flights for related entities, its own employees or employees of a group company including Chairman and members of the Board of Directors and their family members. However, it is necessary that such service be provided for remuneration." 19. The issue, therefore, that arises for consideration is whether the appellant had violated Condition No. 104 of the notification merely because on one occasion one aircraft had been used without remuneration. As noted above, in reply to the show cause notice the appellant had pointed out that in regard to the aircraft VT-RAN which was imported on 13.11.2007, the first flight was undertaken on 25.01.2008 and the second flight was undertaken on 27.01.2008. The second flight was for crew familiarization and it had two pilots and Mr. Sunil Godhwani and Mrs. Dhillon, who as prospective users were travelling on the flight only for experiencing the aircraft. The flight was also from Delhi-Raipu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that though there is no provision for grant of interest on refund of redemption fine, but there is also no provision prohibiting the grant of interest on refund of redemption fine. In this connection, learned counsel for the appellant placed reliance upon the decision of the Supreme Court in Godavari Sugar Mills Limited vs. State of Maharashtra and others [(2011) 2 SCC 439] and on rule 41 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure), Rules 1982. Learned counsel also submitted that the Larger Bench decision of the Tribunal in Advance Mechanical Works vs. Commissioner of Customs & Central Excise, Rajkot [2005 (182) E.L.T. 460 (Tri. - LB)] would not be applicable to the facts of the present case. 25. Learned special counsel appearing for the department, however, submitted that in the absence of any specific provision granting interest on refund of redemption fine, it will not be appropriate for the Tribunal to grant interest. Learned special counsel also placed reliance upon the Larger Bench decision of the Tribunal in Advance Mechanical Works. 26. It would, therefore, be appropriate to refer to the Larger Bench decision of the Tribunal in Advance Mechanical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the goods on the charge that the goods were undervalued, allowed it to be redeemed on payment of fine and imposed a penalty. The importer succeeded in appeal. Since the amount deposited by the importer upon adjudication by the Collector was not refunded, the importer approached the Tribunal for issuing directions to the lower authorities. The Tribunal directed the Collector to refund the money to the importer within 60 days period. The Collector refunded the amount. The importer thereupon filed a Writ in the High Court claiming that he is entitled to interest on the amount involved. The High Court disposed off the Writ directing the department to pay interest at 12% from the date of filing of the revision application till the date of payment. The Union of India went in appeal against the order of the High Court. The Supreme Court allowed the appeal and set aside the order of the High Court. 3. The Supreme Court made some important observations while allowing the appeal of the Union of India. An order passed by a High Court under its writ jurisdiction, awarding interest, cannot be held to be of universal application, the Apex Court observed. The direction for payment of interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Orient Enterprises [1998 (99) E.L.T. 193 (SC)] to hold that no interest would be payable on redemption fine, while refunding the same in pursuance of an order of a higher judicial forum. 28. The decision of the Supreme Court in Godavari Sugar Mills would not come to the aid of the appellant. The Supreme Court had observed that even though section 26 of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961 provides for payment of interest only upto 20 years from the date of taking possession, the owner would still be entitled to interest even after 20 years at a reasonable rate in the discretion of the Court on equitable principles. It would not be appropriate for the Tribunal to award interest on equitable grounds in the absence of any specific provision in the Act for grant of interest on refund of redemption fine. 29. The appellant would, therefore, not be entitled to any interest on the refund of the redemption fine in view of the decision of the Supreme Court in Orient Enterprises. 30. The bank guarantees, however, furnished by the appellant are liable to be discharged as the order passed by the Commissioner has to be set aside. 31. Thus, for the reasons sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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