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TMI Blog2024 (4) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... orted by them is identical in terms of its functions and applications when compared to the other 2 prototypes imported by them but the only difference between the first unit and the other units is that the first unit is tested on the ground in the designers lab to verify that all functionalities, weight and power consumption, as required by the customers are incorporated - Admittedly, the first prototype unit imported by the appellant is only for testing the worthiness of the aircraft for the required upgradation and does not form part of the aircraft. Therefore, the Commissioner was right in disallowing the benefit of the Notification since admittedly; it does not form part of the aircraft. With regard to the other two imports, the technical write-up states that it is meant for upgrading the Engine and Flight Instrument System (EFIS) for DARIN III upgrade programme for Jaguar Aircraft. The set equipment is meant for replacement of the conventional Electro-mechanical instruments/sensors of DARIN Jaguar aircraft. The Commissioner in the impugned order states that the appellant has declared them as prototypes while the first one is not fitted to the aircraft and the other 2 are claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is applicable to Parts of Aircrafts of Chapter Heading 8802 of Central Excise Tariff Act, 1985, if intended for servicing, repair or maintenance of the aircrafts. It is alleged that the appellant had wrongly claimed the benefit of the Notification claiming them as parts that are intended for servicing, repair or maintenance of aircrafts, thus evading duty of Countervailing Duty (CVD), Special Additional Duty (SAD) and Education cess. 2. This appeal is against the impugned order 16/2013 dated 27.08.2013 wherein the Commissioner denied the benefit of the above notification observing that the goods imported were Prototypes and not parts of the aircraft intended for servicing, repair or maintenance of aircrafts. 3. The learned Counsel on behalf of the appellant submits that the appellant M/s. Halbit Avionics Pvt. Ltd. are engaged in Design, Development and import of Flight Simulators and Avionics for M/s. HAL, Bangalore and others. During the period from 11.7.2012 to 11.1.2013, they imported 3 Nos. Prototypes of EFI (Engine Flight Instrument) DPU (Display Processing Unit) under 3 Bills of Entry. As per the details submitted by them vide their letter dated 14.11.2012 and 22.11.2012, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenance has been defined in the following decisions as: Bajrang Alloys Ltd. v Collector - 1994 (70) ELT 624 (Tri.) Modella Steels Alloys Ltd. v CCE-1999 (107) ELT 614 (Trib) Modella Steels Alloys Ltd. vs. CCE: 1999 (107) ELT 614 (Tri.) 3.2 While the word repair has been defined in Black s Law Dictionary, 6th Ed, as Repair, To mend, remedy, restore, renovate. He relies on the following decisions to emphasise the point that repair means replacement /renewal. Sir Shadi Lal Sons, Shamli vs. CIT, Kanpur 1988 SCC (Tax) 121: (1988) 169 ITR 510 wherein it is held that: The idea of 'repair' may include replacement or even a renewal. But the converse may not be true. All replacements or renewals need not necessarily be 'repairs'. Lurcott vs. Wakely [1911] 1 KB 905, 923, CA, per Buckley LJ. Wherein it is held that: `Repair and `Renewal are not words expressive of a clear contrast. Repair always involves renewal; renewal of a part, of a subordinate part . Repair is restoration by a renewal or replacement of subsidiary parts of a whole . Renewal, as distinguished from repair, is re-construction of the entirety, meaning by the entirety not necessarily the whole but substantially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ype - I. Under the circumstances, it cannot be said that the imported Engine and Flight Instrument System (EFIS) are not parts of the Jaguar aircraft and meant for repair and replacement. The first Prototypes evaluated / tested on ground conditions only i.e., in a rig (which is not capable of flight). This is not capable of being used in a flyable units since it does not have permission from Centre for Military Airworthiness Certification (CEMILAC) to do so. The first prototype essentially being an Engineering unit is not permitted by (CEMILAC) to be used in a flyable Aircraft. However, the second third are to be used in a flyable units and evaluated and tested in actual flying conditions. The second and third units are permitted by (CEMILAC) to be used in a flyable Aircraft . 3.5 The Appellants would also like to refer to the decision of the Hon ble Tribunal in the case of Mak Controls vs. Commissioner: 2001 (138) ELT 1152 (Tri-Chennai), which has been upheld by the Hon ble Supreme Court - Commissioner v. Mak Controls - 2005 (183) E.L.T. A73 (S.C.) to submit that the items imported by them are parts of the aircraft. It is finally stated that from the definitions of Prototype, Repa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest thereon is paid before the issue of the Show Cause Notice in terms of Sec. 11(1)(b) and 11 (2) of the CEA, 1944 and 28(1)(b) and 28(2) of the C.A. 1962. 3.8 It is further submitted that there was no mala fide intention on their part since the impugned goods were brought for the purpose of upgrading the Engine and Flight Instrument System (EFIS) for DARIN III Upgrade Programme for Jaguar Aircraft and is meant for replacement of the conventional Electro Mechanical Instruments / Sensors of DARIN Jaguar Aircraft and not for any other purpose. In the absence of any mala fide, no penalty is leviable on the notices as has been held by the following decisions : UOI vs. Dharmendra Textile Processors - 2008 (231) ELT 3(SC). UOI vs. Rajasthan Spinning and Weaving Mills - 2009 (238) ELT 3(SC). 4. The Authorised Representative on behalf of the Revenue reiterates the findings of the Commissioner and submits that the impugned order needs to be upheld and the appeal filed by the appellant to be dismissed. 5. Heard both sides. The only issue to be decided is whether the impugned goods imported by the appellant are eligible for the benefit of exemption in terms of Notification No.12/2002-CE da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try in column (4) of the said Table and subject to the relevant conditions annexed to this notification, if any, specified in the corresponding entry in column (5) of the Table aforesaid: 5.1 The relevant portion of Notification No.12/2012-CE dated 17.3.2012 reads as follows : 303 Parts including pneumatic tyres of rubber, new or rethreaded (other than rubber tubes), of aircraft of heading 8802 Nil 34 Condition 34 reads as follows : 34 If intended for servicing, repair or maintenance of aircraft owned by Government of India, State Governments, Public Sector Undertakings of the Central Government or the State Governments; or intended for servicing, repair or maintenance of aircraft, which is used for operating scheduled air transport service or scheduled air cargo service, as the case may be. Explanation.- The expressions operator , scheduled air transport service and scheduled air cargo service shall have the meanings respectively assigned to them in condition 31. 5.2 As seen above, the benefit of the Notification is available only for the parts of the aircraft which are intended for servicing, repair or maintenance of the aircraft. The question to be decided is whether the importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... types but the Commissioner cannot ignore the fact that as per the technical write-up, these are used as parts and they are actually meant for replacing the old ones thus upgrading the equipment. 5.4 The technical write-up placed before us by the learned counsel states as follows: Engine Flight Instrument System (EFIS) provides the following on a 4 X5 AMLCD display in the cockpit a) Engine parameters b) Fuel parameters c) Flight parameters d) Failure/Emergency Warnings e) Hydraulic Pressure Indication EFIS system will have integrated Air Data, Attitude and Heading sensors called ADAHRS for flight parameters. Existing sensors of DARIN Jaguar a/c for engine, fuel parameters, emergency warmings information and Hydraulic Pressure will be interfaced with EFIS. In the event of failure of INGPS, EFIS will act as a GET-YOU-HOME system. EFIS will replace the following existing conventional Electro-Mechanical Instruments/Sensors of DARIN Jaguar Alc. a) Standby Flight Instruments 1. Vertical Speed Indicator 2. Standby Attitude Indicator (Artificial Horizon Indicator) 3. Turn and Slip Indicator 4. Combined Speed Indicator 5. Altimeter 6. Radio Magnetic Indicator (RMI) b) Engine and Fuel Instrum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re airworthiness and certification to be used in flyable aircrafts for evaluation and testing in actual flying conditions. He further states that the second and third prototype are commercially produced parts of aircrafts, therefore, there is no doubt that these 2 imports form part of the aircraft and it is meant for replacement /upgradation of the aircraft. 5.6 Now the question remains, whether these imports which are intended for replacement/upgradation of the aircraft are eligible for the benefit of the Notification which is intended for servicing, maintenance or repair. The learned counsel has placed enormous data on record to show that repair or maintenance includes replacement and upgradation. In the case of Modella Steels Alloys Ltd. v CCE (supra), the Tribunal observed that: We have carefully considered the pleas advanced from the both sides. We are not inclined to agree with the submission of the ld. JDR. Replacement with a grooved roller of a roller which has outlived its utility will be covered within the scope of the expression maintenance and repair of the rolling mills. We are, therefore, of the view that the appellant is clearly entitled to the benefit of the Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ul, inspection, replacement, defect rectification, and the embodiment of a modification or repair; 60. Maintenance standards and certification- (1) In this rule, 'maintenance' refers to performance of all work necessary for the purpose of ensuring that the aircraft is airworthy and safe including servicing of the aircraft and all modifications, repairs, replacements, overhauls, processes, treatment, tests, operations and inspection of the aircraft, aircraft components and items of equipment required for that purpose. In view of the above definition, contention of the Revenue is that these goods are meant for replacement and upgradation, which cannot be considered as an activity of servicing, repairing or maintenance and therefore, the appellant is not eligible for the benefit of the Notification No. 12/2012-Cus., dated 17-3-2012, is devoid of merit. 5.9 The Commissioner in the impugned order has observed as follows: 21.4 The said certificate captions as the subject as Flight clearance certificate for Engine and Flight Instrumentation System (EFIS) for trials on Jaguar Darin III Air Craft . Further the certification is issued in respect of software and subject to conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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