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TMI Blog2024 (7) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... by notification No. 61/2007-Customs dated 03.05.2007, it is provided that import of goods falling under chapter heading 8802 (except 8802 60 00) are exempt from basic customs duty subject to fulfillment of the condition No. 104. Helicopters being classifiable under Customs Tariff Item 8802 1100, 8802 1200 are covered under the above exemption entry and hence the goods under dispute in this case are eligible for exemption by the main entry under Serial No. 347B of the notification dated 03.05.2007 - on the basis of the above factual matrix of the import goods fulfilling all the conditions and covered by the exemption entry, by description and coverage of the customs tariff sub-heading, the import of helicopter by the appellants would be covered by the exemption entry under Serial No. 347B of the notification dated 03.05.2007. It is therefore to be understood that CAR 2010 can be taken as a basis to comprehend the CAR 1999 and CAR 2000. In terms of the definition of nonscheduled air transport service under CAR, this is other than the scheduled air transport service. Thus, this definition provides a meaning that the requirement of publishing a timetable; providing a pattern of regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir Cargo Complex (ACC), Sahar, Andheri (East), Mumbai. 2.1. Briefly stated, the facts of the case are that the appellants herein had imported one Bell Helicopter (Model No.412-EP, Sr. No.36643 registered as VT-HGK) through the ACC, Mumbai by filing Bill of Entry (B/E) No.397583 dated 26.12.2007. The appellants have claimed classification of the imported helicopter under Customs Tariff Item (CTI) 8802 12 00 of the First Schedule to the Customs Tariff Act, 1975 and have availed exemption from Basic Customs Duty (BCD) under Serial No. 347B of the Notification No.21/2002-Customs dated 01.03.2002 as amended; exemption from Additional Duty of Customs (CVD) vide Sl. No. 54E of Notification No. 06/2006-C.E. dated 01.03.2002 as amended and exemption from Special Additional Duty of Customs (SAD) under Sl. No.1 of Notification No. 20/2006-Customs dated 01.03.2006. In support of their claim for availing exemption from import duties, the appellants had produced a No Objection Certificate (NOC) issued by the Director General of Civil Aviation dated 15.10.2007 with DGCA Permit No.01/2003 dated 02.09.2003 where under the appellants importer was authorized to import the said helicopter for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Aviation and upon such basis have imported the helicopter covered under B/E No.397583 dated 26.12.2007 and deployed the same for carrying persons for remuneration and have not deployed it for private use. Accordingly, he submitted that the appellants have not violated the conditions of Sl. No. 104 of Notification No.21/2002-Customs dated 01.03.2002. 3.2. Learned Advocate further submitted that the issues covered in the present appeal is no more under dispute as these have been addressed by the Larger Bench of the Tribunal in the case of VRL Logistics Limited Vs. Commissioner of Customs, Ahmedabad - (2023) 3 Centax 168 (Tri.-LB), wherein the appellants have also represented as one of the intervenor. Miscellaneous application No.85078 of 2022 filed to this effect was allowed by the Larger Bench of the Tribunal in its Miscellaneous order dated 28.01.2022. He submitted that the Larger Bench had answered the issues in dispute in favour of the appellants/importer and held that the customs duty exemption will continue to be available to aircraft/helicopter imported by a Non- Scheduled Operator-Passenger (NSOP) permit holder for passenger services even when the same is used for providin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exclusive use of these companies at their discretion and thus the helicopter charter service was not open for the public under NSOP services. Such agreement had created the exclusive rights for the hiring companies and inasmuch as the helicopter was used by just two users, the appellants having contravened the conditions that the imported helicopter is used only for NSOP purpose. Further, he stated that there was no published tariff available and no tickets were issued, by the appellants; the hirer companies were operating the helicopter by providing charter services to other parties and associated companies and the appellants had no control over the services. Hence he claimed that the appellants importer had not fulfilled the customs duty exemption conditions as provided in the explanation in Sl. No.104, relevant to the entry at Sl. No. 347B of Notification No.21/2002-Customs dated 01.03.2022 and therefore the impugned order has rightly confirmed the duties and confiscated the goods besides imposition of penalty on the appellants. 4.2 Learned Special Counsel further submitted that the undertaking given by the appellants in respect of imported goods was valid at the time of impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellants in their letter dated 25.02.2009, learned Commissioner had confirmed the demand of customs duty; confiscated the import goods and allowed it on payment of redemption fine of Rs.10,00,000/-; besides imposed penalty of Rs.2,50,000/- each on the appellants and on its Managing Director under Section 112 of the Customs Act, 1962 on the basis of following findings in the impugned order. The relevant paragraphs of the impugned order are extracted below: 21. It is an accepted fact that the helicopter imported by UHPL is completely placed at the disposal of HCPL on charter-hire basis. There is no published tariff (refer Explanation under 104 of Notification 21/2002-Cus). The helicopter is not available for use by any other party. They are not issuing tickets (refer para 10.7 of CAR, Series C Part V). 22. Against the above facts, it is to be decided whether UHPL is operating non-scheduled (passenger) services as envisaged in condition No.104 of Notification 21/2002-Cus . 23. Indian Air Craft Rules, 1937 does not define Non-scheduled (passenger) services'. This expression is defined in the Civil Aviation Requirements for 'Non-scheduled (passenger) services. As per thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not ipso facto mean that the demand for duty is time barred. The duty is payable in terms of the Bond executed under Condition 104 of Notification 21/2002-Cus. xxx xxx xxx xxx 30. Since there is contravention of the conditions of the exemption notification No. 21/2002-Cus the helicopter is liable to confiscation under section 111(o) of the Customs Act also. 31. Since the helicopter is liable to confiscation under section 111(d) and section 111(o) of the Customs Act, UHPL and is managing director are liable to penalty under section 112 of the Customs Act. However, since this is a matter of interpretation of the notification and there was lack of understanding among many as seen from the number of such cases that have been booked all over India, I consider that a nominal penalty is enough. 32. I do not find any willful mis-declaration or suppression on the part of UHPL or its Managing Director and I hold that there is no case for imposing penalty under section 114A of the Customs Act. 33. In view of the above facts and circumstances, I pass the following order: ORDER i) I confirm the demand for duty amounting to Rs. Rs.8,63,53,254/- (Rupees Eight Crore Sixty Eight Lakhs Fifty Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n No. 21/2002-Customs dated 01.03.2002, as amended by notification No.61/2007-Customs dated 03.05.2007, for consideration of the subject issues under dispute. Customs Act, 1962 Section 2. Definitions- In this Act, unless the context otherwise requires, (1A) aircraft has the same meaning as in the Aircraft Act, 1934 (22 of 1934); The Aircraft Act, 1934 2. Definitions.- In this Act, unless there is anything repugnant in the subject or context,- (1) aircraft means any machine which can derive support in the atmosphere from reactions of the air, a[other than reactions of the air against the earth's surface and includes balloons, whether fixed or free, airships, kites, gliders and flying machines; (2C) Directorate General of Civil Aviation means the Directorate General of Civil Aviation constituted under section 4A; 4A. (1) The Central Government may constitute a body to be known as the Directorate General of Civil Aviation, which shall be headed by an officer designated as the Director General of Civil Aviation to be appointed in this behalf by the Central Government by notification in the Official Gazette. (2) The Directorate General of Civil Aviation shall be responsible for carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or by any person authorised by it in that behalf; (2) Any power or duty conferred or imposed by these rules on the Director-General may be exercised or discharged by the Director-General or by any other person authorised by the Central Government in that behalf; Notification No. 21/2002-Customs dated 01.03.2002 In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 17/2001-Customs, dated the 1st March, 2001, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods of the description specified in column (3) of the Table below or column (3) of the said Table read with the relevant List appended hereto, as the case may be, and falling within the Chapter, heading or sub-heading of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as are specified in the corresponding entry in column (2) of the said Table, when imported into India,- (a) from so much of the duty of customs leviable thereon under the said First Schedule as is in excess of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 347A. 8802 (except 8802 60 00) All goods Nil - 103 347B. 8802 (except 8802 60 00) All goods Nil - 104 347C. Any Chapter Parts (other than rubber tyres or tubes) of aircraft of heading 8802 Nil - 105 (B) in the Annexure, after condition No. 102 and the entries relating thereto, the following conditions shall be inserted, namely :- Condition No. Conditions 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 b. he shall pay on demand, in the event of his failure to use the imported aircraft for the specified purpose, an amount equal to the duty payable on the said aircraft but for the exemption under this notification. Explanation. - for the purposes of this entry,- (a) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Limited) and its clients. 3.2 The Helicopter type shall be Bell 412EP. The Bell 412 type helicopters shall consist of a Twin Engine with the capacity for thirteen (13) passenger + (2) pilots (subject to temperature distance) and shall be provided for daylight and the option of the COMPANY and night flights for emergencies. 3.5 It is agreed by the COMPANY that the helicopter utilization of a minimum of 40 (Forty) Hours per month (during daylight hours) will be available by the COMPANY as long as to whether operation is on. 3.6 If in a particular month the utilization, is less than 40 Hrs. even with the two-vessel operation, and the underutilization is not due to non-availability, of the helicopter due to technical reasons, then the CONTRACTOR shall be paid for a minimum of 40 Hrs. 5.0 INVOICING The CONTRACTOR shall be invoice COMPANY every month for 40 Hrs. utilization, at the end of the month. The COMPANY shall release all payment within 30 days from the date of receipt of such invoice from the CONTRACTOR. For any flying beyond 40 Hrs. in the month, a subsequent variable re-joinder invoice detailing the cumulative value of SERVICES achieved beyond 40 Hrs. and any other charges pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been granted approval by the competent authority in the Ministry of Civil Aviation i.e., DGCA for providing Non-Scheduled (Passenger) Service or Non-Scheduled (Charter) Service; (ii) importer furnishes an undertaking to the AC/DC of Customs for providing Non-Scheduled (Passenger) Service or Non-Scheduled (Charter) Service, as the case may be; and (iii) in the event of the importer s failure to use the imported aircraft for the specified purpose, then they shall pay an amount equal to the duty payable on the said aircraft, but for the said exemption provided under this notification. In the present case, as the appellants have held a valid Permit No.1/2003 dated 02.09.1993, being the Permit issued by the DGCA to operate Non-Scheduled Air Transport Services (Passenger), we find that the appellants fulfill conditions (i) and (ii) discussed above. It is a fact on record in the SCN dated 09.02.2009 that the appellants importer had duly executed an undertaking as required in the above notification and on the basis of end use certification submitted by them, such undertaking was cancelled by the Assistance Commissioner of Customs. Hence, the appellants had also fulfilled the condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transport service means an air transport service undertaken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a re-cognisably systematic series, each flight being open to use by members of the public; CIVIL AVIATION REQUIREMENTS (CAR) issued under Sub-rule (2) of Rule 134A of the Aircraft Rules, 1937 specifies that no air transport service, other than a scheduled air transport service, shall be operated by an Indian air transport undertaking unless it holds a Non-Scheduled Operator s Permit granted by the Central Government. The power, in this regard, is delegated to the Director General and to the Joint Director General of Civil Aviation, based on which the permission is given by way of issuing a Non-scheduled Operator s Permit (NSOP). This Civil Aviation Requirement contains the minimum airworthiness and operational requirements and also the procedural requirements for grant of an NSOP. In this issue of the CAR, the requirements for grant of NSOP (Passenger) and NSOP (Charter) have been amalgamated and a uniform code for operation of non-scheduled air transport services has been laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviding a pattern of regular frequency of flight services in a systematic manner; and the such services being kept open for public, is not required to be followed for non-scheduled air transport service. In view of such a definition provided under CAR/Aircraft Rules, 1937, we come to the conclusion that the findings arrived at in the impugned order for denying the exemption benefit under Serial No. 347B of the notification dated 03.05.2007, only on the basis of explanation under condition No.104 is not legally sustainable. 9.3 We also find that in terms of CAR, non-scheduled operators can conduct Charter/non-scheduled operations on transportation by air of persons, mail or goods, in such operations, and the operator shall not publish their time schedules as operations are of non-scheduled nature. Further, Charter operation is defined under CAR as an operation for hire and reward in which the departure time, departure location and arrival locations are specifically negotiated with the customer of the customer s representative for entire aircraft and no ticket is sold to individual passenger for such operation. Thus in our considered view, the grounds of not issuing tickets for passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arified in the instructions issued by the Tax Research Unit of the Ministry of Finance in implementation of the budget changes for the year 2007-2008, as follows: 86.1 Exemption from Customs duty has been withdrawn on Aircraft, and parts thereof imported for private use or by non-scheduled operators (S.No.346 S.No.347 of notification No.21/2002-Customs as amended by notification No. 20/2007-customs refers). However, exemption is available under notification No. 39/96-Customs to Aircraft imported by Government of India, State Governments, Public Sector Undertakings of the Central Government or the State Governments. Accordingly, vide exemption entry at Sl. No. 346B of Notification 21/2002-Customs as amended by Notification No. 20/2007-Customs dated 01.03.2007, exemption from basic customs duty was provided to import of all aircrafts of sub-heading 8802 (except 8802 6000) subject to fulfillment of condition No.101, and import of helicopters for private use was provided with effective rate of 3% BCD under entry at Sl. No. 346C of the said notification. Thus, helicopter imported by an operator for operating scheduled air transport service or scheduled air cargo service, and such aircra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nserting Entry 346B and Condition No. 101 in the earlier exemption notification dated 1-3-2002, whereby, the effective rate of duty on import of aircraft for scheduled air transport service was made 'nil'. No exemption was, however, granted to non-scheduled air transport service and private category aircraft. However, with the issuance of the exemption notification dated 3-5-2007, the effective rate of duty on the import of aircraft for non-scheduled air transport service was made 'nil'. This exemption notification was as a consequence of the statement made by the Hon'ble Finance Minister in the Parliament and it is reproduced: Honourable Members are aware that I had proposed to levy customs duty, CVD and additional customs duty on import of aircraft excluding imports by Government and scheduled airlines. Ministry of Civil Aviation has made a strong representation in favour of exemption for aircraft imported for training purposes by flying clubs and institutes and for non-scheduled point-to-point and non-scheduled charter operators under conditions of registration to be specified and recommended by that Ministry. Since civil aviation is a nascent and growing ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uled (passenger) air transport services' has to be interpreted according to this definition, and applied to passenger travel in contradistinction to carriage of goods or mail. 25 . Thus, if a service is covered by 'air transport service' defined in rule 3(9) of the Aircraft Rules and is other than 'scheduled (passenger) air transport service' defined in rule 3(49), it would be a non-scheduled (passenger) service within the meaning of clause (b) of the Explanation to Condition No. 104 of the exemption notification. 26 . At the time when Condition No. 104 was inserted on 3-5-2007, Civil Aviation Requirement dated 8-10-19999 dealing with non-scheduled (passenger) services as well as Civil Aviation Requirement dated 17-52000 10 , dealing with scheduled (passenger) services, which had been issued under rule 133A of the Aircraft Rules, were in force. The expression 'non-scheduled air transport services (passenger)' has been defined, both under the 1999 CAR as also the 2000 CAR, as follows: Non-scheduled air transport services (passenger) means air transport services other than scheduled air transport services as defined in the rule 3 of the Aircraft Rules, 193 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) It must be operated according to a published time table or the flights must constitute a recognizable systematic series; and (iii) Each flight must be open to use by members of the public. 57. If any of the aforesaid three conditions is not satisfied in respect of a passenger air transport service, the same cannot be termed as 'scheduled air transport service' and, therefore, would be a non-scheduled (passenger) service as defined in clause (b) of the Explanation to Condition No. 104 of the exemption notification. In the present case, the aforesaid conditions are not satisfied and, therefore, the air transport service rendered by the appellants would be other than scheduled (passenger) air transport service. 58. Thus, both the requirements of clause (b) of the Explanation are satisfied. It is also not in dispute that the appellants have been granted non-scheduled operator permits, which permits have been renewed from time to time without any objection from the DGCA. 59. It has now to be seen whether the appellants have used the aircraft for providing non-scheduled (charter) services as defined in clause (c) of Condition No. 104 of the Explanation to the exemption notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion may be of any kind whatsoever, such as seat-wise or daily or weekly or monthly or annual basis. There is no restriction on the mode and manner of fixing or charging the remuneration either in the exemption notification or in the Aircraft Rules; (b) Scheduled (passenger) air transport service only means that air transport service which has the essential features mentioned in the definition in rule 3(49) of Aircraft Rules, namely, it must be undertaken between the same two or more places, operated according to a time table or with flights so regular or frequent that they constitute a recognizable systematic series, each flight being open to use by the 'members of the public'; and (c) If a service is covered by air transport service defined in rule 3(9) and is other than scheduled (passenger) air transport service defined in rule 3(49), it is a non-scheduled (passenger) service within the meaning of clause (b) of the Explanation to the exemption notification. 66. It needs to be noticed that Condition No. 104 specifically refers to the definitions contained in the Aircraft Rules as also Civil Aviation Requirements issued under the provisions of rule 133A of the Aircraft Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said definitions that if tariff is not published, the use of aircraft would be as a private aircraft. Admittedly, in the present case, the appellants have used the aircraft for carriage of persons for remuneration. Further, where the business of an undertaking includes carriage by air of persons it would be an air transport undertaking and if such an undertaking also uses the aircraft to effect carriage of persons without remuneration, it would still be public transport aircraft and not a private aircraft. Therefore, even assuming that some flights are conducted for carriage of persons without remuneration, it would be still be a public transport aircraft and not a private transport aircraft. 87. Even otherwise, the purpose of having a published tariff is to apprise the public of the rates at which the aircraft would be available. The appellants hire the aircrafts to customers pursuant to tenders/negotiations. The purpose of having a published tariff is, therefore, substantially complied with. 88. Learned special counsel for the appearing for the department submitted that the aircraft is being provided for private use and is not available to use by the public. 89. Learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench and the findings are as follows: Whether the customs authorities have the jurisdiction to decide violation of the exemption notification 91. A perusal of the exemption notification clearly shows that it merely requires the conditions set out by the DGCA and the conditions imposed by the Civil Aviation Ministry be complied with for the operations of the non-scheduled operators. It, therefore, follows that it should be the jurisdictional authorities under the Civil Aviation Ministry which alone can monitor the compliance. As stated above initially by exemption notification dated 1-3-2007, entry no. 346B and Condition No. 101 was introduced in the exemption notification dated 1-3-2002 whereby the effective rate of duty on import of aircraft for scheduled air transport service was made 'nil'. As no exemption was granted to non-scheduled air transport service and private category aircraft, the Ministry of Civil Aviation made a strong representation for granting exemption for non-scheduled (passenger) service and non-scheduled (charter) services under conditions to be specified and recommended by the Civil Aviation Ministry. It is for this reason, as would be apparent from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the use of the aircraft is not in accordance with the permit granted by DGCA for non-scheduled (passenger) service and only in that event the Customs authority can demand duty in terms of undertaking. In the present case, the DGCA has not found the use of the aircraft by appellant to be in violation of permit for non-scheduled (passenger) service and in fact has renewed the permit year after year. There is, therefore, no violation of the undertaking and, therefore, Customs cannot demand duty in terms of the undertaking. 36 . It also needs to be noted that the Larger Bench of the Tribunal specifically held that the decision of the Division Bench of the Tribunal in East India Hotels which holds that it is the Customs department that has to ensure compliance of the undertaking is not correct. The Larger Bench also held that the decision of the Division Bench in King Rotors does not lay down the correct position of law. Analysis of the division bench decisions 119. The division bench of the Tribunal in King Rotors held that since the flight operations are not open to the public, the aircraft would not be considered to have been used for non-scheduled (passenger) services. This v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n whether the respondent has complied with the Condition No.104 of the Notification is concerned, the said question is answered in favour of the respondent in view of the decision of this Court in East India Hotels Ltd. v. Commissioner of Customs, Central Excise and Central GST, New Delhi (supra). 10.3 We further find that Special Counsel for Revenue had argued that the order of the Tribunal in the case of Global Vectra Helicop Ltd., (supra) is not applicable to the present case, as the facts of the present case are different from the above referred case and it is distinguishable. In this regard we find that the Larger Bench of the Tribunal in its Miscellaneous Order No. M/85082/2022 dated 28.01.2022 had allowed the appellant in Customs Appeal No.338 of 2009 i.e., the appellants in this case, to intervene in the matter pending before them in VRL Logistics Ltd. (supra) Further, in the Interim Order No.3-23; 17-18; 14/2022 dated 08.08.2022, the Tribunal had specifically stated in paragraph about the appellants having been allowed as intervenor and the answers to the issues referred therein. The relevant paragraphs of the said order are extracted and given below: 2. It needs to be sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther, we also find that the conclusions arrived at by the Larger Bench in the above case at paragraph 124(ii) (iii), (iv), (vi) and (vii), also supports the conclusion arrived by us independently on merits of this case. Thus, we find that the argument of the special Counsel to ignore the Larger Bench decision in VRL Logistics is inappropriate. 11.1 We also find that the order of the Tribunal the case of Airmid Aviation Pvt. Limited (supra), had dealt the genesis of the issue, distinction between definitions provided under the Aircraft Rules and explanation and the interpretation of statutes and exemption notification in detail. Upon such examination the Tribunal has held that exemption is eligible to non-scheduled (passenger) service operator as the peripheral circumstances such as absence of published tariff, non-issue of tickets and carriage of employees of companies, not to be construed as intention for own user by harmoniously interpreting the exemption notification and Aircraft Rules and CAR. The relevant paragraphs of the above order is extracted and given below: 8 . The exemption notification is, thus, pivotal to the dispute. It is intended to cover - an operator who has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble, significance to that statutory instrument. Doubtlessly, tax on import, or manufacture, of aircraft arises from the sovereign authority vested in Parliament and any exemption thereto, emanating from the statutory delegation to the Central Government, is the preserve of the Department of Revenue. However, imposition of tax, or forbearance therefrom, are not necessarily, and almost certainly not, motivated by ways and means. Exemption, undoubtedly an element of tax policy, is unfailingly also an aspected manifestation of general and sectoral policies promulgated in furtherance of governmental business. The economy of a country is guided by the administration of the day through its fiscal, monetary and trade policies. The ways and means of public finance, most often, includes within it a tax policy that has the object of maximising revenue; these are patent in the tariff schedules appendant with the taxing statutes. However, any deviations, absolute or conditional and partial or entire, are exceptions to that objective of tax policy. Governance is not all about, or a limited to, tax collection; policies of the Government formulated by the various departments in the discharge of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policy-making in Government is not subordinate to revenue maximization and that every exemption is not to be viewed through the prism of compensatory quantification. 12 . The notifications under the two indirect tax statutes, though differently worded in the perspective of the taxable is substantially of identical effect. As per Aircraft Rules, 1937, air transport service can be undertaken only by a scheduled air transport service which, till 1994, was the exclusive monopoly of the two air corporations in the public sector but now including a number of erstwhile air taxi operators permitted then under the open sky policy and now, as per Rule 134A of Aircraft Rules, 1937, to an Indian air transport undertaking in possession of nonscheduled operator s permit issued by the Central Government. In Rule 3A scheduled air transport service is defined as - (49) an air transport service undertaken between the same two or more places and operated according to a published timetable or with flights so regular frequent that they constitute recognisably systematic series, each flight being open to use by members of the public and governed by Schedule XI of the said Rules while air transport serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof is not the disqualification argued by Learned Authorised Representative. Private aircraft , by their very definition, do not operate for remuneration and cannot issue tickets. Tickets are only the outward representation of a contract in which remuneration is at the core. As long as that is not in question, non-conformity with ticketing process cannot be perceived as operating for no remuneration. Moreover, the provisions of Carriage by Air Act, 1972, which were intended for regulating international transport, is not applicable to domestic travel and, as submitted by Learned Counsel, ticketing carries with it the privilege of limiting the liability as carrier owing to which the exercise of option not to issue tickets may merely widen liability without compromising status. Carriage of employees of group companies does not alter the status of the aircraft as such employees are not excluded from the larger world of the travelling public. The attempt by Revenue to segregate people into classes that are neither recognised nor acknowledged either in the notification or by the statute governing air transportation is nothing but the imposition of a whimsical and prejudiced template ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and precautionary obligations attached to the several permissions therein cannot be dichotomised merely to satisfy the cravings, or pretensions, of an agent of the Exchequer. Notwithstanding the fast paced evolution of engineering, avionics and navigation systems in the aircraft industry, the statute and the statutory instruments issued thereunder have not lagged; the response to those imperatives are promptly accommodated in articulations of policy - promulgation as Civil Aviation Requirement and notification as Aeronautical Information Services - emanating from the regulator, the Director General of Civil Aviation. The scheme and intent of exemption notification, having deployed expressions referred to, and defined in, the Aircraft Rules, 1937 as well as in the statutory instruments empowered by Section 133A of Aircraft Rules, 1937, cannot, in the absence of meaning assigned to them within the exemption notification itself, be subject to interpretation de hors the said Rules; any other course of action would be weighed down by subjective bias motivated only by disinclination to allow the benefit. 18 . Charter operation is, undoubtedly, acknowledged as an independent permissible a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil Aviation Requirement, does not, in any way, detract from the broad principle of structuring of the industry as air transport service , non-scheduled passenger service and non-scheduled charter service , with each a subordinate grouping of the preceding group, to constitute a separate class of non-scheduled operator. It would, therefore, be safe to conclude that operation of charter service , being a dilution of non-scheduled passenger service , is also no less of compliance than deployment in the latter. 19 . A corollary to be addressed is the enlargement of the frame of dispute by the present appeal : whether compliance with the notification is sufficed by deployment in consonance with the undertaking furnished or, conversely, prescribes alternative deployment. We would presume, in the light of the stipulation in the notification pertaining to charter operation , that it is not the submission of Revenue that the Central Government is not competent to permit such operations. It is also not the case of Revenue that the permit of the respondents herein has been endorsed for charter operations ; nor can we conceive that the regulated environment of physical control , to use a phra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruling of this Tribunal particularly in the case of Sameer Gehlot (supra) the Tribunal has taken a view that benefit of the said notification is available to the assessee/importer whereas another coordinate bench in the case of King Rotors Air Charter P. Ltd. v. CC (ACC Import), Mumbai - 2011 (269) E.L.T. 343 (Tri. - Mum.) = 2011-TIOL-1785-CESTAT-MU and has taken a diagonally opposite view and denied the benefit of exemption notification. and of Learned Counsel therein that - 11.10 it is further urged that the facts of the present case are fully covered by the precedent ruling of this Tribunal in favour of the appellant in the case of CC, New Delhi v. Sameer Gehlot - 2011 (263) E.L.T. 129 (Tri. - Del.) and Global Vectra Helicorp Ltd. v. CC (Import), Mumbai - 2015 (329) E.L.T. 235 (Tri. - Mumbai) = 2015-TIOL-968-CESTAT-MU. Accordingly, Ld. Counsel for the appellant prays for allowing their appeal by setting aside the impugned order and for return of their Bank Guarantee, duly discharged. which, though taken on record, did not prevent the Tribunal from holding that the particular difficulties, impeding the referral Bench in rendering a decision, warranting recourse to Larger Bench is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove decision was referred to with the approval in the Final Order No. See/237-238/2011, dated 3-6-2011 in Dove Airlines Pvt. Ltd. v. C.C. (Prev.), New Delhi. 5. A contrary view is however recorded by another Division Bench of this Tribunal in King Rotors Air CharterP. Ltd. v. C.C. (ACC Import), Mumbai - 2011 (269) E.L.T. 343 (Tri. - Mumbai). After referring to the earlier decision in Sameer Gehlot, the Tribunal in King Rotors Air Charter, at paragraphs 24.18 and 24.19 of the order proceeded on any independent interpretation of Notification No. 61/2007-Cus. and concluded that though the fact of undertaking takes place at the time of importation, the subjects of undertaking at things of the future. The undertaking requires that the imported aircraft shall be used only for providing non-scheduled passenger services and not for non-scheduled charter services. The second condition of the undertaking is that the duty of customs should be paid on demand by the importer in the event of failure to use the aircraft before the specified purpose. In King Rotors Air Charter violation of the conditions of import to place post-import. The tribunal concluded that this crucial aspect did not recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l respect, the views of the Tribunal in re King Rotors Air Charter P. Ltd., we are of the opinion that it does not constitute a binding precedent for the reasons that shall, presently, be adduced. 31 . Our analysis supra of the superfluity of the substitution of the Explanation in the exemption notification that erased the expression as the case may be and, ostensibly, obliterated the distinction between non-scheduled passenger service and non-scheduled charter service distinguishes a key finding in re King Rotors Air Charter P. Ltd. but for which, the outcome therein may, in all probability, have been consistent with the various other decisions of the Tribunal. Again supra, we have drawn upon the wisdom of the Tribunal in concluding that the decision in re King Rotors Air Charter P. Ltd. had erroneously declared the earlier decision to be per incuriam which would restore the decision in re Sameer Gehlot as a binding precedent. Moreover, in ignoring the decision in re Sameer Gehlot, the validation conferred by the approval of Hon ble Supreme Court and, thereby, the binding precedent thereof was, obviously, not available to the Tribunal while deciding in re King Rotors Charters P. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee used the imported helicopter for the avowed purpose. It is not in dispute that, under a charter-hire agreement dated 14-4-2008 with Heligo, the assessee allowed the helicopter to be used by Heligo for the purpose of mobilizing and demobilizing of personnel of third party companies and for movement of their freight and/or equipment. Under the agreement, Heligo would reimburse the actual costs incurred by the assessee in sourcing and acquiring spares for maintenance of the helicopter. The necessary infrastructure for maintenance of the helicopter would also be provided by Heligo. The entire cost of insurance to cover all liabilities in respect of passengers, cargo, crew, helicopter and third party would be incurred by the assessee and reimbursed to them by Heligo. Heligo would also pay monthly remuneration to the pilots of the assessee. They would also bear the costs of maintenance of the helicopter and also the costs of fuel and consumables required for its operation. On a perusal of the charterhire agreement between the assessee and Heligo, we find that Heligo chartered/hired the helicopter for their exclusive use and they incurred the entire costs of operation and maintenance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices are without any time schedule for the flights. [This view is fortified by clause (9.2) of Passenger CAR , which deals with non-scheduled operators and their operations and says : In such operations, the operators shall not publish their time schedules as the operations are of non-scheduled nature.] Other features are common for both scheduled and non-scheduled services. It would follow that, like scheduled air transport service (passenger), nonscheduled air transport service (passenger) also should be open to use by members of the public. As the flight operations in this case were not open to the public, the helicopter cannot be held to have been used for nonscheduled (passenger) services . and raised as a contention in the grounds of appeal, as well as the show cause notice, does not appear to hold true. The appellation of scheduled and its contra have naught to do with schedules, or timetables, but with the class to which air transport services are assigned. The former has a permanent, and the highest, status under Aircraft Rules, 1937 with privileges accorded by international conventions on freedoms of the air while the latter is a status arising from not being scheduled bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt against the above order of the Tribunal in the case of Airmid Avaiation Services (P) Ltd., (supra) have dismissed the appeal by holding that that they did not find that issues raised by the Revenue is covered under its jurisdiction in terms of Section 130 E of the Customs Act, 1962 to entertain such appeal and thus they had dismissed the appeal by keeping all the issues of law as open. The relevant paragraphs in the said order is extracted below: 4 . We have gone through the statement of case filed on behalf of the appellant and do not find that the issues raised come within the four corners of Section 130E of the Customs Act, 1962. 5 . We, therefore, do not see any reason to entertain these appeals in our jurisdiction under Section 130E of the Customs Act, 1962. 6 . The civil appeals are, therefore, dismissed leaving all questions of law open to be agitated in an appropriate case. 26 . The following conditions have to be satisfied pre-negative list for a service to qualify as a GTA service : (i) There should be an activity in relation to transport of goods by road; (ii) Issuance of consignment note by the GTA; (iii) Activity is performed by a GTA for another; and (iv) Activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 11 . The submissions advanced by the learned senior counsel for the appellant deserve to be accepted as the issues raised in this appeal has been decided by the Larger Bench of the Tribunal in the order dated 88-2008. In fact, the reference was made to the Larger Bench in this appeal. 12 . The following issues were decided by the Larger Bench of the Tribunal in the order dated 8-8-2022: (i) In terms of Condition 104 of the exemption notification, if a service is covered by air transport service defined in rule 3(9) of the Aircraft Rules and is other than scheduled (passenger) air transport service defined in rule 3(49), it would be a NSOP (passenger) services within the meaning of clause (b) of the Explanation to Condition No. 104 of the exemption notification. These two conditions are satisfied by the importers, inasmuch as: - a. The contention of the department that the appellants have rendered air 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; b. There is no stipulation or restriction or a condition in the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been strictly used in terms of the permit granted by the DGCA and the said Aircraft was used for remuneration purposes only. 14 . Thus, for the aforesaid reasons, the confirmation of demand by the Commissioner against the appellant for confiscation of the Aircraft BRT with an option to redeem the same on payment of Rs. 6.5 crores under section 125 of the Customs Act cannot be sustained and is set aside. The appeal is, accordingly, allowed. It is also significant to note that the learned Commissioner in the impugned order has held that he did not find any wilful mis-declaration or suppression on the part of the appellants and had confirmed the demand only as per the undertaking given by them and not under Section 28 ibid. Thus, on the basis above decision of the higher appellate forum and based on such findings given in the impugned order, both confiscation and imposition of penalty is not sustainable. 12. In view of the above analysis of the legal provisions and on the basis of the orders passed by the Tribunal, the Hon ble High Court of Delhi and the Hon ble Supreme Court, we are of the considered view that the import of Bell Helicopter (Model No.412-EP, Sr. No.36643 registered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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