Customs exemption for imported helicopter cannot be denied later absent a specific post-import restriction in the notification.

Where a customs exemption for an imported helicopter required only prior civil aviation approval and an undertaking at the time of import, and those conditions were met, the exemption could not be denied later on allegations of private or charter use. The notification contained no express post-import restriction authorising customs to police subsequent use, and civil aviation materials did not establish misuse merely because flights were paid for or undertaken for group entities. A new duty-demand ground not included in the show-cause notice could not be added later, so invocation of section 28 of the Customs Act was unsustainable. The exemption, and the accompanying confiscation and penalty proposals, were therefore not maintainable.

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Issues: Whether the customs exemption for the imported helicopter could be denied on the ground that the importer allegedly used it for private or charter operations, and whether the department could invoke the appeal grounds and demand duty under the Customs Act in the absence of any post-import condition in the exemption notification.

Analysis: The exemption notification required only two pre-import conditions: prior approval from the competent civil aviation authority and an undertaking at the time of import. Both were satisfied when the aircraft was cleared. The notification did not contain a separate post-import condition authorising customs to monitor subsequent use or to deny exemption later for alleged misuse. The regulatory authority had continued to renew the operating permission and had not acted against the importer for any violation, while the civil aviation clarifications supported use by a non-scheduled operator for charter operations and did not establish private use merely because flights were paid for or undertaken for group companies. The department's reliance on a new ground relating to published tariff was also not part of the show-cause notice. In these circumstances, invocation of Section 28 of the Customs Act, 1962 was not sustainable, and the exemption could not be denied on the facts found.

Conclusion: The exemption was correctly availed and the demand of duty, confiscation proposal, and penalty could not be sustained.

Final Conclusion: The department's appeal was dismissed and the order dropping the proceedings was left undisturbed.

Ratio Decidendi: Where an exemption notification prescribes only pre-import conditions and those conditions are fulfilled, customs cannot deny the exemption later on alleged post-import misuse unless the notification itself contains a specific post-import restriction or the undertaking is proceeded against in the manner provided by law.

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