Customs duty exemption for aircraft imports depends on civil aviation approval and proper notice of alleged tariff breaches.

Exemption from customs duty on imported aircraft for non-scheduled air transport operations turned on whether the aircraft was approved and used as permitted by the competent civil aviation authority. The record supported the view that a non-scheduled passenger permit holder could use the aircraft for passenger and charter services, and the authority's letter supported that position. A claimed breach based on pre-publication of tariff could not justify interim recovery because it was not specifically raised in the show cause notice, and a party cannot be proceeded against on a ground not disclosed. The Tribunal therefore granted waiver of pre-deposit and recalled the deposit direction.

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Issues: Whether, at the interim stage, the appellants were entitled to waiver of pre-deposit in proceedings concerning exemption from customs duty on import of aircraft for non-scheduled air transport operations.

Analysis: The exemption notification was linked to approval and use of the aircraft as permitted by the competent civil aviation authority. The record indicated that a non-scheduled passenger permit holder could use the aircraft for both passenger and charter services, and a letter from the civil aviation authority supported that position. The objection that the civil aviation requirements were prospective did not displace the relevance of those requirements to the exemption notification. The alleged breach regarding pre-publication of tariff could not be relied upon for interim recovery because it was not specifically alleged in the show cause notice, and a matter cannot be decided on a ground not disclosed to the assessee. The withheld letter also ought to have been placed before the Tribunal.

Conclusion: The appellants were entitled to waiver of the pre-deposit condition, and the earlier direction requiring deposit was recalled.

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