Tribunal: Duty of customs excludes integrated tax for re-imported aircraft parts

The Tribunal held that the term "duty of customs" in the Exemption Notification does not encompass integrated tax. Consequently, the Appellant, a scheduled airline operator, was deemed eligible for exemption from integrated tax on re-imported repaired aircraft parts under the General Exemption Notification No. 45/2017. The Tribunal overturned the Commissioner (Appeals) orders and ruled in favor of the Appellant, granting the requested exemption from integrated tax.

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Issues Involved:

1. Availability of Integrated Goods and Service Tax (Integrated Tax) exemption under General Exemption Notification No. 45/2017 for re-imported aircrafts and parts after repairs.
2. Interpretation of "duty of customs" in the context of the Exemption Notification.
3. Whether integrated tax is included within the scope of "duty of customs" under the Exemption Notification.
4. Applicability of integrated tax on re-imported repaired parts/aircrafts.

Detailed Analysis:

Issue 1: Availability of Integrated Tax Exemption

The primary issue in these appeals is the availability of Integrated Tax exemption under serial no. 2 of the General Exemption Notification No. 45/2017, as amended, for aircrafts and parts re-imported into India after repairs. The Appellant, a scheduled airline operator, claimed exemption from integrated tax on re-imported repaired parts/aircrafts. The Customs Authorities, however, contended that the Appellant was not entitled to full exemption from integrated tax, interpreting "duty of customs" to include both basic customs duty and integrated tax.

Issue 2: Interpretation of "Duty of Customs"

The Exemption Notification exempts goods re-imported into India from so much of the duty of customs specified in the First Schedule and integrated tax and compensation cess under section 3(7) and (9) of the Tariff Act. The Appellant argued that "duty of customs" should not include integrated tax, relying on the definition provided in section 2(15) of the Customs Act, which defines "duty" as duty of customs leviable under the Customs Act.

Issue 3: Inclusion of Integrated Tax in "Duty of Customs"

The Customs Authorities argued that the term "duty of customs" in the Exemption Notification includes integrated tax, as integrated tax is also collected under section 3 of the Tariff Act. However, the Tribunal held that "duty of customs" refers only to basic customs duty as specified under section 12 of the Customs Act and does not include integrated tax, which is levied under section 5 of the Integrated Tax Act.

Issue 4: Applicability of Integrated Tax

The Tribunal examined the relevant sections of the Customs Tariff Act, the Customs Act, and the Integrated Tax Act, concluding that integrated tax is not a duty of customs but a separate levy under the Integrated Tax Act. The Tribunal noted that integrated tax is collected by Customs Authorities for convenience but is not a part of the "duty of customs" as defined under the Customs Act.

Conclusion:

The Tribunal concluded that the expression "duty of customs" in the Exemption Notification does not include integrated tax. Therefore, the Appellant is entitled to exemption from integrated tax on re-imported repaired parts/aircrafts under the Exemption Notification. The Tribunal set aside the 346 orders passed by the Commissioner (Appeals) and allowed the appeals, granting the Appellant the claimed exemption from integrated tax.

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