Scheduled airline operator exempt from IGST on re-import of repaired aircrafts under Exemption Notification. Customs' assessment overturned.

The Tribunal held that the appellant, a scheduled airline operator, was entitled to exemption from payment of IGST under Exemption Notification No. 45/2017 on re-import of repaired aircrafts and parts into India. The Commissioner of Customs' assessment orders levying IGST were set aside, emphasizing that "duty of customs" in the notification does not include IGST. The appeals were allowed, overturning the previous decision and clarifying the exclusion of IGST from the term "duty of customs."

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Issues Involved:
1. Availability of Integrated Goods and Service Tax (IGST) exemption on re-imported aircrafts and parts after repairs under Exemption Notification No. 45/2017.
2. Interpretation of "duty of customs" in the context of the Exemption Notification.
3. Whether integrated tax is included in "duty of customs" for the purpose of the Exemption Notification.

Detailed Analysis:

1. Availability of IGST Exemption on Re-imported Aircrafts and Parts:
The central issue in these appeals was whether the appellant, a scheduled airline operator, was entitled to claim exemption from IGST on re-imported aircrafts and parts after repairs under Exemption Notification No. 45/2017. The Commissioner of Customs (Appeals) had upheld the assessment orders which levied IGST on the fair cost of repairs and the cost of insurance and freight charges, both ways, rejecting the appellant's claim for exemption.

2. Interpretation of "Duty of Customs":
The Appellant argued that the term "duty of customs" in the Exemption Notification should not include IGST. They contended that the notification clearly separates "duty of customs" from "integrated tax," implying that IGST is wholly exempted under the notification. The Customs Authorities, however, interpreted "duty of customs" to include both basic customs duty and IGST, thus rejecting the appellant's claim for full exemption from IGST.

3. Whether Integrated Tax is Included in "Duty of Customs":
The Tribunal examined various sections of the Customs Tariff Act, 1975, and the Customs Act, 1962, to determine the correct interpretation. It was noted that:
- Section 2(15) of the Customs Act defines "duty" as a duty of customs leviable under the Customs Act.
- Section 12 of the Customs Act specifies that duties of customs shall be levied at rates specified under the Customs Tariff Act or any other law.
- Section 3 of the Customs Tariff Act deals with additional duties, including IGST, but does not refer to them as "duties of customs."

The Tribunal concluded that "duty of customs" as mentioned in the Exemption Notification refers only to the basic customs duty and not to IGST. This interpretation was supported by various judicial precedents, including the Supreme Court's rulings in Prestige Engineering (India) Limited vs. Collector of C. Excise, Meerut, and Collector of Customs, Madras vs. Indian Organic Chemicals Limited, which clarified that additional duties under section 3 of the Tariff Act are not considered "duty of customs" for the purposes of notifications issued under the Customs Act.

Conclusion:
The Tribunal held that the appellant was entitled to exemption from payment of IGST under the Exemption Notification on re-import of repaired parts/aircrafts into India. The order dated September 12, 2018, passed by the Commissioner (Appeals) was set aside, and the appeals were allowed. The Tribunal emphasized that the term "duty of customs" in the Exemption Notification does not include IGST, which is levied under the Integrated Goods and Services Tax Act, 2017.

Additional Observations:
- The Tribunal noted that the appellant is undergoing a corporate insolvency resolution process as directed by the National Company Law Tribunal at Mumbai.
- The Tribunal did not find it necessary to address the remaining contentions regarding the nature of the repair activity as a supply of service or its classification under the Integrated Tax Act.

Order dictated and pronounced on January 13, 2021.

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