2021 (1) TMI 663 - AT - Customs

Appellant entitled to IGST exemption on re-imported aircraft parts under Exemption Notification

Spice Jet Limited Versus Commissioner of Customs (General), New Delhi

The Tribunal held that the appellant is entitled to exemption from IGST on re-imported aircraft parts under Exemption Notification No. 45/2017. The orders ... Exemption form IGST - aircrafts and parts thereof re-imported into India after repairs - serial no. 2 in the General Exemption Notification No. 45/2017 dated June 30, 2017, as amended by Corrigendum Notification dated July 22, 2017 - HELD THAT:- Though integrated tax is levied under section 5 of the Integrated Tax Act, but it is collected in accordance with the provisions of section 3 of the Tariff Act on the value as determined under the Tariff Act and at the point when duties of customs are levied under section 12 of the Customs Act. Thus, integrated tax is levied under section 5(1) of the Integrated Tax Act and only the procedure for collection has been provided under section 3 of the Tariff Act - It also needs to be noted that the term “integrated tax” has not been defined either under the Customs Act or the Customs Tariff Act or under the Exemption Notification. As integrated tax is not levied under section 12 of the Customs Act, it cannot be called “duty of customs”. The charging section for integrated tax, in terms of which it is levied, is section 5 of the Integrated Tax Act and not section 3(7) of the Tariff Act. Section 3 (7) of the Tariff Act only provides for the manner of collection of the said integrated tax to be done by the Customs Authorities in case of import of goods It would also be relevant to refer to the entries at serial no. 1 of the Exemption Notification. Serial no. 1 specifically refers to what types of duties or taxes are leviable under different situations. There is a specific reference to integrated tax in column (3) in connection with serial no. 1 (d) and to integrated tax and compensation cess in connection with serial no. 1(e). There is, therefore, enough intrinsic evidence in the Exemption Notification itself to show that integrated tax cannot be understood as duty of customs in the Exemption Notification - It would be seen that the aforesaid Notification refers to the duties of customs leviable thereon which is specified in the said first schedule, the additional duty leviable thereon under section 3 of the Tariff Act and special duty of customs leviable under section 68(1) of the Finance Act, whereas the instant Exemption Notification refers to duty of customs leviable thereon which is specified in the said First Schedule and the integrated tax, compensation cess leviable thereon respectively under sub-sections (7) and (9) of section 3 of the Tariff Act. Thus, the additional duty leviable thereon under Section 3 of the Tariff Act and special duty of customs leviable under section 68(1) of the Finance Act have been replaced by the integrated tax under section 3(7) and compensation cess under section 3(9) of the Tariff Act. It cannot, therefore, be contended that “duty of customs” referred to in the condition against serial no. 2 of the Exemption Notification would include integrated tax. The inevitable conclusion that follows from the aforesaid discussion is that the absence of mention of integrated tax and compensation cess in column (3) under serial no. 2 of the Exemption Notification would mean that only the basic customs duty on the fair cost of repair charges, freight and insurance charges are payable and integrated tax and compensation cess are wholly exempted. It is not possible to sustain the orders impugned in 51 appeals upholding the assessments made on the Bills of Entry. These orders passed by the Commissioner (Appeals) are, accordingly, set aside and it is held that the Appellant is entitled to exemption from payment of integrated tax under the Exemption Notification on re-import of repaired parts/ aircrafts into India - Appeal allowed. Issues Involved:1. Availability of Integrated Goods and Service Tax (IGST) exemption for re-imported aircraft parts under the Exemption Notification No. 45/2017.2. Interpretation of 'duty of customs' in the context of the Exemption Notification.3. Applicability of integrated tax as part of 'duty of customs.'4. Jurisdiction and applicability of various sections of the Customs Tariff Act and the Integrated Goods and Services Tax Act.Detailed Analysis:1. Availability of IGST Exemption for Re-imported Aircraft Parts:The primary issue in these appeals is whether the appellant is entitled to an exemption from IGST on re-imported aircraft parts under the Exemption Notification No. 45/2017. The appellant claimed that the exemption should apply, arguing that the term 'duty of customs' in the notification does not include IGST. However, the Customs Authorities disagreed, leading to the assessment of IGST on the re-imported parts.2. Interpretation of 'Duty of Customs':The appellant argued that 'duty of customs' as mentioned in the Exemption Notification should not include IGST, relying on the definition in Section 2(15) of the Customs Act, which defines 'duty' as duty of customs leviable under the Customs Act. They contended that since IGST is levied under the Integrated Tax Act, it should not be considered as 'duty of customs.' The Tribunal agreed with this interpretation, noting that the term 'duty of customs' in the Exemption Notification should be understood as per its definition in the Customs Act, which does not include IGST.3. Applicability of Integrated Tax as Part of 'Duty of Customs':The Tribunal examined whether IGST should be considered part of the 'duty of customs.' It was noted that Section 3(7) of the Customs Tariff Act provides for the levy of IGST, but this does not mean IGST becomes a 'duty of customs.' The Tribunal emphasized that IGST is levied under the Integrated Tax Act and only collected by customs authorities, thus it should not be conflated with 'duty of customs.'4. Jurisdiction and Applicability of Various Sections:The Tribunal referred to several sections of the Customs Tariff Act and the Integrated Goods and Services Tax Act to clarify the legislative intent and scope of these provisions. They concluded that the Exemption Notification's reference to 'duty of customs' does not implicitly include IGST, as the latter is a separate tax levied under a different statute. The Tribunal also referenced multiple judgments to support this interpretation, including the Supreme Court's decision in Prestige Engineering and the Bombay High Court's ruling in Ceat Tyres, which distinguished between different types of duties and taxes.Conclusion:The Tribunal concluded that the appellant is entitled to exemption from IGST on re-imported aircraft parts under the Exemption Notification No. 45/2017. The orders passed by the Commissioner (Appeals) upholding the assessments of IGST on the re-imported parts were set aside. The Tribunal held that the term 'duty of customs' in the Exemption Notification does not include IGST, and therefore, the appellant should not be liable for IGST on re-imported parts.Final Orders:- The 10 appeals filed beyond the prescribed period were dismissed.- The remaining 51 appeals were allowed, granting the appellant exemption from IGST on re-imported aircraft parts.[Order dictated and pronounced on January 12, 2021]