Customs aircraft exemption turns on aviation definitions, charter use, and subsisting DGCA approvals under incorporated regulatory rules

Customs exemption for imported aircraft depended on aviation-law definitions and subsisting civil aviation approvals. The Larger Bench held that dismissal of the Revenue's civil appeal did not render the reference infructuous, charter operations by a non-scheduled passenger operator did not breach condition no. 104, and non-publication of tariff or absence of air tickets did not by itself violate the notification. The aircraft could not be treated as private aircraft, Customs could not test the validity of unrevoked DGCA permission on its own, CAR 2010 was explanatory and codificatory, and King Rotors was wrongly treated as per incuriam.

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Issues: (i) Whether the reference to the Larger Bench had become infructuous on dismissal of the Revenue's civil appeal against an earlier Tribunal decision; (ii) whether the appellants violated condition no. 104 of the exemption notification by using aircraft imported for non-scheduled passenger service in a manner said to be inconsistent with that condition, including by charter operations; (iii) whether an aircraft imported for non-scheduled passenger service can be used for non-scheduled charter service and whether non-publication of tariff violates the notification; (iv) whether such aircraft can be treated as a private aircraft; (v) whether Customs can examine the validity of the DGCA permission in the absence of cancellation by DGCA; (vi) whether issuance of air tickets is mandatory for non-scheduled passenger service; (vii) whether CAR 2010 is retrospective or merely explanatory and codificatory; and (viii) whether King Rotors was right in holding Sameer Gehlot to be per incuriam.

Issue (i): Whether the reference to the Larger Bench had become infructuous on dismissal of the Revenue's civil appeal against an earlier Tribunal decision.

Analysis: Dismissal of the civil appeal by the Supreme Court did not amount to a declaration of law on the merits of the Tribunal's reasoning. Only the operative part of the order merged, and the earlier Tribunal reasoning did not stand affirmed so as to render the reference redundant.

Conclusion: The reference had not become infructuous.

Issue (ii): Whether the appellants violated condition no. 104 of the exemption notification by using aircraft imported for non-scheduled passenger service in a manner said to be inconsistent with that condition, including by charter operations.

Analysis: Condition no. 104 was read with the Aircraft Rules and the civil aviation requirements. Non-scheduled passenger service meant air transport service other than scheduled passenger service. The relevant definitions did not prohibit chartering of the aircraft by a non-scheduled passenger operator, and the notification did not impose a tariff-publication requirement for such service.

Conclusion: No violation of condition no. 104 was established.

Issue (iii): Whether an aircraft imported for non-scheduled passenger service can be used for non-scheduled charter service and whether non-publication of tariff violates the notification.

Analysis: The notification did not make non-scheduled passenger and non-scheduled charter services mutually exclusive. The regulatory text permitted charter operations within non-scheduled passenger operations, and absence of a published tariff did not convert the use into a prohibited use.

Conclusion: Such aircraft can be used for charter service, and non-publication of tariff was not a violation.

Issue (iv): Whether such aircraft can be treated as a private aircraft.

Analysis: An aircraft used for carriage of persons for remuneration falls within public transport concepts under the Aircraft Rules. Mere absence of published tariff or use by group-company personnel did not justify classification as a private aircraft.

Conclusion: The aircraft could not be classified as a private aircraft.

Issue (v): Whether Customs can examine the validity of the DGCA permission in the absence of cancellation by DGCA.

Analysis: Where exemption and undertakings are linked to civil aviation approvals and their continuing compliance is regulated by the competent civil aviation authority, Customs cannot independently override the DGCA's subsisting permission unless the competent aviation authority first finds a breach.

Conclusion: Customs could not examine the validity of the DGCA permission in the absence of cancellation by DGCA.

Issue (vi): Whether issuance of air tickets is mandatory for non-scheduled passenger service.

Analysis: The relevant definitions and civil aviation requirements did not make ticket issuance an essential element of non-scheduled passenger service. The absence of tickets did not, by itself, negate the service or amount to violation of the exemption condition.

Conclusion: Issuance of air tickets was not mandatory.

Issue (vii): Whether CAR 2010 is retrospective or merely explanatory and codificatory.

Analysis: CAR 2010 amalgamated the earlier passenger and charter requirements and reflected the existing position already clarified by the DGCA. It was treated as a uniform, explanatory code rather than a new restrictive regime.

Conclusion: CAR 2010 was explanatory and codificatory in nature.

Issue (viii): Whether King Rotors was right in holding Sameer Gehlot to be per incuriam.

Analysis: A decision is per incuriam only when rendered in ignorance of a binding statute or authority. Mere disagreement on reasoning or an alleged omission to consider an aspect does not justify declaring a coordinate bench decision per incuriam.

Conclusion: King Rotors was not correct in holding Sameer Gehlot to be per incuriam.

Final Conclusion: The reference was answered in favour of the appellants on all framed questions, with the earlier view in King Rotors disapproved and the matter directed to proceed before the regular division bench.

Ratio Decidendi: Where exemption under customs law is conditioned on civil aviation approval and compliance with aircraft-operating definitions incorporated from aviation law, the substantive character of the service must be determined from those incorporated definitions and regulatory clarifications, and Customs cannot deny the exemption on a view contrary to the subsisting determination of the competent aviation authority in the absence of a proven statutory breach.

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