2022 (8) TMI 720 - AT - Customs

Appellants not in violation of exemption conditions, aircraft for charter, customs lacks jurisdiction, air ticket issuance not mandatory.

The Larger Bench concluded that the appellants did not violate the conditions of the exemption notification, the aircraft can be used for charter ... Conditional exemption notification and pre-import conditions versus post-import monitoring - non-scheduled (passenger) service - non-scheduled (charter) service - interpretation of Civil Aviation Requirements (CAR) and DGCA clarifications - doctrine of merger and effect of dismissal of appeal by Supreme Court - jurisdiction of customs to verify compliance of conditions certified by another statutory authority - requirement of published tariff and issuance of air tickets - per incuriam and stare decisis among coordinate benchesDoctrine of merger and effect of dismissal of appeal by Supreme Court - Whether the reference to the Larger Bench is rendered infructuous by the dismissal of the Department's Civil Appeal against the Tribunal's decision in Reliance Transport. - HELD THAT: - The Tribunal examined the scope and limits of the doctrine of merger as explained by the Supreme Court. The Supreme Court's dismissal of the Civil Appeal as 'devoid of any merit' did not address or adopt the reasons and therefore did not constitute a declaration of law under Article 141. Following authorities which limit merger to the operative part or where the superior court has spoken on and adopted the subordinate court's reasoning, the Larger Bench held that the dismissal did not extinguish the need for reference and the matter remained open for examination by a larger bench.The reference to the Larger Bench has not become infructuous by reason of the dismissal of the Civil Appeal.Non-scheduled (passenger) service - air transport service - Whether the appellants have used the aircraft only for non-scheduled (passenger) services as defined in the exemption notification. - HELD THAT: - The Tribunal analysed the definitions in the Aircraft Rules: air transport service (transport for any remuneration) and scheduled air transport service (same two or more places, published timetable or recognisable systematic series, each flight open to members of the public). If any of the scheduled-service conditions is absent, the service qualifies as non-scheduled (passenger). The appellants transported persons for remuneration and held DGCA non-scheduled operator permits renewed without objection; consequently both limbs of the Explanation to Condition No.104 were satisfied and the use qualified as non-scheduled (passenger) service.The appellants have not violated Condition (b) of the Explanation and have provided non-scheduled (passenger) services.Non-scheduled (passenger) service - non-scheduled (charter) service - Civil Aviation Requirements (CAR) and DGCA clarifications - Whether an aircraft imported for non-scheduled (passenger) services can be used for non-scheduled (charter) services. - HELD THAT: - The Tribunal contrasted the broader definition of non-scheduled (passenger) services with the narrower charter category. CAR 1999 (and CAR 2010) and DGCA clarifications permit NSOP holders to conduct charter operations; CAR 2010 expressly includes charter operations within non-scheduled services and permits carriage either per seat or by whole-aircraft charter. The exemption notification does not bar chartering by NSOP permit holders. A charter-specific registration is directed at small-aircraft relaxations and does not restrict NSOP holders from charters.An aircraft imported for non-scheduled (passenger) services can lawfully be used for non-scheduled (charter) services.Private aircraft - public transport and remuneration - Whether the aircraft imported by the appellants can be classified as a 'private aircraft'. - HELD THAT: - Applying definitions in the Aircraft Rules, public transport includes carriage of persons for remuneration; an air transport undertaking whose business includes carriage for hire or reward is public. The absence of a published tariff or predominant use by group-company personnel does not convert remunerated carriage into private use. The Tribunal held that use for remuneration (even pursuant to contracts or agreements) makes the aircraft public transport aircraft, not private aircraft.The aircraft cannot be classified as private aircraft on the facts and definitions considered.Jurisdiction of customs to verify compliance of conditions certified by another statutory authority - undertaking and enforcement - Whether the Customs Authority can examine the validity of DGCA permission in the absence of cancellation of that permit by DGCA. - HELD THAT: - The exemption was granted based on Ministry of Civil Aviation recommendations and conditions specified by DGCA/CAR. The Tribunal held that DGCA and the civil aviation authorities are the competent monitor of operational compliance; customs may act on the customs undertaking only when the civil aviation authority finds a breach (or where the undertaking's remedies are invoked). Precedents emphasise that where a fiscal benefit is granted on the basis of another statutory authority's certificate, that authority is the primary monitor; customs' verification jurisdiction is limited to facts not requiring interpretation of another enactment.Customs cannot independently examine the validity of DGCA permission absent DGCA cancellation or a finding by the civil aviation authority of breach.Requirement of published tariff and issuance of air tickets - civil aviation requirements - Whether it is mandatory for the importer to issue air tickets or to publish tariff to comply with the Conditions for non-scheduled (passenger) service. - HELD THAT: - The Tribunal found no requirement in the Aircraft Rules or the Explanation to Condition No.104 that a tariff must be published for non-scheduled (passenger) services; publication obligations in rule 135 apply to scheduled services. CAR 1999 and policy guidelines do not mandate ticket issuance for non-scheduled operations; CAR provisions and DGCA practice show tickets are not essential for charter or many non-scheduled services. Non-issuance of tickets, therefore, does not of itself negate compliance.It is not mandatory for the importer to issue air tickets or publish tariff to meet the non-scheduled (passenger) service condition.Civil Aviation Requirements 2010 (CAR 2010) as codification - retrospective applicability of regulatory guidance - Whether CAR 2010 merely amalgamates CAR 1999 and CAR 2000 and whether it is explanatory/codificatory of earlier DGCA clarifications. - HELD THAT: - The Tribunal reviewed CAR 2010 and found it unifies CAR 1999 and CAR 2000, expressly includes charter operations within non-scheduled services, and records prior DGCA clarifications. CAR 2010 restates and codifies earlier positions and serves an explanatory role regarding the interplay between passenger and charter non-scheduled operations.CAR 2010 amalgamates and codifies CAR 1999 and CAR 2000 and is explanatory of earlier DGCA clarifications.Per incuriam and stare decisis among coordinate benches - Whether the decision in Sameer Gehlot was rendered per incuriam and therefore not binding as held by King Rotors. - HELD THAT: - The Tribunal revisited the per incuriam doctrine and concluded that a bench of coordinate jurisdiction should not lightly label an earlier coordinate decision per incuriam unless it is shown the earlier court acted in ignorance of a binding statute or authority. King Rotors' characterization-that the earlier bench failed to appreciate post-importation aspects of the undertaking-did not demonstrate ignorance of binding law or statute. Hence King Rotors was incorrect in declaring Sameer Gehlot per incuriam.The division bench in King Rotors was incorrect to hold that Sameer Gehlot was rendered per incuriam.Final Conclusion: The Larger Bench answered the framed questions by holding that the reference remains live despite the Supreme Court dismissal of the Civil Appeal; the appellants' imports satisfied the non-scheduled (passenger) service condition; NSOP permit-holders may lawfully perform charter operations; the aircrafts in question are not private aircrafts under the Aircraft Rules; customs cannot re-examine DGCA permissions absent DGCA action; issuance of tickets or publication of tariff is not mandatory for NSOP compliance; CAR 2010 codifies earlier CARs and DGCA clarifications; and King Rotors was wrong to deem Sameer Gehlot per incuriam. The appeals were to be listed back to regular benches for further hearing. Issues Involved:1. Whether the reference to the Larger Bench has become infructuous due to the doctrine of merger.2. Whether the appellants violated Condition No. 104 of the exemption notification.3. Whether an aircraft imported for non-scheduled (passenger) services can be used for non-scheduled (charter) services.4. Classification of the imported aircraft as 'private aircraft.'5. Jurisdiction of Customs Authority to examine the validity of DGCA's permission.6. Requirement of issuing air-tickets for non-scheduled (passenger) services.7. Retrospective application of CAR 2010.8. Validity of the decision in King Rotors in holding the decision in Sameer Gehlot as per incuriam.Detailed Analysis:1. Doctrine of Merger:The reference to the Larger Bench has not become infructuous due to the doctrine of merger. The Supreme Court's dismissal of the Civil Appeal against the Tribunal's decision in Reliance Transport does not constitute a declaration of law under Article 141 of the Constitution. The Supreme Court did not address the reasons or the law laid down by the Tribunal, thus the reference remains valid.2. Violation of Condition No. 104:The appellants have not violated Condition No. 104 of the exemption notification. The use of the aircraft for non-scheduled (passenger) services satisfies the requirements of clause (b) of the Explanation to Condition No. 104. The appellants have been granted non-scheduled operator permits, which have been renewed without objection from the DGCA.3. Use of Aircraft for Charter Services:An aircraft imported for non-scheduled (passenger) services can be used for non-scheduled (charter) services. There is no restriction in the exemption notification, Aircraft Rules, or Civil Aviation Requirements against providing air transport service by chartering the aircraft. The DGCA has clarified that a non-scheduled (passenger) permit holder can conduct charter operations.4. Classification as Private Aircraft:The imported aircraft cannot be classified as 'private aircraft.' The definition of 'private aircraft' under rule 3(43) of the Aircraft Rules does not stipulate that non-publication of tariff or non-issuance of tickets would render the aircraft private. The aircraft used for carriage of persons for remuneration remains a public transport aircraft.5. Jurisdiction of Customs Authority:The customs authority cannot examine the validity of the permission granted by the DGCA in the absence of cancellation of the permit by the DGCA. The jurisdictional authorities under the Civil Aviation Ministry alone can monitor compliance with the conditions imposed by the DGCA and the Civil Aviation Ministry.6. Requirement of Issuing Air-Tickets:It is not mandatory for the importer to issue air tickets for providing non-scheduled (passenger) services. The definitions of 'air transport service' and 'non-scheduled (passenger) service' do not stipulate such a requirement. The Policy Guidelines for Starting Scheduled/Non-Scheduled Air Transport Services issued by the Ministry of Civil Aviation state that non-scheduled operators are not permitted to publish time schedules and issue tickets to passengers.7. Retrospective Application of CAR 2010:CAR 2010 merely amalgamates CAR 1999 and CAR 2000 to provide a uniform code for the operation of non-scheduled air transport services. It has restated and codified the position stated earlier by the DGCA through various clarifications and is explanatory in nature.8. Validity of King Rotors Decision:The division bench in King Rotors was not correct in holding that the decision of the Tribunal in Sameer Gehlot was rendered per incuriam. The principle of per incuriam applies to decisions given in ignorance of statutory provisions or binding authorities, which was not the case in Sameer Gehlot.Conclusion:The Larger Bench concluded that the appellants did not violate the conditions of the exemption notification, the aircraft can be used for charter services, it cannot be classified as a private aircraft, and the customs authority does not have the jurisdiction to examine the validity of DGCA's permission. The requirement to issue air tickets is not mandatory, and CAR 2010 is explanatory in nature. The decision in King Rotors was incorrect in holding that Sameer Gehlot was rendered per incuriam. The appeals are to be listed before the regular division bench for hearing.