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Issues: (i) Whether import of helicopters under Condition 104 of Notification No. 61/2007-Customs was vitiated by alleged violation of the requirement of use only for non-scheduled passenger or charter services, including the objections based on charter operations, group-company use, and absence of tickets or published tariff; (ii) Whether the demand and confiscation in respect of Helicopters AZU and AZV could be sustained on the new ground that the non-scheduled operator's permit had been transferred to VAPL, when that allegation was not part of the show-cause notice.
Issue (i): Whether import of helicopters under Condition 104 of Notification No. 61/2007-Customs was vitiated by alleged violation of the requirement of use only for non-scheduled passenger or charter services, including the objections based on charter operations, group-company use, and absence of tickets or published tariff.
Analysis: Condition 104 required prior approval from the competent civil aviation authority and an undertaking that the imported aircraft would be used only for non-scheduled passenger or non-scheduled charter services. The relevant aviation framework treated non-scheduled passenger services broadly, and charter operations were not excluded merely because the service was rendered by way of full-aircraft hire, long-term contracts, or use for customers including group entities. The customs authorities could not deny the exemption on the basis of absence of a published tariff or non-issuance of tickets, and the civil aviation clarification confirmed that lease or charter operations, including operation and maintenance, fell within the privileges of the non-scheduled operators permit.
Conclusion: The objections to exemption on the grounds of charter use, group-company carriage, absence of tickets, and absence of published tariff were rejected, and the benefit of the notification could not be denied on those grounds.
Issue (ii): Whether the demand and confiscation in respect of Helicopters AZU and AZV could be sustained on the new ground that the non-scheduled operator's permit had been transferred to VAPL, when that allegation was not part of the show-cause notice.
Analysis: The demand against AZU and AZV was ultimately confirmed not on the original allegation that the helicopters were used contrary to the permit conditions, but on a different and new allegation that the permit had been transferred to VAPL. That ground was absent from the show-cause notice. A demand cannot be upheld on a case never put to notice, and the customs authority could not travel beyond the notice to sustain the demand or the confiscation order.
Conclusion: The demand and confiscation in respect of Helicopters AZU and AZV were unsustainable and were set aside.
Final Conclusion: The assessee succeeded in the appeal, the departmental challenge failed, and the relief granted by the Tribunal resulted in acceptance of the exemption position for the helicopters concerned.
Ratio Decidendi: In customs exemption disputes, the exemption cannot be denied on grounds not borne out by the show-cause notice, and a valid non-scheduled operators permit may encompass charter and lease operations where the civil aviation authority so clarifies.
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