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of <h1>Import of lightweight aircraft exemption tested against permit compliance and commercial use; confiscation demand annulled restoring exemption entitlement</h1> Import of lightweight twine-engine aircraft and applicability of nil rate customs exemption for non-scheduled passenger and charter services is examined; ... Import of twine engine light weight Aircraft (Aircraft BRT) - Benefit of the exemption - nil rate of duty on import of aircraft for non-scheduled (passenger) services as well as non-scheduled (charter) services - whether there has been any violation of Condition No. 104 of the exemption notification? - HELD THAT:- It is clear that the Aircraft BRT has been strictly used in terms of the permit granted by the DGCA and the said Aircraft was used for remuneration purposes only. The confirmation of demand by the Commissioner against the appellant for confiscation of the Aircraft BRT with an option to redeem the same on payment of Rs. 6.5 crores under section 125 of the Customs Act cannot be sustained and is set aside - Appeal allowed. Issues Involved:1. Entitlement to exemption notification benefits.2. Violation of Condition No. 104 of the exemption notification.3. Validity of the Customs Duty demand and penalties imposed.4. Compliance with DGCA regulations and permits.5. Authority of Customs versus DGCA in monitoring compliance.Detailed Analysis:1. Entitlement to Exemption Notification Benefits:The appellant, M/s. Taneja Aerospace and Aviation Ltd., contested the order denying the benefit of the exemption notification no. 61 of 2007, which amended the earlier notification no. 21 of 2002, for the import of Aircraft BRT. The exemption notification allowed a 'nil' rate of duty for aircraft used for non-scheduled (passenger) or non-scheduled (charter) services, subject to Condition No. 104. This condition required the importer to have approval from the Ministry of Civil Aviation and to furnish an undertaking that the aircraft would be used solely for the specified services.2. Violation of Condition No. 104 of the Exemption Notification:The Commissioner held that the appellant violated Condition No. 104, asserting that:- Charter services were not permissible under the NSOP issued by DGCA.- The exemption notification did not reference Aircraft Rules or DGCA regulations.- The appellant did not issue 'tickets' to individuals.- The operation lacked a 'published tariff'.- The aircraft was used within the same group/associated companies under a long-term lease, not publicly available for hire.- The Department's jurisdiction allowed action for the violation of the undertaking given at import, irrespective of DGCA permit compliance.3. Validity of the Customs Duty Demand and Penalties Imposed:The Commissioner confirmed a Customs Duty demand of Rs. 06,22,67,295/- and a penalty of Rs. 03,00,00,000/- under section 112 of the Customs Act, 1962. Additionally, the aircraft was ordered for confiscation under section 111(o) with an option to redeem it for Rs. 6.5 crores under section 125. The appellant argued that these issues were already decided in their favor by the Larger Bench of the Tribunal, which clarified that:- NSOP (passenger) services include charter operations.- There is no requirement for a published tariff.- The Customs Authority cannot question DGCA's permit validity unless DGCA cancels the permit.- The aircraft's use for remuneration purposes complied with the exemption notification.4. Compliance with DGCA Regulations and Permits:The appellant had a valid NSOP (passenger) permit since 1997, renewed periodically, and used the Aircraft BRT for non-scheduled (passenger) services, including contracts with ISMT Ltd. and other customers. The Larger Bench ruled that:- NSOP (passenger) services could include charter operations.- The DGCA's clarification that charter operations are permissible under NSOP (passenger) permits should be respected.- The Customs Authority's role is secondary to DGCA's monitoring of compliance.5. Authority of Customs versus DGCA in Monitoring Compliance:The Tribunal emphasized that the Customs Authority could act based on the undertaking only if DGCA found permit violations. The DGCA alone could monitor and enforce compliance with the conditions of the permit. The Tribunal concluded that the appellant's operations complied with the DGCA permit and the exemption notification.Conclusion:The Tribunal set aside the Commissioner's order, including the Customs Duty demand, penalties, and confiscation directive. The appeal was allowed, confirming that the Aircraft BRT was used in accordance with the DGCA permit and for remuneration purposes only.(Order dictated and pronounced in open Court)
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