2023 (5) TMI 49 - AT - Customs

Tribunal Grants Exemption for Charter Aircraft, Rebukes Customs Authorities' Jurisdiction Over DGCA Permissions.

Vrl Logistics Ltd, Anand Sankeshwar Md, Vijay Sankeshwar Md, C Karunakara Shetty Director, KN Umesh, Karnavati Aviation Private Ltd, Anurag Mathur Manager, Mundra Port And Special Economic Zone Ltd, Gautam S Adani, K Venugopal, Rajesh S Adani, Brigadier Satwinder Singh Bhatti, Deccan Charters Limited, Lt Col Arun Rao Sm, Balkrishna Shabaraya and Eldo T Lyre Versus C.C. -Ahmedabad

Vrl Logistics Ltd, Anand Sankeshwar Md, Vijay Sankeshwar Md, C Karunakara Shetty Director, KN Umesh, Karnavati Aviation Private Ltd, Anurag Mathur ... Issues Involved:1. Admissibility of exemption under Notification No. 21/2002-Cus.2. Violation of conditions of the exemption notification.3. Jurisdiction of Customs authorities to decide on the violation of exemption notification conditions.4. Use of aircraft for private purposes and its implications on exemption eligibility.5. Requirement of published tariff for non-scheduled (charter) services.6. Use of aircraft by group companies and its classification as public transport.Summary of Judgment:1. Admissibility of Exemption under Notification No. 21/2002-Cus:The Larger Bench of the Tribunal addressed the admissibility of the exemption under Notification No. 21/2002-Cus. They concluded that the reference to the Larger Bench was not rendered infructuous and that the appellants did not violate condition (b) of the notification. It was held that aircrafts imported for non-scheduled (passenger) services could be used for non-scheduled (charter) services and cannot be classified as private aircraft. The customs authority cannot question the validity of the DGCA's permission unless it is canceled by the DGCA. It was also determined that it is not mandatory for the importer to issue air tickets for providing non-scheduled (passenger) services.2. Violation of Conditions of the Exemption Notification:The Tribunal found that the conditions set out in the exemption notification were not violated by the appellants. The notification does not prohibit a non-scheduled (passenger) service permit holder from using the aircraft for charter operations. The Tribunal emphasized that both non-scheduled (passenger) services and non-scheduled (charter) services are eligible for exemption, and there is no restriction in the notification or the Aircraft Rules against such use.3. Jurisdiction of Customs Authorities:The Tribunal held that the jurisdictional authorities under the Civil Aviation Ministry alone can monitor the compliance of the conditions imposed by the DGCA. The Customs Authorities can take action based on the undertaking submitted by the importer only when the Civil Aviation Ministry finds that the conditions have been violated. The Tribunal referenced several Supreme Court decisions to support this position, including Titan Medical Systems Pvt. Ltd. vs. CCE.4. Use of Aircraft for Private Purposes:The Tribunal rejected the contention that the aircrafts were used for private purposes, noting that the aircrafts were used for remuneration, which qualifies as public transport under Rule 3(45) of the Aircraft Rules, 1937. Even flights conducted without remuneration would still be considered public transport if conducted by an air transport undertaking.5. Requirement of Published Tariff:The Tribunal found that the requirement of having a published tariff applies only to non-scheduled (charter) services and not to non-scheduled (passenger) services. The absence of a published tariff does not disqualify the appellants from the exemption, as the definition of non-scheduled (passenger) service does not include such a requirement.6. Use of Aircraft by Group Companies:The Tribunal concluded that the use of aircraft by personnel of group companies does not constitute private use. Personnel of group companies are considered members of the public, and the aircraft's use for remuneration qualifies as public transport.Conclusion:The Tribunal set aside the impugned orders and allowed the appeals, granting the appellants the benefit of the exemption under Notification No. 21/2002-Cus. The Tribunal found no contravention of the conditions of the exemption notification and confirmed that the appellants were legally eligible for the exemption.