NSOP passenger permit holders may conduct charter operations; aircraft use remained within exemption conditions and no confiscation lay.

The exemption condition for an imported aircraft was not breached where the NSOP (Passenger) permit holder used the aircraft for charter operations on commercial terms. The Tribunal applied the Larger Bench view that chartering the whole aircraft remains within non-scheduled (passenger) services, and relied on DGCA clarification and Civil Aviation Requirements supporting such use under the NSOP framework. As the aircraft was available beyond group companies and was not shown to be a private aircraft, the proposed confiscation, duty demand, interest and penalty were unsustainable.

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Issues: Whether the aircraft imported under the exemption notification and covered by NSOP (Passenger) permit was used in violation of Condition No. 104 by being deployed for charter/private use, thereby justifying confiscation, demand of duty, interest and penalty.

Analysis: The exemption under Condition No. 104 permitted use of the aircraft for non-scheduled (passenger) services or non-scheduled (charter) services, as the case may be. The Tribunal followed the Larger Bench ruling that a non-scheduled (passenger) permit holder can conduct charter operations, and that chartering of the whole aircraft does not take the use outside the scope of non-scheduled (passenger) services. The DGCA clarification and the Civil Aviation Requirements also supported that charter operations were permissible within the NSOP framework. The aircraft was found to have been used on commercial terms for carriage of persons for remuneration, was available beyond group companies, and was not shown to be a private aircraft. The contrary High Court decision was held distinguishable because it turned on absence of remuneration.

Conclusion: The condition of the exemption notification was not violated, and the proposed confiscation, duty demand, interest and penalty were not sustainable.

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