Charter operations under a non-scheduled passenger permit may satisfy customs exemption conditions for imported aircraft.

A helicopter imported under a non-scheduled (passenger) permit could be used for charter operations without breaching Condition No. 104 of Notification No. 21/2002-Cus, because the Aircraft Rules and civil aviation requirements did not bar a permit holder from undertaking charter flights and later regulatory treatment also recognised chartering within non-scheduled air transport service. The Tribunal distinguished the Revenue's reliance on contrary authority on the basis that the decisive factor there was the absence of remuneration, which was not present here. The use of the helicopter for charter operations therefore did not violate the exemption condition, and the duty demand, confiscation, interest and penalty were held unsustainable.

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Issues: Whether a helicopter imported under a non-scheduled (passenger) permit could be used for charter operations without breaching Condition No. 104 of Notification No. 21/2002-Cus, and whether the consequential demand of duty, confiscation, interest and penalty could be sustained.

Analysis: The operative condition in the exemption notification required the aircraft to be used for non-scheduled (passenger) services or non-scheduled (charter) services, and the relevant definitions under the Aircraft Rules and civil aviation requirements did not impose a bar on a non-scheduled (passenger) permit holder undertaking charter operations. The later regulatory position also treated non-scheduled air transport service as including charter operations. The Tribunal applied the settled position that chartering an aircraft may still fall within non-scheduled (passenger) services, and distinguished the contrary decision relied upon by the Revenue on the basis that the decisive factor there was absence of remuneration, which was not the factual position here.

Conclusion: Use of the helicopter for charter operations did not violate the exemption condition, so the duty demand and the consequential confiscation, interest and penalty were not sustainable.

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