Non-scheduled air transport exemption and extended customs limitation turn on operational use and deliberate suppression requirements.

Non-scheduled air transport operators may use the same aircraft for passenger and charter services, and exemption under the customs notification is not denied merely because flights are operated for group concerns or their members, where the activity remains within the non-scheduled air transport framework. Individual passenger tickets and tariff publication were not treated as mandatory on these facts, and the operator's engagement in air transport activity for remuneration supported eligibility. For customs limitation, the extended period under section 28(4) applies only on deliberate suppression or wilful misstatement intended to evade duty; mere non-disclosure is insufficient. On that reasoning, the duty demand, penalty, confiscation, and extended limitation could not be sustained.

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Issues: (i) Whether the imported aircraft and spare parts satisfied the conditions of the exemption notification for non-scheduled air transport operations, including the requirements relating to charter use, ticketing, tariff publication, and dedication to air transport activity; (ii) Whether the extended period of limitation under section 28(4) of the Customs Act, 1962 could be invoked on the ground of suppression of facts and willful misstatement.

Issue (i): Whether the imported aircraft and spare parts satisfied the conditions of the exemption notification for non-scheduled air transport operations, including the requirements relating to charter use, ticketing, tariff publication, and dedication to air transport activity.

Analysis: The exemption was examined in the context of the civil aviation regime governing non-scheduled operations. The relevant framework permitted a non-scheduled operator to use the same aircraft for passenger and charter operations, including revenue charter flights for group and related entities, and did not require publication of tariff in the manner alleged. The absence of individual passenger tickets was not treated as fatal where the operations were otherwise within the scope of non-scheduled air transport services. The company's objects and the manner of operation showed that it was engaged in air transport activity against remuneration and could not be denied the exemption merely because flights were undertaken for group concerns or their members.

Conclusion: The conditions of the exemption notification were held to have been satisfied, and the denial of exemption, demand of duty, and confiscation could not be sustained on this ground.

Issue (ii): Whether the extended period of limitation under section 28(4) of the Customs Act, 1962 could be invoked on the ground of suppression of facts and willful misstatement.

Analysis: The extended limitation could be applied only where suppression was deliberate and aimed at evading duty. Mere non-disclosure or an adverse inference about the purpose of import was not enough. The impugned order did not record a finding showing a conscious intent to evade duty, and the legal test applied in tax jurisprudence required a positive act of suppression or wilful misstatement. In the absence of such a finding, the extended period could not be sustained.

Conclusion: Invocation of the extended period of limitation was held to be unsustainable.

Final Conclusion: The order confirming duty, penalty, confiscation, and extended limitation was set aside, and the appeal succeeded.

Ratio Decidendi: A non-scheduled operator may use the same aircraft for charter and passenger services consistent with the exemption framework, and the extended period of limitation in customs matters cannot be invoked unless suppression of facts is shown to be deliberate and intended to evade duty.

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