Exemption interpretation: re imported repaired aircraft parts exempt from IGST under existing customs notification; later amendment not retrospective.

The article addresses whether re imported repaired aircraft parts attract integrated tax and whether a later notification is clarificatory and retrospective. It concludes the phrase "duty of customs" in the exemption notification must be read as duties leviable under the Customs Act and tariff schedules and does not include IGST or compensation cess; accordingly re imported repaired parts qualify for exemption from IGST under the earlier notification and IGST assessments were set aside. It further concludes the subsequent notification expanded the tax net and is not a retrospective clarificatory amendment, so it cannot be applied to earlier periods.

---

---

Issues: (i) Whether re-imported repaired aircraft parts are eligible for exemption from integrated goods and services tax (IGST) under Notification No.45/2017-Cus. dated 30.06.2017; (ii) Whether Notification No.36/2021-Cus. dated 19.07.2021 is clarificatory and retrospective so as to apply to periods prior to its date.

Issue (i): Eligibility of exemption under Notification No.45/2017-Cus. dated 30.06.2017 for IGST on re-imported repaired aircraft parts.

Analysis: The Tribunal examined the statutory scheme defining 'duty' under Section 2(15) of the Customs Act, the charging and collection provisions for integrated tax under Section 5(1) and Section 2(12) of the Integrated Goods and Services Tax Act, 2017, and the role of Section 3(7) and Section 3(9) of the Customs Tariff Act, 1975 as procedural provisions for collection. The Tribunal analysed the language of the exemption notification and column (3) of the Table for Serial No.2, compared prior exemption practice and notifications, and considered precedents distinguishing duties leviable under the Customs Act from taxes levied under the IGST Act. The Tribunal concluded that the expression "duty of customs" in the exemption notification is to be read as duties leviable under the Customs Act and the Tariff schedules and does not, by omission, incorporate IGST or compensation cess which are levied under the IGST Act and collected under Tariff Act provisions.

Conclusion: The appellants are entitled to exemption from payment of integrated tax (IGST) under Notification No.45/2017-Cus. dated 30.06.2017 on re-import of repaired parts/aircrafts; the impugned assessment orders upholding IGST on re-imported repaired parts are set aside.

Issue (ii): Whether Notification No.36/2021-Cus. dated 19.07.2021 is clarificatory and retrospective so as to cover earlier periods.

Analysis: The Tribunal considered the effect and language of Notification No.36/2021 and the accompanying Board circular, evaluated whether the amendment merely clarified existing law or introduced an expansive substantive change, and reviewed subsequent tribunal and high court decisions addressing the retrospective character and constitutional validity of the amendment. The Tribunal followed authority concluding that the amendment expanded the tax net and was not merely clarificatory or retrospective in operation.

Conclusion: Notification No.36/2021-Cus. dated 19.07.2021 cannot be treated as clarificatory or retrospective to cover periods prior to its effective date; the amendment does not support imposing IGST for the earlier period covered by Notification No.45/2017.

Final Conclusion: The appeals filed by the assessee are allowed and the impugned assessment and appellate orders denying exemption from IGST on re-imported repaired aircraft parts under Notification No.45/2017-Cus. dated 30.06.2017 are set aside; the Revenue appeals are rejected.

Ratio Decidendi: For the purpose of exemption notifications under the Customs Act, the phrase "duty of customs" denotes duties leviable under the Customs Act as defined by Section 2(15) of the Customs Act, 1962, and does not include integrated tax levied under the Integrated Goods and Services Tax Act, 2017; an amendment that substantively expands the tax net cannot be treated as a retrospective clarificatory change unless clearly expressed.

---