AI Drafter 
TaxTMI 
TaxTMI 
2011 (6) TMI 731
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....ted in the following consequences as seen in the order portion of the impugned order reproduced below :- "(i) I confiscate the aircraft Cessna 525A Citation CJ2, registration No. VT-DOV valued at Rs. 24,29,30,978/- under Section 111(d) and (o) of the Customs Act, 1962. However, I give an option to M/s. DAPL to redeem the same after paying Rs. 4 crores as redemption fine under Section 125 of the Customs Act, 1962. (ii) I confirm the demand of customs duty of Rs. 6,01,82,205/- in terms of the undertaking given by M/s. DAPL at the time of importation read with Supreme Court's judgments in the cases of Commissioner of Customs v. Jagdish Cancer and Research reported in 2001 (132) E.L.T. 257 (S.C.) and C.C. v. CT Scan Research Centre (P) Ltd. reported in 2003 (155) E.L.T. 3 (S.C.). (iii) Since duty is not demandable under Section 28 of the Customs Act, 1962, as discussed in paras 33, 34 and 35, I do not demand any interest under Section 28AB of the Act ibid. (iv) I impose a penalty of Rs. 3 crores upon M/s. DAPL under Section 112 of the Customs Act, 1962. (v) I also impose penalty of Rs. 10 lakhs upon Shri Pramod Kumar Fatehpuria, Director of M/s. ....
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....sp; 'non-scheduled (charter) services' means services provided by a 'non-scheduled (charter) air transport operator', for charter or hire of an aircraft to any person, with published tariff, and who is registered with and approved by Directorate General of Civil Aviation for such purposes, and who conforms to the civil aviation requirement under the provision of Rule 133A of the Aircraft Rules, 1937. Provided that such Air charter operator is a dedicated company or partnership firm for the above purposes." 4. The adjudicating authority has examined in Paras 41 and 42 of the impugned order, the question whether the importer complied with the above conditions in the notification. 5. For understanding the dispute, it is necessary to take note of the fact that M/s. Dove Airlines, the appellant, is a private limited company; that their paid up capital was of Rs. 1.73 crores as on 31st March, 2008; that out of this capital, Rs. 86.05 lakhs each was borne by M/s. Usha Martin Ltd. and M/s. Ujjwal Udyog Ltd. In the order-in-original, it is mentioned that there is no doubt that the aircraft was used f....
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....een rightly pointed out by investigation that M/s. DAPL has resorted to a colorable device using dubious method and subterfuge by which the aircraft could be used only by the associate companies and at the same time no customs duty will be required to be paid under this arrangement." "42.5 In the light of above judgment of Supreme Court in the present case the notification demands that there should be a 'published tariff' but instead importer has tried to operate under a lease agreement, which may be a valid contract but it is not part of the published tariff and such an arrangement has dubiously helped them in using the aircraft only within the same group of companies which they are boldly defending as proper. Existence of the words 'published tariff' is not existing in the definition of Charter operation given in Para 3 of CAR, 2000. Therefore, it can be easily said by the importers that such a clause is not existing in Civil Aviation Law and it does not make any difference whether a charter operator has got any published tariff or not or different tariffs exist for different class of clients. These findings are, therefore, another evidence to hold that interpretation giv....
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....; An evasion, an escape; 5. A thing which provides concealment" 8. The appellants made their submissions. 8.1 The substance of their arguments is that they have complied with every bit of condition 104 of the notification subject to which the impugned exemption was granted. They submit that their company was formed in February, 2006 and DGCA granted them licence to operate chartered services. At the stage of issue of the licence, the impugned exemptions from customs duties were not in operation. Therefore, it is argued that there is no basis for the allegation that the company is a colourable device and contrived just for availing the customs exemption. 8.2 The other submissions are that the adjudication order does not deal with the submissions forming part of written submissions given before the adjudicating authority and recorded in Para 21(ii) to (v) of the order-in-original. These are reproduced below :- ''(ii) The aircraft importer has chartered their aircraft to several independent parties in addition to M/s. UKL and M/s. UUL which include Govt. of Jharkhand; (iii) the tarif....
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..... 9.1 He denied that the appellants had a published tariff on their website. He argues that a website can easily be manipulated and the claim of publishing the tariff on the website is not a bona fide claim. He points out that at the time of statement of Shri Pramod Kumar Fatepuria, Director of the appellant-company recorded under Section 108 of the Customs Act on 25-7-2008, there was no claim regarding publication of Tariff on the website. Therefore, this claim cannot be accepted. He also rebutted the claim that tariff was published through a brochure because the date on which the brochure was published is not given at all. 9.2 He points out that as per the statement under Section 108 of the Customs Act, the company had not paid service tax for the services rendered for hiring aircraft to their parent company which clearly shows that such use was for themselves. 9.3 Thereafter, he explained the background for giving the exemption under the said notifications. He quoted from Para 140 of the Budget Speech of the Finance Minister while presenting the Budget of 2007-08 which reads as under :- "140. Import of aircraft, including helicopters, by Governmen....
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....vity to small towns and destinations that are widely used by foreign as well as Indian tourists. It was also stated that flying training institutes will also get adversely affected as imposition of import duty will add to the cost of aircraft imported for training purposes.  3. The matter was discussed with Hon'ble Finance Minister in the post-Budget discussions. It was felt that some relief needed to be given to the aircraft imported by non-scheduled operators till the sector gains some strength. Subsequently, it was decided with the approval of FM to provide full exemption from customs duty and excise duty/CV duty to aircraft falling under heading 8802 and their parts when imported/procured for operating non-scheduled (passenger) services or non-scheduled (charter) services. There was a concern, however, that unless suitable safeguards were built into the exemption, it may be misused by diversion for private use. As such, the following conditions were incorporated in the exemption entry : (i) The importer has been granted approval by the competent authority in the Ministry of Civil Aviation to import/acquire aircraft for operat....
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....rgued that even a single instance of violation of condition applicable for claiming exemption would vitiate the claim for exemption. Since the aircraft was being used by the parent companies for about 50% of the total flight hours, substantial misuse as a private aircraft is proved and therefore they are not eligible for exemption. 9.9 The Counsel for Revenue quoted many case laws to buttress his argument that an exemption notification is to be interpreted strictly and the burden of proving eligibility for exemption is on the person claiming it. Some important case laws quoted in this regard are, - (i) CCE v. Parle Exports - 1988 (38) E.L.T. 741 (ii) Novopan India Ltd. v. CCE - 1994 (73) E.L.T. 769 (S.C.) (iii) Bombay Oil Industries Ltd. v. UOI - 1995 (77) E.L.T. 32 (S.C.) (iv) CCE, Indore v. Parental Drugs (I) Ltd. - 2009 (236) E.L.T. 625 (S.C.) (v) Liberty Oil Mills (P) Ltd. v. CCE, Mumbai - 1995 (75) E.L.T. 13 (S.C.). 9.10 He pointed out that in the impugned case an undertaking was given by the importer to use their aircraft as per the terms of the notif....
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.... that set of flights and therefore dashes are put in the columns relating to other connected flights. He contested that none of the flights was operated free of cost for the parent company. And the argument that the appellant gave the aircraft on charter for a non-revenue chartered flight for the parent company is not correct at all. 11. We have considered the submissions of both the sides and perused records. 12.1 Record reveals that the initial permission for import was granted by DGCA on 1-11-2006 followed by subsequent permission granted on 28-12-2006 (Ref : page 81 of Volume I of paper book) and import of aircraft was made on 11-5-2007 (Ref : page 340 at Para 5.5 of Volume I of paper book). Terms of permit was known to the Customs authorities since the exemption Notification No. 61/2007-Cus. came on 3-5-2007 i.e. 8 days before import of the aircraft in question. Final permit was issued on 8-6-2007 vide No. 4/2007 and that appears at page 238 of Volume II of paper book. Such permit was for operating non-scheduled (passenger/cargo/chartered) air transport service and that was renewed on two occasions up to 7-6-2009 as appearing at page 239 of Volume II of paper b....
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....specifically answered to the query made by the investigating authority stating that there were corporate/tourist chartered/Government and administration use of the aircraft and also miscellaneous use thereof in emergency medical services for issue of permit by DGCA. The appellant did not suppress any fact because the use of the chartered flight was made known to the DGC authority while granting permission. Such an important statement recorded under Section 108 of the Customs Act, 1962 was ignored by the authority below. 12.5 It was also specifically replied to the show cause notice at pages 341 and 342 of Vol. 2 of paper book stating that the chartered agreement was entered into on 26-3-2007 for use of the chartered flight and the tariff was made public in website. In Para 6.1 of the reply to show cause notice, it was averred by the appellant that notification does not debar use of the chartered flight on 'hire' basis since Explanation (c) to Condition No. 104 to the notification permits such hire 'to any person' with public Tariff. It appears that DGCA permit norms were not violated for which exemption benefit to the appellant is undeniable. 12.6 In the course of h....
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....eed to advertise this service as in the case of service provided by a mobile phone company or a company providing DTH service or similar service. It is enough that the publication reaches the limited targeted audience. The fact that many persons availed of the services of the company is evidence that such audience were aware of the services being offered by the appellant-company. During the initial stage of any new business of providing service, such ventures can succeed only if there is an assured market for the service in question to reach break-even levels. Since the promoter companies were requiring the services of chartered aircrafts, they thought of setting up a company for providing such service and bringing in money and commitment by way of assured market. This cannot lead to a conclusion that the parent companies were not different from the appellant-company and the use of the aircraft by the parent company was private use of the aircraft. So we are not in agreement with the argument that the appellant-company was a colourable device contrived just to claim the customs exemption. We are unable to see any subterfuge in the matter either. 14. The contention that the ....
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...., incorporated in the notification cannot be interpreted to give it a meaning beyond the words used in the Notification to convey the policy of the government to the public. This is not a case where strict interpretation of the words, as canvassed by Revenue can lead to the result that the Revenue is praying for. This is a case where an interpretation beyond the words used is canvassed for achieving the "intention of the Government" as is now being explained. 17. There is also the fact that the Directorate General of Civil Aviation was being kept informed through periodic reports about the use to which the aircraft was being put to. The Ministry of Civil Aviation which was part of the decision making process for granting the exemption, did not find the above company to be not satisfying the conditions prescribed by them for import of the aircraft for Non-Scheduled (Charter) Services. Thus the matter is prima facie a case of divergence in perception between the stand of the Ministry of Civil Aviation and that of the Ministry of Finance. In the matter of conditions regarding import, the stand of Ministry of Civil Aviation has to prevail over the stand of the Ministry of Finan....