TaxTMI 
TaxTMI 
2017 (6) TMI 1015
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....f aircraft engine, in terms of Notification 12/2012-CUS dated 17/03/2012 (Sl. No. 454) and Notification 12/2012-CUS dated 17/03/2012 (Sl. No. 305) for CVD. The imported goods were examined by the Customs officers on 05/12/2012. Entertaining certain doubt regarding the eligibility of the goods for the claimed exemption, the bill of entry was sent for reassessment. The Assessing Officer, on 06/12/2012, raised queries regarding fulfillment of conditions of the said notifications for claiming exemption. After getting replies from the CHA & KFA, the Assessing Officer assessed the bill of entry and denied the exemption claimed by the importer. 2. In a separate development, a detention notice dated 29/10/2012 was issued by Assistant Commissioner, Division III, Service Tax - I, Mumbai stating, inter-alia, that KFA had failed to pay service tax dues amounting to Rs. 63 crores + interest and requesting for detention of any goods belonging to the defaulter which are under the control of officer of customs. In pursuance of the said detention notice, the aircraft engine imported vide bill of entry dated 29/11/2012 was detained by the Customs authority in Delhi, on 14/12/2012. The Service Tax....
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.... The noticees filed their defence replies and the case was adjudicated by the Original Authority, resulting in the impugned order. The impugned order held that the exemptions from payment of custom duty and CVD are not available to the appellant and the assessment of bill of entry denying the exemption is correct and proper. The appellants were held to be the importers, after due amendment in the bill of entry. The Original Authority ordered for recovery of customs duty of Rs. 8,69,49,646/- as already assessed in the bill of entry, alongwith applicable interest. The imported engine was ordered to be confiscated in terms of Section 111 (o) with an option to the appellant to redeem the same on payment of fine of Rs. 3,37,00,000/-. A penalty of Rs. 2,50,00,000/- each was imposed on the appellant and KFA in terms of Section 112 (a). No penalty was imposed on the CHA and Shri Vishok Mansingh, the then Vice President in KFA. 6. Aggrieved by the above said original order the appellant filed this appeal. The main grounds of appeal can be summarized as below :- (i) the imported goods being aircraft engine is a part of aircraft falling under Customs Tariff Heading 8802. The exe....
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.... (ix) The bill of entry was not duly reassessed. No adjudication on admissibility of exemption claimed by the importer was made. Since, the engine was never cleared out of customs bounded area, the question of payment of duty or interest does not arise ; (x) neither the engine is liable for confiscation nor the appellants are liable for any penalty as there is no offence involved in the importation of the said machine. The conduct of the appellant is not in violation of any of the provisions of Customs Act, 1962 ; (xi) various case laws have been relied upon in support of various contentions raised by the appellant (These are dealt with, wherever applicable, later in this order). 7. The learned AR reiterated the findings of the Original Authority. He submitted that the bill of entry was filed by KFA at the time when they are no more functioning as scheduled airline operator. It is clear that the exemption claimed for the engine is not applicable as the same is not for repair and maintenance of aircraft in connection with scheduled airline operation. The appellants who came into the picture later claiming the ownership of the engine have not disclosed the full....
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....the delivery of aircraft MSN 3089, the lease for which was terminated, even prior to the import of said engine. The said aircraft was intended to be registered with Irish Civil Aviation Authorities. Already, the proceedings for de-registration of aircraft with Indian Civil Aviation register has begun. Application to that effect has been filed with DGCA. Accordingly, the Original Authority concluded that the aircraft MSN 3089 could not have been used in operating air transport service or the scheduled air cargo service for the following reasons :- "(a) The said Aircraft was on the AOP (Aircraft Operate Permit) of KFA (Noticee No. 2) but this AOP was suspended by DGCA on 20/10/2012 i.e. prior to importation of the impugned engine i.e. 29/11/2012 (date of filing of bill of entry).Since the very schedule given by DGCA was suspended and the aircraft could not have flown as per schedule. All the Noticees have contended that the AOP was only suspended and not cancelled and the suspension could have been revoked at any time for which Noticee No. 2 was making consistent efforts and requests were made to DGCA for revocation of the same. However, as a matter of fact the susp....
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....and categorical. The aircraft engine should have been for servicing, repair or maintenance of aircraft which is used for operating scheduled air transport service. In the present case the aircraft to which the engine was intended to be fitted is not to be used for operating scheduled air transport service. The lease for aircraft has already been terminated. There is no way the aircraft can be considered as used for operating scheduled air transport service. Further, all the parties to the dispute categorically admitted that the import of engine is only for the purpose of making the aircraft air worthy and to take it back, out of India. This certainly does not meet the requirement of exemption in terms of the said notification. As stated, we have no hesitation to uphold the findings of the Original Authority regarding the ineligibility of the impugned aircraft engine for the said exemption. 12. Similarly, we note the appellants claim for exemption under Notification 12/2012-CE dated 17/03/2012 was also disallowed by the Original Authority. In terms of Sl. No. 448 of Notification 12/2012-CUS condition No.73 has been imposed for availment of exemption. This condition will also be a....
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....ing certain exemption. The same was denied at the time of assessment by the Customs Authorities. Hence, the question of allowing any exemption and with condition and thereafter the importer violating such condition does not arise. In fact, we are not in agreement with the observation made by the Original Authority at para 42.3 of the impugned order. It is recorded that when the Department is in possession of evidence that the condition of exemption notification could not be fulfilled, the Department should take preventive action under the provisions of Customs Act, 1962. We are not convinced or persuaded by such reasoning by the Original Authority. The exemption claimed has been denied to the appellant and, hence, there is no question of violation of conditions of exemption. Claiming an exemption in the bill of entry by itself will not make the goods liable for confiscation if the said exemption was found to be not available to the appellant in terms of assessment done by the Customs authorities. 15. The background of the case has to be appreciated in this regard. KFA first filed bill of entry, claiming the exemption available to the engine to be fitted or used for repair of air....
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....ry. In pursuance of the detention notice issued for recovery of such confirmed arrears, the Customs Authorities, New Delhi acted by detaining the said import cargo. This is a revenue recovery action permissible under law and not a seizure in terms of Customs Act which is for contemplated punitive action against the goods/importer. The detention for revenue recovery is entirely different from seizure under Customs Act. As such, we find no merit in the contention of the appellant on this ground. 18. The last point for determination is the liability of the appellant for penal action. The Original Authority imposed a penalty of Rs. 2,50,00,000/- on the appellant under Section 112 (a) of the Customs Act, 1962 for the various acts of omission and commission discussed in the said order. Section 112 (a) reads as below :- "112. Penalty is imposable on any person, - (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act". 19. A plain reading of the above provision will indicate that penalty under the said section can be imposed ....