TaxTMI 
TaxTMI 
2022 (8) TMI 720
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.... of 2010 filed by VRL Logistics Ltd., the appellant and the connected Customs Appeals bearing No's. 75 of 2010, 76 of 2010, 77 of 2010, 78 of 2010, 79 of 2010, 80 of 2010, 81 of 2010, 82 of 2010, 83 of 2010, 114 of 2010, 115 of 2010, 116 of 2010, 117 of 2010, 118 of 2010, 119 of 2010 and 120 of 2010, noticed that two contradictory views had been expressed by division benches of the Tribunal in Commissioner of Customs, New Delhi vs. Sameer Gehlot, 2011 (263) E.L.T. 129 (Tri.-Del.) and King Rotors & Air Charter P. Ltd. vs. C.C. (ACC & Import), Mumbai, 2011 (269) E.L.T. 343 (Tri.- Mumbai), for while in Sameer Gehlot the benefit of the exemption notification No. 61 of 2017 dated 03.05.2007, the exemption notification that amended the earlier exemption notification No. 21 of 2022 dated 01.03.2002 was held to be available to the importer of an aircraft that had been granted permit by the Director General of Civil Aviation, DGCA for operating non-scheduled (passenger) services, the benefit of the aforesaid exemption notification was denied in King Rotors. The division bench, accordingly referred the matter to a larger bench of the Tribunal to express its view as to which of the two views ....
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....es; and (ii) the importer furnishes an undertaking to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, at the time of importation that:- a. the said aircraft shall be used only for providing non-scheduled (passenger) services or non-scheduled (charter) services, as the case may be; and b. he shall pay on demand, in the event of his failure to use the imported aircraft for the specified purpose, an amount equal to the duty payable on the said aircraft but for the exemption under this notification. Explanation. - for the purposes of this entry,- (a) 'operator' means a person, organization, or enterprise engaged in or offering to engage in aircraft operation; (b) 'non-scheduled (passenger) services' means air transport services other than scheduled (passenger) air transport services as defined in rule 3 of the Aircraft Rules 1937. (c) '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 con....
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.... issued. The adjudicating authority dropped the proceedings holding that the use of the aircraft by the operator was in terms of the permit that was granted by DGCA and the operator had not used the helicopter as a private aircraft. It is this order of the adjudicating authority that was challenged by the department before the Tribunal. The division bench of the Tribunal observed that it is for the civil aviation authorities to ensure that the aircraft is operated in terms of the permit issued by DGCA and the customs authorities cannot decide whether an operator has violated the permit granted by DGCA. The division bench found that since the civil aviation authority had not detected any violation by the operator and the permit was being regularly renewed, the customs authorities could not take any action on their own. The bench noticed that both the requirements of Condition No. 104 were pre-import conditions which had been fulfilled by the operator and the exemption notification does not contain separate post import conditions. The relevant paragraphs of the decision of the Tribunal are reproduced below: "10. The impugned exemption under consideration before us has only pre-impo....
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....way of chartering the whole aircraft. 12. The exemption notification obviously keeps private aircrafts out of its scope by implication but there is no Condition or restriction built into the exemption notification that the exempted aircraft cannot be used on payment by the group companies to which the importing company belongs. We are of the view that the adjudicating Commissioner after analyzing various legal provisions has taken a reasonable view in this regard and the same cannot be faulted especially in the absence of any restriction in the notification not to permit use of the aircraft by the importing company or its holding company on payment. If the Government finds such use not to be in line with the intended purpose of the exemption, it can always amend the notification specifically disallowing exemption for a particular kind of use such as use by Group Companies. However, as the exemption notification is worded, it would be discriminatory to object to use of the aircraft by the group companies on payment, whereas others are allowed such use. 13. As regards the requirement of published tariff for carrying out charter operations, the respondents have stated that firstly....
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....the bench while taking the view that the requirement of undertaking to be furnished by the importer was only a pre-importation condition. According to the division bench, this was a mistake in the decision and, therefore, the decision was considered to be per-incuriam. The relevant paragraphs of the decision are reproduced: "24.2 There is no room for doubt as to the scope of the permit issued to the assessee by DGCA. The permit is for operating "non-scheduled air transport services (passenger)" with the helicopter mentioned in the list appended thereto (Appendix-1), for the period specified in Appendix-2, subject to observance of the Conditions specified in Appendix-3. "Non-Scheduled Air Transport Services (Passenger)" prominently figures in the caption of each of these appendices to the permit. Appendix-1 (list of aircraft) clearly provides:- "The following aircraft can be operated under this permit for Non-scheduled Air Transport Services (Passenger)". The permit per se is "subject to the compliance with the provisions of the Aircraft Act, the Aircraft Rules and any Orders, Directions or Requirements issued under the said Act and Rules...." One of the Requirements issued under ....
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....assengers, cargo, crew, helicopter and third party would be incurred by the assessee and reimbursed to them by Heligo. Heligo would also pay monthly remuneration to the pilots of the assessee. They would also bear the costs of maintenance of the helicopter and also the costs of fuel and comsumables required for its operation. On a perusal of the charter-hire agreement between the assessee and Heligo, we find that Heligo chartered/hired the helicopter for their exclusive use and they incurred the entire costs of operation and maintenance of the helicopter and even the cost of insurance to cover all liabilities. One significant term of the contract was that the "helicopter shall be utilized solely for the purpose of providing the services pursuant to the agreement and the contractor shall not utilize the helicopter for any other purpose without the prior consent of the company." Accordingly, the helicopter could not be used by the assessee (contractor) for any other purpose without the prior consent of Heligo (company). It is evident that the agreement created an exclusive right in Heligo for use of the helicopter during its tenure. That Heligo exercised this right for the benefit of....
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....of inclusiveness of "non- scheduled (passenger) services" and "non-scheduled (charter) services" is anathema to anyone who would prudently like to go by the text of clause (ii)(a) of Condition No. 104 as per the established rule of strict interpretation of Exemption Notification." (emphasis supplied) 9. The division bench of the Tribunal in Dove Airlines Pvt. Ltd. vs. Commissioner of Customs (Prev.), New Delhi, 2014 (313) E.L.T. 292 (Tri.- Del.) decided on 03.06.2011, also examined the aforesaid exemption notification. The bench, after noticing that the permit that was issued to the operator was for operating non-scheduled (passengers) services, observed as follows:- "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....
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.... did not print passenger ticket nor the flights were opened to public is erroneous. We hold that offering the service to public at large includes entering into agreement for providing regular service to a few members of the public on a regular basis over a period of time. The expression person includes the company under various tax laws. Further, company also forms part of the general public. The members of the public (company included) due to requirement of its business enters into the agreement with the service providers for providing of service over an extended period of time, may be weeks, months or years, it cannot be said that the service was not provided to public. Further, printing of ticket is not an essential element and such a requirement is not there, where the services are provided on the basis of published tariff or agreement wherein the hourly charges and flying charges along with other charges are mentioned for providing service for extended period of time. Accordingly, we hold that the services provided by the importer are in the nature of non-scheduled passenger service. Further relying on the ruling of the Apex Court in the case of Titan Medical (supra), we hold ....
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....he Member (Anil Choudhary, Member Judicial) have distinguished the ruling in the case of King Rotors & Air Charter (supra) observing that in the case of King Rotors & Air Charter the facts were that they had entered into an agreement with one Heligo Charter Pvt. Limited and under such agreement it parted with the possession of the helicopter/aircraft to Heligo Charter Pvt. Limited. The said Heligo Charter was taking care of maintenance, repair and operation, payment of salaries to the crew members, etc. etc. Further, on enquiry by Revenue the said King Rotors & Air Charter could not submit any documentary evidence of end use of the helicopter. Further, in the course of enquiry from the copies of passenger manifest, document evidencing payment of lease amount to the lessor-supplier of the helicopter, and copy of agreement with Heligo Charter, it was found that actually Heligo Charter was engaged in providing helicopter services to other company as NSOP, on a charter basis. The said Heligo Charter was maintaining log book, including approval from the DGCA, payment to the crew, paying for fuel bill, etc. Further, King Rotors could not furnish any letter from DGCA as to the compliance ....
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....hat issue of ticket is not an essential Condition, not required in case of charter operation. Admittedly, appellant have operated their aircraft mainly for charter operation, which is permissible under the NSOP." (emphasis supplied) 12. The aforesaid decision of the Tribunal was assailed by the department before the Supreme Court. The Civil Appeal (Commissioner vs. Reliance Transport & Travels Ltd.), 2020 (372) E.L.T. A105 (S.C.) was dismissed by the Supreme Court on 08.01.2020 and the order is reproduced below: "Delay condoned. Having heard Learned Solicitor General appearing on behalf of the appellant and gone through the records of the case, we are of the considered opinion that the appeals, being devoid of any merit, are liable to be dismissed and, are dismissed accordingly." 13. A division bench of the Tribunal in Commr. of Cus. (Import), ACC, Mumbai vs. Airmid Aviation Pvt. Ltd. 2019 (370)ELT1789 (Tri. - Mumbai), that was decided on 11.09.2019, considered the entitlement of the aircraft operator for continuance of exemption from duties of customs that had been allowed on import of aircraft against the undertaking given by the operator for complying with the condition ....
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....different from the case of King Rotors & Air Charter (Supra) and that of Sameer Gehlot (Supra) because the main allegation qua the violation of undertaking was based on the fact that the undertaking was given for using the aircraft only for NSOP (passenger service) whereas the assessee therein were found to use the same for NSOC (charter services). Both the cases are pre 2010 when there had been an amendment in this notification. With the introduction of new CAR issued by DGCA on 1.6.2010, it has been clarified that non scheduled air transport services can be the passenger as well as charter services simultaneously. xxxxxxxxxx 19. xxxxxxxx. The issue in the earlier cases is as to whether undertaking for using the aircraft for non-scheduled operator services includes the use thereof for non-scheduled charter services. The amendment of CAR 2010 clarifies that both are inclusive. The issue in the present case primarily is whether the undertaking for using the imported aircraft of non-scheduled passenger / charter services includes the use thereof only for private purposes or not. xxxxxxxxx 21. xxxxxxxxxx. It is definitely the Customs Department's duty to ensure continuous com....
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....t cannot be ruled out especially when there is no evidence produced on record by the appellant. (emphasis supplied) 15. It needs to be noted that the Department had filed Civil Appeals before the Supreme Court against the decision rendered by the Tribunal on 12.11.2010 in Sameer Gehlot, the decision of the Tribunal rendered on 11.09.2019 in Airmid Aviation and the decision rendered by the Tribunal on 03.06.2011 in Dove Airlines. All these Civil Appeals were dismissed by the Supreme Court on 26.11.2021, but questions of law were left open to be adjudicated in an appropriate case. The order passed by the Supreme Court is reproduced below: "These appeals filed under Section 130-E of the Customs Act, 1962 are directed against the (1) judgment and final order No. C/170-174/10 dated 12.11.2010 passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi in Appeal Nos. C/493 to 497/2009 and C/CO/212/2009; (2) final impugned No. A/87028/2019 dated 11.9.2019 passed by the Customs, Excise & Service Tax Appellate Tribunal, Mumbai, West Zonal Bench in Custom Appeal No.411 of 2011; and, (3) judgment and final order No. C/237-238/2011-CU(DB) dated 03.06.2011 passed by the Custom....
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....t the undertaking was given for using the aircraft only for NSOP (passenger service) whereas the assessee therein were found to use the same for NSOC (charter services). Both the cases are pre 2010 when there had been an amendment in this notification. With the introduction of new CAR issued by DGCA on 1.6.2010, it has been clarified that non scheduled air transport services can be the passenger as well as charter services simultaneously." 20. This larger bench of the Tribunal by order dated 09.05.2022, framed questions of law and the order is reproduced below: "During the course of hearing of this appeal it was pointed out by both the learned counsel appearing for the appellants as also the learned special counsel for the Department that specific questions of law have not been framed by the Division Bench while referring the matter to the President for constituting a Larger Bench. Accordingly, as agreed to the learned counsel for all the parties, the following questions of law are being framed: (i) Whether the reference made to the Larger Bench of the Tribunal has become infructuous by applying the principles of doctrine of merger as was held in Pernod Ricard India (P) Ltd. v....
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....ein did not provide non-scheduled operation passenger service but a third party had provided the non-scheduled operation passenger service and whether the Tribunal in King Rotors was correct in holding the decision of the Tribunal in C.C. New Delhi vs. Sameer Gehlot, 2011 (263) ELT 129 (T), is per in-curiam. 2. List the appeal for hearing on June 08, 2022. The parties may submit additional submissions in two weeks." 21. It would be useful, before adverting to the submissions advanced by the learned counsel appearing for the appellants and the intervenors, as also the learned special counsel appearing for the Department, to relate certain essential facts and the relevant legal provisions. 22. Aircrafts and helicopters are classified under Customs Tariff Heading 88 of the First Schedule to the Customs Tariff Act, 1975. The tariff rate of duty till 28.02.2007 on the import of aircraft was 3% / 12.5%. Subsequently, pursuant to the proposal made in the Finance Bill 2007, exemption notification no. 20/2009 dated 01.03.2007 was issued inserting Entry 346B and Condition No. 101 in the earlier exemption notification dated 01.03.2002, whereby, the effective rate of duty on import of airc....
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....nsport services other than scheduled (passenger) air transport services as defined in Rule 3 of the Aircraft Rules, 1937." 26. The aforesaid definition refers to 'air transport services' and 'scheduled (passenger) air transport services' as defined in rule 3 of the Aircraft Rules, 1937, the Aircraft Rules. 27. "Air transport services" is defined in rule 3(9) of the Aircraft Rules as under: "Air transport service" means a service for the transport by air of persons, mails or any other thing, animate or inanimate, for any kind of remuneration whatsoever, whether such service consists of a single flight or series of flights." 28. "Scheduled air transport service" is defined in rule 3(49) of the Aircraft Rules as under: "Scheduled air transport service" means an air transport service undertaken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognizably systematic series, each flight being open to use by members of the public." 29. The term 'scheduled (passenger) air transport services' has to be interpreted according to this definition, and applied to passenger travel in contrad....
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.... (iii) There is no restriction or prohibition against providing air transport service by way of charter of aircraft while providing non-scheduled (passenger) services as defined in clause (b) of the Explanation contained in Condition No. 104 of the exemption notification; (iv) The contention of the respondent that carriage, for remuneration, of personnel of companies which are group companies of the appellant, does not constitute carriage of members of 'public', apart from being incorrect, is irrelevant; (v) The decision of the Tribunal in King Rotors proceeds on a completely erroneous basis that if flight operations are not open to the public, the aircraft cannot be said to have been used for 'non-scheduled (passenger) service'; (vi) The decision of the Tribunal in East India Hotels proceeds on an incorrect premise that published tariff to the public is a mandatory requirement of 'non-scheduled (passenger) service' and if the tariff is not published, the use of the aircraft would be for 'private' use; (vii) There is no requirement of issuance of tickets for non-scheduled (passenger) service; (viii) The action of the customs authorities is without jurisdiction in view o....
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....he facts of the case and the provisions of the Aircraft Rules; (vii) The language of the undertaking prescribed in the exemption notification clearly indicates that it is a continuing future obligation and in the event of the failure to use the aircraft for the declared purpose, an obligation is placed on the importer to pay the duty. Thus, the appellants are not justified in asserting that it contains only pre-import conditions; (viii) The contention of the appellants that when the DGCA under the Aircraft Rules has not found the use of the aircraft by the appellants to be not in inconformity with the permits granted by the DGCA for non-scheduled (passenger) services and such permits have been renewed from time to time, the customs authorities cannot hold that the use of the aircraft was for a purpose other than that covered by the permit is not correct. In support of this contention reliance has been placed on the decisions of the larger bench of the Tribunal in Bombay Hospital Trust vs. Commissioner of Customs, Sahar, Mumbai 2005 (189) E.L.T. 374 (Tri.-LB), and the decisions of the Tribunal Patel Engineering Ltd. vs. Commissioner of Customs (Import), Mumbai, 2013 (295) E.L.T.....
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....aforesaid decision of the Supreme Court would indicate that the Civil Appeal was dismissed as being devoid of any merit. The Supreme Court did not specifically deal with the various reasons given by the Tribunal for holding that the operator had not violated the conditions stipulated in the exemption notification. 40. To support the contention, learned counsel for the appellants placed reliance upon the decision of the Supreme Court in Kunhayammed and Pernod Ricard India. 41. In Kunhayammed a review petition was filed before the High Court after the Special Leave Petition against the order of the High Court had been dismissed by the Supreme Court. An objection was raised regarding the maintainability of the review petition contending that the order of the High Court stood merged in the order of the Supreme Court and, therefore, ceased to exist in the eye of law and that the order of the Supreme Court would amount to affirmation of the order passed by the High Court. It was, therefore, contended that the High Court could not entertain a prayer for review of its order, much less disturb the order in exercise of the review jurisdiction. The High Court overruled the preliminary objec....
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....pheld the validity of Act No. 13 of 1960 but against this decision, appeals by special leave were filed before the Supreme Court. The Supreme Court dismissed the appeals by an order dated September 10, 1986 and it is reproduced below :- "The Constitutional validity of Act 13 of 1960 amending the Madras City Tenants' Protection Act, 1921 is under challenge in these appeals. The State of Tamil Nadu was not made a party before the Trial Court. However, the State was impleaded as a supplemental respondent in appeal as per orders of the High Court. When the appellants lost the appeal, they sought leave to appeals to this Court. The State of Tamil Nadu was not made a party in the said leave petition. In the S.L.P. before this Court also the State of Tamil Nadu was not made a party. A challenge to the constitutional validity of the Act cannot be considered or determined, in the absence of the concerned State. The learned counsel now prays for time to implead the State of Tamil Nadu. This appeal is of the year 1973. In our view it is neither necessary nor proper to allow this prayer at this distance of time. No other point survives in these appeals. Therefore, we dismiss these appeal....
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....tement of law contained in the decision of the High Court. The Supreme Court, therefore, held that upon the dismissal of the appeals on September 10, 1986, the operative part of the order of the division bench stood merged in the decision of the Supreme Court, but the remaining part of the order of the division bench of the High Court cannot be said to have merged in the order of the Supreme Court nor did the Supreme Court make any declaration of law within the meaning of article 141 of the Constitution, either expressly or by the necessary implication. The Supreme Court further made it clear that since neither the merits of the order of the High Court nor the reasons recorded therein nor the law laid down therein had been gone into in the earlier order, the statement of law contained in the division bench judgment of the High Court in Pillai would continue to remain the decision of the High Court, binding as a precedent on subsequent Benches of coordinate or lesser strength but open to reconsideration by any Bench of the same High Court with a coram of judges more than two. The Supreme Court, it needs to be noted, also observed that the Full Bench of the High Court was not hearing....
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.... even in the order passed in revision, it does so only for certain purposes, namely, for the purposes of computing the period of limitation for execution of the decree". A three-Judge Bench in State of Madras v. Madurai Mills Co. Ltd., AIR (1967) SC 681 held, "the doctrine of merger is not a doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by the inferior authority and the other by a superior authority, passed in an appeal or revision, there is a fusion or merger of two order irrespective of the subject-matter of the appellate or revisional order and the scope of the appeal or revision contemplated by the particular statute. The application of the doctrine depends on the nature of the appellate or revisional order in each case and the scope of the statutory provisions conferring the appellate or revisional jurisdiction. (emphasis supplied). Recently a three-Judge Bench of this Court had an occasion to deal with doctrine of merger in Kunhayammed and Ors. v. State of Kerala and Anr., [2000] 6 SCC 359 and this Court reiterated that the doctrine of merger is not of universal or unlimited application; the nature of jurisdiction ex....
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....ceeds on consideration of the issues, cannot be deemed to be a law declared, to have a binding effect as is contemplated by Article 141. His Lordship quoted the observation from B. Shama Rao v. The Union Territory of Pondicherry, [1967] 2 SCR 650 "it is trite to say that a decision is binding not because of its conclusions but in regard to its ratio and the principles, laid down therein". His Lordship tendered an advice of wisdom -"restraint in dissenting or overruling is for sake of stability and uniformity but rigidity beyond reasonable limits is inimical to the growth of law." M/s. Rup Diamonds and Ors. v. Union of India and Ors., AIR (1989) SC 674 is an authority for the proposition that apart altogether from the merits of the grounds for rejection, the mere rejection by a superior forum, resulting in refusal of exercise of its jurisdiction which was invoked, could not by itself be construed as the imprimatur of the superior forum on the correctness of the decisions sought to be appealed against. In Supreme Court Employees Welfare Association v. Union of India and Ors. AIR (1990) SC 334 this Court observed that a summary dismissal, without laying down any law, is not a declar....
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....by this Court on the ground of non-joinder of necessary party, though the operative part of the order of the Division Bench stood merged in the decision of this Court, the remaining part of the order of Division Bench of the High Court cannot be said to have merged in the order of this Court dated 10.9.1986 nor did the order of this Court make any declaration of law within the meaning of Article 141 of the Constitution either expressly or by necessary implication. The statement of law as contained in the Division Bench decision of the High Court in M. Varadaraja Pillai's case would therefore continue to remain the decision of the High Court, binding as a precedent on subsequent benches of coordinate or lesser strength but open to reconsideration by any bench of the same High Court with a coram of judges more than two. 18. The Full Bench was not dealing with a prayer for review of the earlier decision of the Division Bench in M. Varadaraja Pillai's case and for setting it aside. Had it been so, a different question would have arisen, namely, whether another Division Bench or a Full Bench had jurisdiction or competence to review an earlier Division Bench decision of that pa....
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.... In State of Kerala and another vs. Kondottyparambanmoosa and Others (2008) 8 SCC 65, the Supreme Court also examined the doctrine of merger. The decision of the Taluk Land Board was assailed in a revision before the High Court. The revision was dismissed as the delay condonation application was rejected. The Board subsequently reopened the case, but the respondent filed a revision before the High Court to challenge the order of the Board reopening the case. The main ground for challenge was that the earlier order of the Board had merged with the revisional order of the High Court. The High Court allowed the revision holding that the earlier order of the Board had merged in the order of the High Court. This reasoning of the High Court was not accepted by the Supreme Court and it was held that the order of the Board had not merged in the order of the High Court since the revision was dismissed on the ground of rejection of the application filed for condonation of delay and not on merits. The observation are as follows :- "20. It is clear that the Board vide its order dated 13-6-1985 held that the respondents were not liable to surrender any land. However, it cannot be said that th....
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....lay cannot be allowed to take away the jurisdiction of the Board, whose order forms a subject-matter of petition and Section 85(9) of the Act confers powers on the Board to reopen the case if such grounds for reopening the case are shown to exist." (emphasis supplied) 47. It is seen that Kunhayammed was considered by the Supreme Court in the aforesaid judgment in Nadar. 48. Learned counsel for the appellants also relied upon the decision of the Supreme Court in Perond Ricard. This decision followed the earlier decision of the Supreme Court in Kunhayammed and the observations are as follows: "In our opinion, once a statutory right of appeal is invoked, dismissal of appeal by the Supreme Court, whether by a speaking order or non speaking order, the doctrine of merger does apply, unlike in the case of dismissal of special leave to appeal under Article 136 of the Constitution by a non-speaking order." 49. It needs to be noted that while deciding the Civil Appeal filed by the Department against the decision of the Tribunal Reliance Transport, the Supreme Court had not expressed any view on the reasons given by the Tribunal as it merely observed that the appeal, being devoid of any....
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....ties. These issues, on which objections have been raised by learned special counsel for the department, have been considered by other division benches of the Tribunal which have referred to Sameer Gehlot and King Rotors. It is for this reason that these issues were framed by the Larger Bench. It is, therefore, not possible to accept this objection raised by the learned special counsel for the department. Use of Aircraft for only non-scheduled (passenger) services 53. It needs to be examined, as has been contended on behalf of the appellants, whether the aircraft was used by the appellants only for providing non-scheduled (passenger) services as defined in clause (b) of the Explanation to Condition No. 104 of the exemption notification. 54. Non-scheduled (passenger) services has been defined in the aforesaid clause (b) to mean air transport services other than scheduled (passenger) air transport services as defined in rule 3 of the Aircraft Rules. Thus, what has to be seen is whether the use of the aircraft satisfies the following two requirements of clause (b): (i) the use should be for air transport service; and (ii) such air transport service should be other than scheduled....
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....enewed from time to time without any objection from the DGCA. 59. It has now to be seen whether the appellants have used the aircraft for providing non-scheduled (charter) services as defined in clause (c) of Condition No. 104 of the Explanation to the exemption notification. 60. Non-scheduled (charter) services have been defined in clause (c) to mean services provided by a non-scheduled (charter) air transport operator, for charter or hire of an aircraft to any person, with a published tariff, and who is registered with and approved by DGCA for such purposes and who confirms to the Civil Aviation Requirements. An aircraft operator can be said to provide non-scheduled (charter) service only if the service satisfies the requirements of clause (c). The appellants are not registered and approved with DGCA as non-scheduled (charter) air transport operator and in some cases there is no published tariff. The appellants, therefore, cannot be said to have provided non-scheduled (charter) services as defined in clause (c). 61. The appellants have, therefore, provided non-scheduled (passenger) services, as defined in clause (b) of the Explanation to the exemption notification. Non-schedu....
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.... in clause (b) of the Explanation to Condition No. 104 of the exemption notification, makes the following position quite clear: (a) The expression "air transport service" covers service for the transport by air of person for any kind of remuneration whatsoever. The service may be individually for each seat or by chartering the entire aircraft and the remuneration may be of any kind whatsoever, such as seat-wise or daily or weekly or monthly or annual basis. There is no restriction on the mode and manner of fixing or charging the remuneration either in the exemption notification or in the Aircraft Rules; (b) "Scheduled (passenger) air transport service" only means that air transport service which has the essential features mentioned in the definition in rule 3 (49) of Aircraft Rules, namely, it must be undertaken between the same two or more places, operated according to a time table or with flights so regular or frequent that they constitute a recognizable systematic series, each flight being open to use by the 'members of the public'; and (c) If a service is covered by "air transport service" defined in rule 3(9) and is other than "scheduled (passenger) air transport service....
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....atter, the contention of the learned special counsel for the department that a charter permit is required for carrying out charter operations cannot be accepted. In fact, the prohibition is on a non-scheduled (charter) holder to carry out (passenger) operations. 72. This issue can be examined from another aspect. A comparison of the definition of non-scheduled (passenger) services with non-scheduled (charter) services would show that while non-scheduled (passenger) services are of much wider category, non-scheduled (charter) services are of limited nature applicable only to small aircrafts and restricted to operators registered under the non-scheduled (charter) category. What needs to be noticed is that the exemption is available to both non-scheduled (passenger) services and non-scheduled (charter) service and neither the exemption notification nor the Aircraft Rules or Civil Aviation Requirements excludes charter operations from the ambit of non-scheduled (passenger) services. 73. The provisions of CAR 1999 and CAR 2000 do indicate that CAR 2000 was issued for charter operation only so as to provide some relaxation to smaller aircrafts. Pre-dominantly, the two contain identical....
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....) services and charter services are mutually exclusive. 75. Emphasis has been placed by the learned special counsel for the department on the expressions "only" and "as the case may be" used in clause (ii)(a) of Condition No. 104 of the exemption notification. The use of the term "only" signifies that the use of the aircraft is restricted to non-scheduled (passenger) services or non-scheduled (charter) services and the use for any other purpose would not be permissible for the claiming exemption. As a non-scheduled (charter) permit holder cannot carry out "passenger operations", the expression "as the case may be" has been used and it would not mean that a non-scheduled (passenger) permit holder cannot carry out charter operations. 76. In this connection, it would be pertinent to refer to the clarifications issued by DGCA for non-scheduled (passenger) services operator. The letter dated 08.08.2008 issued by DGCA states that a non-scheduled (passenger) permit holder can conduct charter operations and such operations would be within the purview of the non-scheduled (passenger) services permit holders. The relevant portion of the clarification is as under: "The non-scheduled opera....
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.... sent by DGCA to the Commissioner of Customs, New Delhi. 79. DGCA has, therefore, unequivocally clarified that a non-scheduled (passenger) permit holder can conduct charter operations. It is the DGCA which is empowered to issue Civil Aviation Requirements under rule 133A of the Aircraft Rules. Thus, charter operations can be carried out by a permit holder of non-scheduled (passenger) services. 80. Learned counsel for the appellants have also submitted that in fact DGCA has amalgamated CAR 1999 and CAR 2000 into CAR 2010. This CAR 2010 has restated and codified the earlier position stated by DGCA through clarifications and is explanatory in nature. It is, therefore, the submission that for this reason also a non-scheduled (passenger) service operator can carry out charter operations. 81. A perusal of paragraph 1 dealing with "introduction" does indicate that the CAR 1999 and CAR 2000 have been amalgamated and a uniform code for operation non-scheduled air transport services has been laid down. The relevant paragraphs of CAR 2010 are reproduced below: "2.4 The carriage of passengers by a non-scheduled operator's permit holder may be performed on per seat basis or by way of chart....
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....tion Regulations and absorbs the clarification issued by DGCA from time to time and is explanatory in nature. The aid of CAR 2010 can, therefore, be taken to understand the CAR 1999 and CAR 2010. Whether, non publication of tariff is violative of Explanation (c) of Condition No. 104 83. Learned special counsel for the department placed reliance on the definition of 'non-scheduled (charter) services' contained in Explanation (c) of Condition No. 104 to the exemption notification to contend that the condition of the exemption notification has not been fulfilled by the appellant. 84. Learned counsel appearing for the appellants submitted that it is only while defining 'non-scheduled (charter) services' that reference has been made to published tariff and, therefore, it cannot be termed as a condition to the exemption notification. The submission is that while defining 'non-scheduled (passenger) services' in clause (b) of the Explanation, there is no requirement of having a published tariff. 85. The submission advanced by learned counsel for the appellants deserves to be accepted. Merely because the appellants can also conduct charter operations would not mean that the appellant wo....
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....ft would be available. The appellants hire the aircrafts to customers pursuant to tenders/negotiations. The purpose of having a published tariff is, therefore, substantially complied with. 88. Learned special counsel for the appearing for the department submitted that the aircraft is being provided for private use and is not available to use by the public. 89. Learned counsel for the appellants submitted that the aircraft is available not only to group companies but also to other customers. 90. In the first instance, personnel of companies which are group companies of the appellant are also members of public. The aircraft is, therefore, available for used by the public. Even otherwise, this cannot be a reason to hold that the air transport service provided by the appellants would fall outside the scope of non-scheduled (passenger) service. Whether the customs authorities have the jurisdiction to decide violation of the exemption notification 91. A perusal of the exemption notification clearly shows that it merely requires the conditions set out by the DGCA and the conditions imposed by the Civil Aviation Ministry be complied with for the operations of the non-scheduled operato....
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....of C. Ex. & Customs 2007 (210) E.L.T. 648 (S.C.), Titan Medical Systems Pvt. Ltd. vs. Collector of Customs, New Delhi 2003 (151) E.L.T. 254 (S.C.) and Vadilal Chemicals Ltd. vs. State of Andhra Pradesh 2005 (192) E.L.T. 33 (S.C.). 94. Learned special counsel appearing for the department has however placed reliance upon the decision of a larger bench of the Tribunal in Bombay Hospital Trust vs. Commissioner of Customs, Sahar, Mumbai 2005 (188) E.L.T. 374 (Tri.-LB), and also division bench decision of the Tribunal in Patel Engineering Ltd. vs. Commissioner of Customs (Import), Mumbai 2013 (295) E.L.T. 243 (Tri.- Mumbai). Learned special counsel for the department also placed reliance upon the decision of the Supreme Court in Sheshank Sea Foods Pvt. Ltd. vs. Union of India 1996 (88) E.L.T. 626 (S.C.). 95. In Titan Medical Systems, by an exemption notification, certain goods which were imported into India against an advanced licence for the purpose of manufacture were exempted from duty of customs. A show cause notice was, however, issued by the customs to show cause as to why penalty should not be imposed for not having complied with the conditions of the exemption notification. The....
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....ions of another enactment. Nor was it a case of difference of opinion between the interpretation of any such provision on the part of customs on the one hand and the Director General of Health Services on the other. This decision, therefore, does not help the respondents. It also needs to be noted that the decision of the larger bench of the Tribunal was delivered by a learned Member who had also delivered the decision of the Tribunal in Sameer Gehlot. The learned Member was, therefore, aware of the difference between the nature of conditions involved in the two cases. 97. In Patel Engineering Ltd., the undertaking was that the machinery shall be used exclusively for construction of roads and shall not be sold or disposed of in any manner for a period of five years from the date of import. The allegation was that the importer had diverted the machine to other entities before completion of the said period of five years. The verification of compliance of the undertaking was one purely of fact, namely whether the machine had been disposed of before expiry of five years. It was held that the customs had jurisdiction to verify the same. Such verification did not involve any interpretat....
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.... the Policy Guidelines for starting scheduled/non-scheduled air transport services issued by Ministry of Civil Aviation provide that non-scheduled operator is not permitted to publish time schedule and issue tickets to passengers. There is, therefore, no obligation on the part of the appellants to issue tickets to passengers. 103. In any event, non-issuance of passenger ticket has not been considered by the competent authority under Ministry of Civil Aviation, namely Director General of Civil Aviation to mean that the appellants had not used the aircraft for non-schedule passenger service in terms of the permit issued by the said authority. 104. Under the Carriage by Air Act, 1972, the issuing of tickets is governed by the Second Schedule. Further, as per section 8 of the said Act, the Schedule will only be applicable to domestic carriage, once a notification is published applying the said provision to domestic carriage. In this regard, a notification dated 30.03.1973 was published in the Gazette, wherein Part I and II of Second Schedule dealing with the passenger tickets were not notified to apply to domestic carriage. Therefore, there is no requirement for issuing the tickets u....
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....that the duty of customs should be paid, on demand, by the importer in the event of his failure to use the aircraft for the avowed purpose. Both are things to happen post-importation. This crucial aspect did not receive the attention of the Hon'ble Bench when it took the view that the condition was only a pre-importation condition. xxxxxxxxxxxxx In Sameer Gehlot's case (AASPL's case), the post-importation nature of the subjects of undertaking was not appreciated by the Bench while taking the view that the requirement of undertaking to be made by the importer was a pre- importation condition. The mistake vitiated the decision. This is the reason why, with great respect, we consider the decision in AASPL's case as having been rendered per incuriam." (emphasis supplied) 107. It is, therefore, clear that the division bench examined Condition No. 104 of the exemption notification and proceeded to take a view which was at variance with the view taken by the earlier division bench in Sameer Gehlot. The division bench held that post importation nature of the subjects of undertaking 'was not appreciated by the bench while taking of the view that the requirement of undertaking to be mad....
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....n is given in ignorance of the terms of a statue or rule having statutory force. A decision should not be treated as given per incuriam, however, simply because of a deficiency of parties, or because the court had not the benefit of the best argument, and as a general rule, the only cases in which decisions should be held to be given per incuriam are those given in ignorance of some consistent statue or binding authority. Even if a decision of the Court Appeal must follow its previous decision and leave the House of Lords of rectify the mistake." 112. In Babu Parasu Kaikadi (Dead) by Lrs. vs. Babu (Dead) Through Lrs. (2004) 1 Supreme Court Cases 681, the Supreme Court observed: "14. Having given our anxious thought, we are of the opinion that for the reasons stated hereinbefore, the decision of this Court in Dhondiram Tatoba Kadam having not noticed the earlier binding precedent of a coordinate Bench and having not considered the mandatory provisions as contained in Section 15 and 29 of the Act had been rendered per incuriam. It, therefore, does not constitute a binding precedent." 113. In Yeshbai vs. Ganpat Irappa Jangam AIR 1975 Bom 20: (1974) 76 BOMLR 278, a Division Bench o....
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....rect to a Bench of a coordinate jurisdiction considering the question later, on the ground that a possible aspect of the matter was not considered or not raised before the Court or more aspects should have been gone into by the Court deciding the matter earlier but it would not be a reason to say that the decision was rendered per incuriam and liable to be ignored. The earlier judgment may seem to be not correct yet it will have the binding effect on the later bench of coordinate jurisdiction. Easy course of saying that earlier decision was rendered per incuriam is not permissible and the matter will have to be resolved only in two ways either to follow the earlier decision or refer the matter to a larger Bench to examine the issue, in case it is felt that earlier decision is not correct on merits. Though hardly necessary, we may however, refer to a few decisions on the above proposition." (emphasis supplied) 117. This position was reiterated by the Supreme Court in Central Board of Dawoodi Bohra Community vs. State of Maharashtra 2010 (254) ELT 196 (SC), Amrit Lakshmi Machine Works vs. CC (Import) 2014 (303) ELT 161 (Bom.), State of UP & Anr. vs. Synthetic and Chemicals Ltd. & A....
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....vices can be the passenger as well as charter services simultaneously. ******* 19. ******** Hence we are of the opinion that irrespective of pendency of issue related to this notification before the Hon'ble Apex Court, the facts of these other cases are very much different from the facts of the present case, the earlier cases being prior the amendment of year 2010 and the present one being post amendment in CAR. The issue in the earlier cases is as to whether undertaking for using the aircraft for non-scheduled operator services includes the use thereof for non-scheduled charter services. The amendment of CAR 2010 clarifies that both are inclusive. The issue in the present case primarily is whether the undertaking for using the imported aircraft of non-scheduled passenger / charter services includes the use thereof only for private purposes or not." (emphasis supplied) 122. A perusal of the order passed in East India Hotels would indicate that the aircraft had been purchased by East India Hotels on 21.05.2007 and the show cause notice alleging violation of the conditions of the exemption notification was issued on 27.06.2008. This show cause notice was, however, adjudicated u....