TaxTMI 
TaxTMI 
2023 (1) TMI 1056
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....st; ordering recovery of import duty amounting to Rs. 29,02,019/- forgone on imports of spare parts for maintenance of the said aircrafts with interest; imposing penalty of Rs. 1,96,95,848/- on the appellant for acts of omission and commission rendering the said Aircrafts and spare parts liable to confiscation under section 114 of the Customs Act; and ordering appropriation of bank guarantee of 3 crores executed by the appellant during the course of investigation and for adjustment towards the import duties forgone, redemption fines and personal penalty. 2. Customs Appeal No. 55388 of 2013 has been filed by Uday Punj, Director of the appellant to assail the said order dated 28.09.2012 passed by the Commissioner in so far as it imposes a penalty of Rs. 1,96,95,848/- for acts of omission and commission which rendered the said Aircraft and the spare parts liable to confiscation under section 114 of the Customs Act. 3. Miscellaneous Application No. 50437 of 2022 was filed by the appellant in Customs Appeal No. 55387 of 2013 and Miscellaneous Application No. 50088 of 2022 was filed by the appellant in Customs Appeal No. 55388 of 2013 seeking permission of t....
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....rmission was initially granted by the DGCA for ten Aircrafts, but it was subsequently reduced to five Aircrafts after an amendment was made in the Civil Aviation Requirement dated 01.06.2010 [2010 CAR] . 7. The appellant claims that from the time of import i.e. 27.02.2008 till 31.03.2012, the appellant used the Aircrafts belonging to the appellant for a total time of 17,808:30 hours. Further, out of the total flying of 17,808:30 hours, the Aircrafts were used for non-scheduled (charter) services for only 217:05 hours i.e. 1.21% of the total flying hours. Thus, even after getting the permission for using the said Aircrafts for both training and charter services, the usage for non-scheduled (charter) service operations was very minimal i.e. 1.21% and the main activity continued to be 'flying training' using 98.79% of the flying hours. 8. Apart from the import of the said Aircrafts, the appellant had also imported aircraft parts for maintenance of the said Aircrafts, after availing the benefit of duty exemption under Serial No. 347C of the exemption notification. During the period of 2008-11, the appellant imported various spare parts and cleared it by filling ....
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....f one month i.e. 22.04.2010 to 21.05.2010 11. 28.04.2010 Renewal of non-schedules (charter) service Permit No. 16/2009 from 17.04.2010 to 16.04.2011 by DGCA 12. 18.05.2010 Approval of renewal of Flying Training License by DGCA for one month i.e., 22.05.2010 to 21.06.2010. 13. 11.06.2010 Approval of renewal of Flying Training License by DGCA for 15 days i.e., 22^nd June to 6^th July 2010 14. 29.07.2010 Approval of renewal of Flying Training License by DGCA for 1 year i.e., 07.07.2010 to 06.07.2011 15. 21.04.2011 Renewal of non-scheduled (charter) service Permit No. 16/2009 from 17.04.2011 to 16.04.2013 by DGCA 16. 05.07.2011 Approval of renewal of Flying Training License by DGCA for a period of 3 months i.e., 07.07.2011 to 06.10.2011 17. 07.10.2011 Approval of renewal of Flying Training License by DGCA for a period of 3 months i.e., 07.10.2011 to 06.01.2012 18. 06.12.2011 Approval of renewal of Flying Training License by DGCA for a period of 6 months i.e., 07.01.2012 to 31.07.2012 12. A show cause notice dated 24.01.2012 was issued to the appellant stating therein that the appellant ....
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....nd-use of the aircraft inasmuch as they willingly and intentionally did not disclose the fact before the Customs that the said eight aircrafts (Cessna 172-R) were to be used / were being used for charter purpose also after getting NSOP form the DGCA in May 2009. Further, the Importer appears to have deliberately suppressed the end-use of the spare parts inasmuch as they willingly and intentionally did not disclose the fact before the Customs that the spare parts as detailed in para 4.1 above were being used for maintenance of the aircrafts the end-use of which had been altered to include charter and other non-training services as well. As discussed above, the suppression of facts in this regard continued unabated even after May 2009 and well into 2010 and 2011 even when the importer was fully aware of the violation of end-use. Accordingly, the undertakings executed by the importer were wrong and misleading. Thus, by their above acts of omission and commission, the importer appears to have rendered the said eight aircrafts valued at Rs. 8,00,00,000/- (declared value) liable for confiscation under Section 111 (0) of the Customs Act, 1962. Further, by their above acts of omission and ....
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....s by the DGCA approved Flying Training Institute. Condition No.104 relates to the duty free import of aircrafts for Non-Scheduled (Passenger) Services or NonScheduled (Charter) Services by the DGCA approved OPERATOR for carrying out Non Scheduled Passenger/Charter Services. ***** 42. It is pertinent to note that on the date of importation and at the time of filing of Bill of Entry seeking exemption from payment of Customs duty, the importer is required to have first fulfilled the conditions mentioned therein for being eligible for the benefit of exemption The noticee company in this case, M/s. Chimes Aviation Pvt. Ltd. filed the Bill of Entry and claimed exemption from payment of Customs duty under Condition No. 103 and furnished the necessary undertaking to the effect that they shall use the aircraft for specified purposes i.e. Flying Training Purposes only. This makes abundantly clear that despite the fact that they being aware of another Condition No. 104, they did not claim the benefit of exemption for transportation of passengers under Condition No. 104. ***** ***** 45. Against the charge of willful violation of the terms and condit....
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....n the exemption notification. 16. The submissions advanced by the learned counsel for the appellant and the learned special counsel appearing for the Department as also the learned authorized representative appearing for the Department have been considered. 17. 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 aircraft for scheduled air transport service was made 'nil'. No exemption was, however, granted to non-scheduled air transport service and private category aircraft. However, with the issuance of the exemption notification dated 03.05.2007, the effective rate of duty on the import of aircraft for non-scheduled air transport service was made 'nil'. This exemption notification was as a consequence of the statement made by the H....
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....ion of the Government of India in the Ministry of Finance (Department of Revenue), No. 21/2002-Customs, dated the 1st March, 2002 which was published in the Gazette of India, Extraordinary, vide number G.S.R. 118(E) of the same date, namely:- In the said notification,- (A) In the Table,- (i) xxxxxxxx (ii) after S. No. 347 and the entries relating thereto, the following S. Nos. and entries shall be inserted, namely:- S. No. Chapter or Heading No. or Sub- heading No. Description of goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6) 347A 8802 (except 8802 60 00) All goods Nil - 103 347B 8802(except 8802 60 00) All Goods Nil - 104 347C Any Chapter Parts (other than rubber tyres or tubes) of aircraft of heading 8802 Nil - 105 xxxxxxxx (B) in the Annexure, after Condition No. 102 and the entries relating thereto, the following Conditions shall be inserted, namely:- 103. If, - (a) the aircraft is imported by:- ....
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....d (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.. 105. If,- (i) imported for servicing, repair or maintenance of aircraft imported or procured by Aero Club of India; or (ii) imported for servicing, repair or maintenance of aircraft, which are used for flying training purposes or for operating non-scheduled (passenger) service or nonscheduled (charter) services; (iii) the importer furnishes an undertaking to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, at the time of importation that:- a. the imported goods shall be used for the specified purpose only; and b. he shall pay on demand, in the eve....
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....rt (charter) services. The show cause notice, therefore, alleges them the appellant had violated the terms of conditions of the exemption notification as a result of which the customs duty was required to be paid by the appellant in terms of the undertaking. 22. The issue as to whether the customs authorities would have the jurisdiction to decide violation of the exemption notification was examined at length by a Larger Bench of the Tribunal in VRL Logistics and the relevant paragraphs are reproduced below: "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 operators. It, therefore, follows that it should be the jurisdictional authorities under the Civil Aviation Ministry which alone can monitor the compliance. As stated above initially by exemption notification dated 01.03.2007, entry no. 346B and Condition No. 101 was introduced in the exemption notification dated....
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....dical 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 Supreme Court found that the licencing authority had not taken steps to cancel the licence, and infact the licencing authority did not even claim that there was any misrepresentation. Thus, when an advanced licence had been issued and not questioned by the licencing authority, the customs authorities could not refuse exemption on an allegation that there was a misrepresentation and even if there was any misrepresentation, it was for the licencing authority to take steps. The relevant portion of the judgment of the Supreme Court is reproduced below: "13. As regards the contention that the appellants were not entitled to the benefit of the exemption notification as they had misrepresented to the licensing authority, it was fairly admitted that there was no requirement, for issuance of a licence, that an appl....
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....od of 8 years reckoned from the date of the issue of the import license. The cars were seized for the reason that the export obligation had not been properly fulfilled. According to the petitioner, the initiation of the investigation was incompetent as a certificate had been issued by the Directorate General of Foreign Trade [DGFT] certifying that the obligation in regard to two of the seized cars had been fulfilled. What was sought to be contended on behalf of the writ petitioner was that if the competent authority under the Scheme had interpreted or understood the Scheme in a particular fashion and certified due compliance with the conditions subject to which the imports were made, it was no longer open any other agency of the government to sit in judgment by placing a different interpretation of the Scheme. It is in this context, that the Delhi High Court observed as follows: "12. Two interpretations are thus being offered by the parties to the terms of the policy. The one offered by the petitioner if accepted would mean that once the capital goods are harnessed into the establishment, it is not necessary that the export obligation should be fulfilled only from ou....