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TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 47
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.... appellant had complied with the conditions for exemption as set out in the Customs Notification No.21/2002-CUS, as amended by Customs Notification 61/2007-CUS (hereafter 'the Notification'). The learned Tribunal held that the aircraft imported by the appellant was used for private purposes and not for providing non-scheduled (passenger) services or non-scheduled (charter) services. Thus, the Condition no.104 of the Notification was violated. 3. There is no dispute that the aircraft imported by the appellant was used by its officials and the Board of Directors, for travelling to various destinations. According to the appellant, such use of the aircraft in question qualified as providing non-scheduled (passenger) services; therefore, the appellant met the condition for duty exemption under the Notification. Question of Law 4. In the aforesaid context, the question that arises for consideration is whether the learned Tribunal had erred in misinterpreting the Notification and concluding that the appellant had not complied with the conditions for availing duty exemption under the Notification. Factual Background 5. On 25.01.2006, the Director General of Civil Aviation (hereafter '....
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....the appellant and no adverse action had been taken by DGCA against it. 13. On 27.07.2010, the respondent passed an order being No. VII/Cus. Prev/Adj/Cmmr. /12/ElH /08, whereby the respondent confiscated the aircraft under Section 111(o) of the Customs Act, on the ground that the appellant had violated the conditions of the undertaking dated 22.05.2007 and the terms of the Notification, read with the provisions of the Customs Act. 14. Aggrieved by the aforesaid order, the appellant filed an appeal being Customs Appeal No. 558 of 2010 before the learned Tribunal, impugning the order dated 27.07.2010, passed by the respondent. Thereafter, on 01.04.2011, the learned Tribunal passed a stay order being No. C/162/11 stating that the bank guarantee executed by the appellant on 05.07.2008 (hereafter 'the bank guarantee') shall be treated as a pre-deposit under Section 129E of the Customs Act and shall remain valid till the disposal of the appeal. On 27.03.2015, the appellant furnished a fresh bank guarantee (CGANDH502515). 15. On 14.01.2020, the learned Tribunal dismissed the appeal filed by the appellant and held that the appellant had wrongly availed the exemption under the Notificatio....
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....neration for use of the aircraft by public. 20. In view of its conclusion, the learned Tribunal dismissed the appellant's appeal. Submissions 21. Mr. Ganesh, learned senior counsel appearing for the appellant, submitted that the controversy involved in the appeal was covered by the decision of the learned Tribunal in Reliance Transport v. Commissioner of Customs: Custom Appeal No.497/2010 decided on 15.10.2018. He submitted that the appeal preferred against the said judgment was dismissed by the Supreme Court by an order dated 08.01.2020. He submitted that the aircraft was registered with DGCA for non-scheduled air transport service under passenger category (NSOP permit) and that DGCA had not raised any issue regarding the use of the aircraft being inconsistent with the NSOP permit. He submitted that it was not open for the customs authorities to question whether the aircraft was used for non-scheduled air transport service, as that question was required to be addressed only by the DGCA. He submitted that the Customs Department was not empowered to examine the validity of any permissions granted by the DGCA. Since the DGCA had not found any irregularity in the use of the aircraf....
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....ervices' mean 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." 26. The aircraft was used by the Chairman and the officials of the appellant, who frequently travelled to various destinations. Admittedly, the flights operated by the appellant were non-revenue flights. According to the appellant, such non-revenue flights - that is, flights operated without generating revenue - were also covered under the broad definition of non-scheduled (passenger) services. 27. The key question to be addressed is whether non-revenue flights, operated by a company for transporting its officials, would fall within the scope of providing non-scheduled (passenger) services or non-scheduled (charter) services within the meaning of those terms under the Notification. In terms of e....
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....her person. In the circumstances, it would be difficult to accept that the appellant has used the aircraft for providing 'air transport service' within the meaning of Rule 3(9) of the Aircraft Rules. 33. The learned Tribunal had also referred to Civil Aviation Requirement (CAR), Section 3, Air Transport Series 'C' Part-III issue-II, dated 01.06.2010 issued by the DGCA. The opening paragraph of the said CAR clarifies that it was issued to specify the minimum airworthiness and the operational requirements as well as procedural requirements for grant of Non-Scheduled Operators Permit (NSOP). Paragraph 2.4 and 2.5 of the said CAR (Section 3, Air Transport Series, dated 01.06.2010) are relevant and read as under: "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 chartering the whole aircraft on per flight basis, or both. There is no bar on the same aircraft being used for either purpose as per the requirement of customers from time to time. The operator is also free to operate a series of flights on any sector within India by selling individual seats but will not be permitted to publish time table for such flig....
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.... not used the aircraft for rendering any 'air transport service' within the meaning of Rule 3(9) of the Aircraft Rules. 38. We are inclined to accept Mr. Ganesh's contention that the question whether the appellant has complied with the conditions of the exemption under the Notification is required to be determined with reference to the Notification alone. However, we find that the use of the aircraft by the assessee does not amount to using the aircraft "only for providing non-scheduled (passenger) services" within the meaning of Condition 104(i) of the Notification. 39. The contention that it would not be open for the Customs Authorities to question the use of the aircraft as the DGCA has not raised any allegation that the appellant has violated the terms of its permit, is unmerited. The Customs Authorities are required to examine whether the conditions for availing exemption under the Notification are satisfied. In terms of the Notification, the appellant has also furnished an undertaking as required under clause (ii) of Condition no.104 of the Notification. This undertaking has been furnished to the Customs Authorities and we are unable to accept that the Authorities are not e....
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....her than domestic journey. 43. It is clear that whilst the appellant in that case had used the aircraft for transporting senior officials of the related entity and their family members, it had done so for remuneration. Thus, the appellant had complied with the requirement of providing 'air transport service' within the meaning of Rule 3(9) of the Aircraft Rules. Indisputably, the air transport service provided by Reliance Transport were not covered under the definition of scheduled air transport service as defined under Rule 3(49) of the Aircraft Rules and thus, were covered within the definition of non-scheduled (passenger) services within the meaning of clause (b) of Explanation II of Condition no.104 of the Notification. 44. The decision rendered by the learned Tribunal in Global Vectra Helicorp Ltd. and Ors. v. Commissioner of Customs (Import) and Ors. (supra) does not support the case of the appellant. In that case the learned Tribunal had noted that non-scheduled (passenger) services must entail transport of persons or things for remuneration. The relevant extract of paragraph 7 of the said decision is set out below: "7. Having considered the rival contentions, we find th....