TaxTMI 
TaxTMI 
2024 (4) TMI 445
X X X X Extracts X X X X
X X X X Extracts X X X X
....re intended for servicing, repair or maintenance of aircrafts, thus evading duty of Countervailing Duty (CVD), Special Additional Duty (SAD) and Education cess. 2. This appeal is against the impugned order 16/2013 dated 27.08.2013 wherein the Commissioner denied the benefit of the above notification observing that the goods imported were 'Prototypes' and not parts of the aircraft intended for servicing, repair or maintenance of aircrafts. 3. The learned Counsel on behalf of the appellant submits that the appellant M/s. Halbit Avionics Pvt. Ltd. are engaged in Design, Development and import of Flight Simulators and Avionics for M/s. HAL, Bangalore and others. During the period from 11.7.2012 to 11.1.2013, they imported 3 Nos. 'Prototypes' of EFI (Engine & Flight Instrument) DPU (Display Processing Unit) under 3 Bills of Entry. As per the details submitted by them vide their letter dated 14.11.2012 and 22.11.2012, they have cleared 1st and 2nd 'Prototype' without paying CVD and Cess by availing exemption under Sl. No. 303 of Not. No. 12/2012-C.E. dated 17.3.2012. The 3rd 'Prototype' was imported on payment of CVD 'Under Protest', in view of the ongoing investigation. It is subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....)'' * Modella Steels & Alloys Ltd. vs. CCE: 1999 (107) ELT 614 (Tri.) 3.2 While the word 'repair' has been defined in Black's Law Dictionary, 6th Ed, as "Repair, To mend, remedy, restore, renovate. He relies on the following decisions to emphasise the point that repair means replacement /renewal. * Sir Shadi Lal & Sons, Shamli vs. CIT, Kanpur - 1988 SCC (Tax) 121: (1988) 169 ITR 510 wherein it is held that: "The idea of 'repair' may include replacement or even a renewal. But the converse may not be true. All replacements or renewals need not necessarily be 'repairs'." * Lurcott vs. Wakely - [1911] 1 KB 905, 923, CA, per Buckley LJ. Wherein it is held that: "`Repair' and `Renewal' are not words expressive of a clear contrast. Repair always involves renewal; renewal of a part, of a subordinate part.......... Repair is restoration by a renewal or replacement of subsidiary parts of a whole'. Renewal, as distinguished from repair, is re-construction of the entirety, meaning by the entirety not necessarily the whole but substantially the whole subject matter under discussion." * CIT vs. Mahalaxmi Textile Mi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts carried out on prototype - I. Under the circumstances, it cannot be said that the imported Engine and Flight Instrument System (EFIS) are not parts of the Jaguar aircraft and meant for repair and replacement. The first Prototypes evaluated / tested on ground conditions only i.e., in a rig (which is not capable of flight). This is not capable of being used in a flyable units since it does not have permission from Centre for Military Airworthiness & Certification (CEMILAC) to do so. The first prototype essentially being an Engineering unit is not permitted by (CEMILAC) to be used in a flyable Aircraft. However, the second & third are to be used in a flyable units and evaluated and tested in actual flying conditions. The second and third units are permitted by (CEMILAC) to be used in a flyable Aircraft". 3.5 The Appellants would also like to refer to the decision of the Hon'ble Tribunal in the case of Mak Controls vs. Commissioner: 2001 (138) ELT 1152 (Tri-Chennai), which has been upheld by the Hon'ble Supreme Court - Commissioner v. Mak Controls - 2005 (183) E.L.T. A73 (S.C.) to submit that the items imported by them are parts of the aircraft. It is finally stated that from th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the above submissions, the Appellants submit that no penalty is leviable if duty and interest thereon is paid before the issue of the Show Cause Notice in terms of Sec. 11(1)(b) and 11 (2) of the CEA, 1944 and 28(1)(b) and 28(2) of the C.A. 1962. 3.8 It is further submitted that there was no mala fide intention on their part since the impugned goods were brought for the purpose of upgrading the Engine and Flight Instrument System (EFIS) for DARIN III Upgrade Programme for Jaguar Aircraft and is meant for replacement of the conventional Electro - Mechanical Instruments / Sensors of DARIN Jaguar Aircraft and not for any other purpose. In the absence of any mala fide, no penalty is leviable on the notices as has been held by the following decisions : * UOI vs. Dharmendra Textile Processors - 2008 (231) ELT 3(SC). * UOI vs. Rajasthan Spinning and Weaving Mills - 2009 (238) ELT 3(SC). 4. The Authorised Representative on behalf of the Revenue reiterates the findings of the Commissioner and submits that the impugned order needs to be upheld and the appeal filed by the appellant to be dismissed. 5. Heard both sides. The only issue to be decided is whether the imp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n under the First Schedule to the Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table and subject to the relevant conditions annexed to this notification, if any, specified in the corresponding entry in column (5) of the Table aforesaid: 5.1 The relevant portion of Notification No.12/2012-CE dated 17.3.2012 reads as follows : 303 Parts including pneumatic tyres of rubber, new or rethreaded (other than rubber tubes), of aircraft of heading 8802 Nil 34 Condition 34 reads as follows : 34 If - intended for servicing, repair or maintenance of aircraft owned by Government of India, State Governments, Public Sector Undertakings of the Central Government or the State Governments; or intended for servicing, repair or maintenance of aircraft, which is used for operating scheduled air transport service or scheduled air cargo service, as the case may be. Explanation.- The expressions "operator", "scheduled air transport" service and "scheduled air cargo service" shall have the meanings respectively assigned to them in condition 31. 5.2 As seen above, the benefi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e used as equipment. But by the very reason of being not ready without testing and evaluation, the same are not considered as commercial goods." There is no doubt that the products are declared as prototypes but the Commissioner cannot ignore the fact that as per the technical write-up, these are used as parts and they are actually meant for replacing the old ones thus upgrading the equipment. 5.4 The technical write-up placed before us by the learned counsel states as follows: Engine & Flight Instrument System (EFIS) provides the following on a 4"X5" AMLCD display in the cockpit a) Engine parameters b) Fuel parameters c) Flight parameters d) Failure/Emergency Warnings e) Hydraulic Pressure Indication EFIS system will have integrated Air Data, Attitude and Heading sensors called ADAHRS for flight parameters. Existing sensors of DARIN Jaguar a/c for engine, fuel parameters, emergency warmings information and Hydraulic Pressure will be interfaced with EFIS. In the event of failure of INGPS, EFIS will act as a GET-YOU-HOME system. EFIS will replace the following existing conventional Electro-Mechanical Instruments/Senso....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tement submitted that the first prototype is used in the ground rig and the second and third are used in the Jaguar Aircraft for testing and evaluating its suitability and effectiveness to ensure that it meets the specifications and requirement. He further submits that the first prototype is evaluated/tested on the ground conditions and is not permitted to be used in aircrafts while the second and third prototypes are airworthiness and certification to be used in flyable aircrafts for evaluation and testing in actual flying conditions. He further states that the second and third prototype are commercially produced parts of aircrafts, therefore, there is no doubt that these 2 imports form part of the aircraft and it is meant for replacement /upgradation of the aircraft. 5.6 Now the question remains, whether these imports which are intended for replacement/upgradation of the aircraft are eligible for the benefit of the Notification which is intended for servicing, maintenance or repair. The learned counsel has placed enormous data on record to show that repair or maintenance includes replacement and upgradation. In the case of Modella Steels & Alloys Ltd. v CCE (supra), the Tribun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egistered in India wherever they may be, expect cases falling under sub-rule(4); to, and to persons on, all aircraft for the time being in or over India : Definitions and Interpretation - In these rules, unless there is anything repugnant in the subject or context - (33C) "Maintenance" means the performance of tasks on an aircraft, engine, propeller or associated part required to ensure the continuing airworthiness of an aircraft, engine, propeller or associated part including any one or combination of overhaul, inspection, replacement, defect rectification, and the embodiment of a modification or repair; 60. Maintenance standards and certification- (1) In this rule, 'maintenance' refers to performance of all work necessary for the purpose of ensuring that the aircraft is airworthy and safe including servicing of the aircraft and all modifications, repairs, replacements, overhauls, processes, treatment, tests, operations and inspection of the aircraft, aircraft components and items of equipment required for that purpose. In view of the above definition, contention of the Revenue is that these goods are meant for replacement and upgradation, whi....