TaxTMI 
TaxTMI 
2024 (4) TMI 445
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....hus 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 submitted that the Appellants vide their letter dated 7.1.2013 stated th....
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....n 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 Mills - 1967 (66) ITR 710 wherein it is held that: "Repair is restoration by renewal, or parts replacement of subsidiary of a whole." * New ShorrockSpg. and Mfg. Co vs.....
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....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 the definitions of 'Prototype, Repair, Maintenance and Replacement' ,the impugned goods are meant for Engine and Flight Instrument System (EFIS) for DARIN III Upgrade Programme for Jaguar Aircraft. The said equipment is meant f....
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.... 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 impugned goods imported by the appellant are eligible for the benefit of exemption in terms of Notification No.12/2002-CE dated 17.3.2012. For the sake of clarity, the relevant Notification is reproduced below: Notification No. 12 /2012-Central Excise dated 17.3.2012 G.S.R. ....
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....n 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 benefit of the Notification is available only for the parts of the aircraft which are intended for servicing, repair or maintenance of the aircraft. The question to be decided is whether the imported 'prototype' form part of the aircraft and whether they are intended for the said purpose mentioned in the Notification. T....
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....hey 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/Sensors of DARIN Jaguar Alc. a) Standby Flight Instruments 1. Vertical Speed Indicator 2. Standby Attitude Indicator (Artificial Horizon Indicator) 3. Turn and Slip Indicator 4. Combined Speed Indicator 5. Altimeter 6. Radio Magnetic Indicator (RMI) b) Engine and Fuel Instruments 1. RPM Indicator (Tachometer Indicator)- 2 nos 2. TGT In....
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.... 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 Tribunal observed that: "We have carefully considered the pleas advanced from the both sides. We are not inclined to agree with the submission of the ld. JDR. Replacement with a grooved roller of a roller which has outlived its utility will be covered within the scope of the expression "maintenance and repair" of the rolling mills. We are, therefore, of the view that the appellant is clearly entitled to the benefit of the Notification 281/86-C.E. His case is fu....
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....verhaul, 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, which cannot be considered as an activity of servicing, repairing or maintenance and therefore, the appellant is not eligible for the benefit of the Notification No. 12/2012-Cus., dated 17-3-2012, is devoid of merit. 5.9 The Commissioner in the impugned order has observed as follows: "21.4 The said certificate captions as the subject as 'Flight clearance certificate for Engine and Flight Instrumentation System (EFIS) for trials on Jaguar Darin III Air Craft'. Further the certification is issued in respect of software and subject t....