In a recent case the Delhi High Court while considering the examination of aircraft usage compliance held that customs should not be bound by the Director General of Civil Aviation decision.
The present appeal was filed by the revenue (Petitioner) against the order of the Customs Excise and Service Tax Appellate Tribunal (CESTAT).
The petitioner commissioner of customs had raised a demand of ₹6,22,67,295 and f imposed a penalty under Section 112 of the Customs Act, 1962. In addition, the Commissioner also directed confiscation of the aircraft imported by the respondent, Taneja Aerospace And Aviation Ltd, with an option to redeem the same by payment of a redemption fine of ₹6,50,00,000/-
The reason for making the additional penalty was that it had not complied with the undertaking furnished in terms of the Condition 104 of the Notification No.21/2002-Customs.dated 01.03.2002 as amended by the Custom Notification No.61/2007-Customs.
In terms of the Condition No.104, the aircraft is required to be used for providing non-scheduled (passenger) services. According to the Commissioner, the respondent had not complied with the said condition and had used the aircraft for private purposes and not for providing non-scheduled (passenger) service.
When an appeal was filed by the respondent before the CESTAT against the order of the petitioner the Tribunal allowed the respondent appeal.
The observation of the tribunal was that aircraft were used in terms of the permit granted by the Director General of Civil Aviation (DGCA) and the aircraft was used for remuneration.
Ravi Prakash, Senior Standing Counsel with Aman Rewaria, Advocate, Appeared for petitioner
They submitted that, “In terms of the Condition No.104, the aircraft is required to be used for providing non-scheduled (passenger) services. But respondent had not complied with the said condition and had used the aircraft for private purposes and not for providing non-scheduled (passenger) service”
Kishore Kunal, Manish Rastogi and Runjhun, Advocates appeared for the respondent.
Counsel for the respondent supported the decision of the CESTAT and said that aircraft was used in terms of the permit granted by the Director General of Civil Aviation (DGCA) and the aircraft was used for remuneration.
After considering the contentions of the both sides the division bench of Justice Vibhu Bakhru and Justice Amit Mahajan allowed the appeal filed by the petitioner and said that The Custom Authorities are not bound by the decision of the DGCA.
Further the bench observed the decision of the Delhi High Court, in East India Hotels Ltd Vs Commissioner of Customs -had held that non-scheduled passenger services do not include providing air transport services to the public at large on payment of published tariff.
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