The Customs, Excises, and Service Tax Appellate Tribunal (CESTAT) while granting relief to Interglobe Aviation held that the appellant is entitled to exemption from payment of integrated tax under the Exemption Notification on re-import of repaired parts/aircraft into India.
The appellant, M/s Interglobe Aviation Limited filed 346 appeals which are about the availability of Integrated Goods and Service Tax exemption provided at serial no. 2 in the General Exemption Notification No. 45/2017 dated June 30, 2017, as amended by Corrigendum Notification dated July 22, 2017, to aircrafts and parts thereof that are re-imported into India after repairs.
The Appellant is a scheduled airline operator, engaged in the business of transportation of passengers and goods by air. In order to carry out the scheduled operations in India, the Appellant imported aircrafts and it is stated that when the engines/ auxiliary power units or other parts of the aircrafts began to develop defects, they were exported out of India for repairs to M/s Pratt & Whitney, which is a maintenance and repair organisation specializing in maintenance of parts/ aircrafts.
It is further stated that at times, the aircrafts also have to be exported out of India for repairs and maintenance. The repaired parts/ aircrafts are thereafter re- imported into India and at the time of re-import, Bills of Entry are filed. These Bills of Entry are assessed to basic customs duty and integrated tax at the applicable rates.
The Commissioner, therefore, disallowed the integrated tax exemption claimed by the Appellant on all the 349 Bills of Entry and integrated tax was levied on the fair cost of repairs and the cost of insurance and freight charges, both ways. It is against the aforesaid assessment of the 349 Bills of Entry, that the Appellant had filed 349 appeals before the Commissioner (Appeals). The Commissioner (Appeals) upheld the assessments made on all the 349 Bills of Entry and, accordingly, rejected all the appeals.
The dispute in all these appeals is as to whether the Appellant is justified in claiming exemption of integrated tax under the Exemption Notification on re-import of repaired parts/ aircrafts into India during the period from August, 2017 to March, 2019.
The Appeals seek the quashing of the 346 orders passed by the Commissioner of Customs (Appeals) that uphold the orders of assessment of Bills of Entry, as a result of which all the appeals have been dismissed by the Commissioner (Appeals).
The notification refers to the duties of customs leviable thereon which is specified in the said first schedule, the additional duty leviable thereon under section 3 of the Tariff Act and special duty of customs leviable under section 68(1) of the Finance Act, whereas the instant Exemption Notification refers to duty of customs leviable thereon which is specified in the said First Schedule and the integrated tax, compensation cess leviable thereon respectively under sub-sections (7) and (9) of section 3 of the Tariff Act.
The two-member bench headed by the President Justice Dilip Gupta the absence of mention of integrated tax and compensation cess in column (3) under serial no. 2 of the Exemption Notification would mean that only the basic customs duty on the fair cost of repair charges, freight and insurance charges are payable and integrated tax and compensation cess are wholly exempted.
“The Appellant is entitled to exemption from payment of integrated tax under the Exemption Notification on re-import of repaired parts/ aircrafts into India. All the 346 Appeals are, therefore, allowed,” the tribunal while quashing the 346 orders of the CIT(A) said.
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