As a relief to Reliance Commercial Dealers, the Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has allowed the duty exemption on the use of aircraft for non-scheduled (passenger) services.
The appellant engaged in providing “non-scheduled air transport (passenger) service” and claimed the benefit of exemption from customs duty under serial 347B of notification no. 21/2002-Cus dated 01.03.2002, as amended by notification no. 61 of 2017 dated 03.05.2007.
The Director, Ministry of Civil Aviation, Government of India, by a letter dated 02.01.2008, granted such permission/No-objection Certificate to import the aircraft for non-scheduled operations and claimed exemption from customs duty under of the exemption notification.
The said exemption is subject to Condition No. 104 contained in the said notification which is to the effect that the aircraft should be imported by an operator who has been granted approval for providing nonscheduled (passenger) services or non-scheduled (charter) services and the importer should furnish an undertaking that the aircraft shall be used only for providing the said services. The Commissioner denied the exemption and demanded duty with interest and held the aircraft to be liable for confiscation and imposed a fine and penalty.
It was observed that the Larger Bench held that the undertaking to use the aircraft for non-scheduled (passenger) service can be said to have been violated only when the DGCA finds that the use of the aircraft is not by the permit granted by DGCA for non-scheduled (passenger) service and then only the Customs authority can demand duty in terms of the undertaking.
A Coram consisting of Justice Dilip Gupta, president and Mr P V Subba Rao, member (technical) observed that the DGCA has not found the use of the aircraft by the appellant to violate the permit for non-scheduled (passenger) service and has renewed the permit year after year, therefore, no violation of the undertaking.
The Tribunal while allowing the appeal, held that the use of the aircraft was within the scope of non-scheduled (passenger) services and there is no violation of the undertaking to use the aircraft for non-scheduled (passenger) services and set aside the impugned order dated 31.08.2010.
Shri J.C. Patel, Shri Vipin Jain and Ms Shilpa Balani, Advocates appeared for the Appellant and Shri PRV Ramanan, Special Counsel and Shri Rakesh Kumar Authorized Representative for the Department
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