ATF Supplied To Foreign-Going Aircraft Through Warehouses Eligible For Excise Exemption: CESTAT [Read Order]
CESTAT clarifies that routing aviation fuel through warehouses does not defeat excise exemption when supplies are ultimately made to foreign-going aircraft.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that Aviation Turbine Fuel (ATF) supplied to foreign going aircraft continues to be eligible for excise duty exemption even if such supplies are made through customs bonded warehouses setting aside the excise demand made by the Department.
The appeal was preferred by Bharat Petroleum Corporation Limited (BPCL), who supplied ATF to foreign going aircraft at international airports. Instead of supplying the fuel directly from the refinery, BPCL cleared ATF to bonded warehouses from where the fuel was subsequently supplied to aircraft flying international routes.
The Department had issued a show cause notice on the grounds that the exemption was available only if ATF was supplied directly from the refinery and that clearance from warehouses would thereby break the exemption chain. Consequently, excise duty demands along with interest and penalties were confirmed.
The BPCL relied upon the exemption notification and submitted that it does not prescribe any condition requiring direct delivery from the refinery. It was submitted that the relevant aspect is the end use of ATF in foreign going aircraft which was not disputed. The appellant also relied upon the recognized procedure of warehousing which does not change the nature or destination of the goods.
However,The Department relied upon the introduction of the intermediate stage of warehousing and submitted that this disentitled BPCL from claiming exemption.
The CESTAT Bench comprises Justice Dilip Gupta (President) and Hemambika R. Priya(Technical Member). disagreed with the Department’s view and held that notifications for exemptions are to be construed in accordance with their express terms and that nothing more can be inferred from them. The Tribunal noted that warehousing is only a facilitation tool and that ATF was ultimately used in foreign-going aircraft.
The Bench also held that beneficial exemptions cannot be denied on hyper-technical considerations, particularly when the material requirement of using ATF in foreign-going aircraft was fully met.
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