Delhi HC Denies Customs Duty Exemption of ₹56.15 Cr on Aircraft Import: Supreme Court to Hear East India Hotels’ Appeal [Read Order]
The High Court ruled that the exemption requires air transport services rendered for remuneration, which was absent in this case
The Supreme Court is set to hear East India Hotels Ltd.’s appeal challenging the Delhi High Court’s refusal to grant customs duty exemption on a ₹56.15 crore aircraft import.
The High Court had upheld the Customs Tribunal’s finding that the company’s use of the aircraft for non-revenue corporate travel did not qualify as “non-scheduled (passenger) services” under Customs Notification No. 21/2002.
In its judgment, the High Court upheld the Customs Tribunal’s finding that East India Hotels violated the conditions of duty exemption by using the aircraft exclusively for transporting its officials and board members without charging any fare.
The Court emphasised that “air transport service” under Rule 3(9) of the Aircraft Rules, 1937, requires some form of remuneration, even if indirect or internal, and that non-revenue flights do not meet this threshold.
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The appellant had imported a Hawker 850 XP aircraft in 2007, backed by a DGCA permit for non-scheduled passenger services and a customs undertaking committing to such use. However, the Customs Department issued a show cause notice alleging misuse and suppression of facts, ultimately confiscating the aircraft and demanding ₹13.92 crore in duty.
The Tribunal and High Court both found that the aircraft’s use was private and not commercial, disqualifying it from exemption.
East India Hotels argued that the DGCA had not objected to its usage and that the Customs Department lacked jurisdiction to interpret aviation permits. The High Court disagreed, stating that Customs authorities are empowered to assess compliance with exemption conditions independently of DGCA oversight.
The Court also distinguished the case from Reliance Transport, where the aircraft was leased to a group company with documented reimbursement and service fees, thus meeting the “remuneration” test.
The judgment clarified that while DGCA permits may allow corporate use, the customs exemption hinges on whether the aircraft is used for transport services involving payment.
The Court rejected the appellant’s claim that internal corporate travel qualifies as non-scheduled passenger service, noting that the Notification’s language and the Aircraft Rules require a commercial element.
Following the High Court’s dismissal, East India Hotels has approached the Supreme Court, which registered the matter as a Civil Appeal. The case is now expected to be heard by the Supreme Court.
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