Exemption on payment of IGST on re-import of repaired parts/aircrafts into India

Spice Jet Limited Vs Commissioner of Customs (General) (CESTAT Delhi)

Conclusion: Assessee was justified in claiming exemption from payment of integrated tax under the Exemption Notification on re-import of repaired parts/ aircrafts into India during the period commencing August 2017 to March 2019.

Held: Assessee-company was 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, it imported aircrafts and when the engines/ auxiliary power units or other parts of the aircrafts began to develop defects, they were exported out of India for repairs. The repaired parts/ aircrafts were thereafter re-imported into India and at the time of re-import, Bills of Entry were filed. These Bills of Entry were assessed to basic customs duty and integrated tax at the applicable rates. The dispute was whether assessee was justified in claiming exemption from payment of integrated tax under the Exemption Notification on re-import of repaired parts/ aircrafts into India during the period commencing August, 2017 to March, 2019. It was held that 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. Thus, 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under Section 3 of the Tariff Act and special duty of customs leviable under section 68(1) of the Finance Act have been replaced by the integrated tax under section 3(7) and compensation cess under section 3(9) of the Tariff Act. The inevitable conclusion that follows from the aforesaid discussion is that 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.  It would not be necessary to examine the contentions advanced by assessee that the activity of repairs was “supply of service” or that the activity would not fall under the category of “import of service‟ under the Integrated Tax Act since the necessary ingredients mentioned therein had not been fulfilled. Assessee was entitled to exemption from payment of integrated tax under the Exemption Notification on re-import of repaired parts/ aircrafts into India.

FULL TEXT OF THE CESTAT DELHI ORDER

1. All these 61 appeals have been filed by M/s Spice Jet Limited1. The issue raised in all these appeals is about the availability of Integrated Goods and Service Tax2 exemption provided at serial no. 2 in the General Exemption Notification No. 45/2017 dated June 30, 20173, as amended by Corrigendum Notification dated July 22, 2017, to aircrafts and parts thereof that are re-imported into India after repairs. The Appeals seek the quashing of the orders passed by the Commissioner of Customs (Appeals)4 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).

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