Case Law Details
Bharat Hotels Vs Commissioner of Customs (Preventive) (CESTAT Delhi)
Conclusion: Demand could be made under Undertaking only when Director General of Civil Aviation (DGCA) found that use of aircraft was not in accordance with permit granted. Where DGCA had not initiated any proceedings against assessee and in fact had renewed the permit from time to time, there was no violation of the undertaking and Customs could not demand duty in terms of the undertaking.
Held: Assessee had imported the aircraft claiming customs duty exemption under Notification No. 61 of 2017 dated 03.05.2007 that amended the earlier Exemption Notification No. 21 of 2002 dated 01.03.2002. Prior to importing the aircraft, assessee had obtained the no objection certificate from DGCA on 08.02.2007 to operate the aircraft for non scheduled air transport (charter) services. It need to be noted that assessee had earlier also imported an aircraft after obtaining a permit on 06.02.2004 from the DGCA to operate non scheduled air transport (charter) services. After importing the second aircraft through the Bill of Entry dated 16.05.2007, assessee requested the DGCA for inclusion of the newly imported aircraft in the earlier permit dated 06.02.2004 and on being satisfied that assessee fulfilled the requirements, the DGCA endorsed the newly imported aircraft in the earlier permit. According to the department, assessee had used the aircraft for charter purposes only for fifty hours out of the total 244.9 flown hours and, therefore, assessee had violated Condition No. 104 of the exemption notification. The exemption notification dated 03.05.2007, on which revolved the entire controversy, granted „nil‟ rate of duty on import of aircraft for non-scheduled (passenger) services as well as nonscheduled (charter) services subject to Condition No. 104 that was required to be fulfilled by an importer of the aircraft for availing the benefit of the exemption notification. It was held that the customs authority cannot demand duty in the absence of proceedings initiated by DGCA. In the present case, proceedings have not been initiated by DGCA against the appellant and in fact the permits have been renewed time to time. 27. The impugned order also holds that non-revenue flights undertaken by the aircraft carrying Chairman and other employees are private flights and though such flights may be permissible under the Civil Aviation Law but the same cannot be interpreted to be also permissible under the exemption notification. 28. It needs to be noted that Condition No. 104 of the exemption notification refers to Aircraft Rules 1937 and thus compliance or noncompliance of Condition No. 104 is required to be examined in the light of the clarification provided by DGCA and not in isolation. The approvals given by the DGCA has necessarily to be examined. Thus a demand can be made under the Undertaking only when DGCA finds that the use of the aircraft is not in accordance with the permit granted by the DGCA. In the present case, DGCA has not initiated any proceedings against the appellant and in fact has renewed the permit from time to time. There is, therefore, no violation of the undertaking and, therefore, Customs cannot demand duty in terms of the undertaking.
FULL TEXT OF THE CESTAT DELHI ORDER
Customs Appeal No. 60 of 2010 has been filed by Bharat Hotels Pvt. Ltd.1 to assail the order dated 20.11.2009 passed by the Commissioner of Customs (Preventive) 2 , by which the aircraft imported by the appellant against the Bill of Entry dated 16.05.2007 on the basis of a non-scheduled operator permit (charter) issued by the Directorate General of Civil Aviation3 has been confiscated under section 111(0) of the Customs Act 19624 with an option to redeem the same. The order also seeks to confirm the customs duty in terms of the undertaking given by the appellant at the time of importation and also imposes penalty under section 112 of the Customs Act.
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