Case Law Details
Commissioner of Customs Vs Taneja Aerospace And Aviation Ltd (Delhi High Court)
Delhi High Court held that whether condition 104 of Notification No. 21/2002-Cus. dated 01.03.2002 is complied or not is required to be considered by the Customs Authorities and Customs Authorities are not bounded by the decision of DGCA.
Facts- The Revenue has filed the present appeal impugning an order dated 22.09.2022 (Final Order No.50929/2022) passed by the Customs Excise and Service Tax Appellate Tribunal.
The respondent had filed the aforementioned appeal (Customs Appeal No. 57/2010) impugning an order-in-original dated 20.11.2009, whereby the Adjudicating Authority (Commissioner of Customs) had raised a demand of ₹6,22,67,295/- and further imposed a penalty of ₹3,00,00,000/- u/s. 112 of the Customs Act, 1962. In addition, the Commissioner also directed confiscation of the aircraft imported by the respondent u/s. 111(o) of the Customs Act with an option to redeem the same by payment of a redemption fine of ₹6,50,00,000/- u/s. 125 of the Customs Act. The allegation against the respondent was that it had not complied with the undertaking furnished in terms of the Condition 104 of Notification No. 21/2002-Cus. dated 01.03.2002 as amended by the Custom Notification No. 61/2007-Cus.
In terms of the Condition No.104, the aircraft is required to be used for providing non-scheduled (passenger) services. According to the Commissioner, the respondent had not complied with the said condition and had used the aircraft for private purposes and not for providing non-scheduled (passenger) services. The Tribunal allowed the respondent’s appeal by the impugned order.
Conclusion- The question whether an undertaking, as furnished in terms of Condition 104 of the Notification in question is complied with or not is required to be considered by the Custom Authorities. The Custom Authorities are not bound by the decision of the DGCA.
The other questions relate to whether the respondent had complied with Condition 104 of the Notification and had used the aircraft for providing non-scheduled (passenger) services. The said question is also covered by the decision in East India Hotels Ltd. v. Commissioner of Customs, Central Excise and Central GST. It is not disputed that the respondent has provided the said services for remuneration.
In the aforesaid view, notwithstanding that the respondent has not published its tariff for providing the said services, it has nonetheless complied with the conditions of providing non-scheduled (passenger) services as defined in Explanation to Condition 104 of the Notification in question.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The Revenue has filed the present appeal impugning an order dated 22.09.2022 (Final Order No.50929/2022) passed by the Customs Excise and Service Tax Appellate Tribunal (hereafter ‘the Tribunal’) in Customs Appeal No. 57/2010.
2. The respondent had filed the aforementioned appeal (Customs Appeal No. 57/2010) impugning an order-in-original dated 20.11.2009, whereby the Adjudicating Authority (Commissioner of Customs) had raised a demand of ₹6,22,67,295/- (Rupees six crores twenty two lacs sixty seven thousand two hundred and ninety five) and further imposed a penalty of ₹3,00,00,000/- (Rupees three crores) under Section 112 of the Customs Act, 1962 (hereafter ‘the Customs Act’). In addition, the Commissioner also directed confiscation of the aircraft imported by the respondent (hereafter ‘the aircraft’) under Section 111(o) of the Customs Act with an option to redeem the same by payment of a redemption fine of ₹6,50,00,000/- (Rupees six crores fifty lacs only) under Section 125 of the Customs Act. The allegation against the respondent was that it had not complied with the undertaking furnished in terms of the Condition 104 of the East India Hotels Ltd. v. Commissioner of Customs, Central Excise and Central GST, New Delhi in CUSAA 5/2020, decided on 31.01.2023as amended by the Custom Notification No.61/2007-Cus. (CUS dated 03.05.2007). In terms of the Condition No.104, the aircraft is required to be used for providing non-scheduled (passenger) services. According to the Commissioner, the respondent had not complied with the said condition and had used the aircraft for private purposes and not for providing non-scheduled (passenger) services.
3. The Tribunal allowed the respondent’s appeal by the impugned order. The Tribunal found that the aircraft was used in terms of the permit granted by the Director General of Civil Aviation (DGCA) and the aircraft was used for remuneration. The Tribunal decided the appeal in view of the interim order dated 08.08.2022 passed by the Larger Bench of the Tribunal in Customs Appeal No.74/2010 captioned M/s VRL Logistics Ltd. v. Commissioner of Customs, Ahmedabad. The operative part of the impugned order reads as under:
“12. The following issues were decided by the Larger Bench of the Tribunal in the order dated 08.08.2022:
(i) In terms of Condition 104 of the exemption notification, if a service is covered by “air transport service” defined in rule 3(9) of the Aircraft Rules and is other than scheduled (passenger) air transport service defined in rule 3(49), it would be a NSOP (passenger) services within the meaning of clause (b) of the Explanation to Condition No. 104 of the exemption notification. These two conditions are satisfied by the importers, inasmuch as: –
a. The contention of the department that the appellants have rendered “air transport service” to their group companies by carrying personnel of their group companies is not of any relevance as there is no prohibition in the said definition against any kind of persons to be transported;
b. There is no stipulation or restriction or a condition in the definition that a tariff should be published or that such service should be rendered only on per-seat basis and not by chartering or about the category or class of persons to be transported;
(ii) There is no requirement of having a published tariff and Condition 104 (c) to the exemption notification cannot be said to be violated on this ground;
(iii) Aircraft imported for non-scheduled (passenger) services can be used for nonscheduled (charter) services and there is no restriction on the same. The exemption notification or the CAR do not prohibit a non-scheduled (passenger) service permit holder to use the aircraft for charter operations. This is for the reason that:
(a) NSOP (passenger) is a much wider category and specifically includes charter operations in which the entire aircraft is given for hire or reward by charging remuneration from the hirer;
(b)Where the regulatory requirements under the CARs itself permit the NSOP (passenger) holder to carry out charter operations, it would not be correct on the part of the department to contend that NSOP (passenger) holder cannot carry out charter operations and that these services are mutually exclusive;
(c)DGCA has unequivocally clarified that charter operations are permissible. It is the DGCA which is empowered to issue CARs under rule 133A of the Aircraft Rules. Thus, NSOP (passenger) permit holder can carry out charter operations.
(iv) Only because some flights are conducted without remuneration, it would not classify the aircraft imported as a private aircraft. Personnel of companies which are group companies of the importers are also members of public. The aircraft is, therefore, available for use by the public. Even otherwise, this cannot be a reason to hold that the air transport service provided would fall outside the scope of nonscheduled (passenger) service;
(v) The Customs Authority cannot examine the validity of the permission granted by the DGCA in absence of cancellation of the permit by the DGCA and it is the DGCA alone that can monitor the compliance of the conditions imposed;
(vi) The Customs Authorities can take action on the basis of the undertaking submitted by the importer only when the DGCA holds that the conditions of the permit issued by them have been violated; and
(vii) It is not mandatory for the importer to issue air tickets for providing NSOP services.
13. It is clear that the Aircraft BRT has been strictly used in terms of the permit granted by the DGCA and the said Aircraft was used for remuneration purposes only.”
4. In the aforesaid context, the Revenue has projected the following questions for consideration of this Court:
“i. Whether in the facts and circumstances of the case the Hon’ble Tribunal is right in holding that the Customs Authority cannot examine whether the appellants have fulfilled the condition of exemption notification.
ii. Whether in the facts and circumstances of the case the Hon’ble Tribunal has misinterpreted the notification and concluded that the respondent company has complied with the conditions for availing duty exemption under the notification.
iii. Whether in the facts and circumstances of the case, the Hon’ble Tribunal is right in holding that the aircraft imported by the appellants cannot be classified as private aircraft.
iv. Whether in the facts and circumstances of the case the Hon’ble Tribunal is right in holding that non-scheduled (passenger) operator can carry out charter service.
v. Whether in the facts and circumstances of the case the Hon’ble Tribunal is right in holding that there is no obligation on the part of the respondent company to issue tickets to the passengers.”
5. Insofar as the first question is concerned, the same is covered in favour of the Revenue and against the assessee by a recent decision of this Court in East India Hotels Ltd. v. Commissioner of Customs, Central Excise and Central GST, New Delhi in CUSAA 5/2020, decided on 31.01.2023. The question whether an undertaking, as furnished in terms of Condition 104 of the Notification in question is complied with or not is required to be considered by the Custom Authorities. The Custom Authorities are not bound by the decision of the DGCA.
6. The other questions relate to whether the respondent had complied with Condition 104 of the Notification and had used the aircraft for providing non-scheduled (passenger) services. The said question is also covered by the decision in East India Hotels Ltd. v. Commissioner of Customs, Central Excise and Central GST, New Delhi in CUSAA 5/2020, decided on 31.01.2023. It is not disputed that the respondent has provided the said services for remuneration.
7. In the aforesaid view, notwithstanding that the respondent has not published its tariff for providing the said services, it has nonetheless complied with the conditions of providing non-scheduled (passenger) services as defined in Explanation to Condition 104 of the Notification in question.
8. In view of the above, no substantial questions of law arise in the present appeal.
9. In view of the above, the question no.(i), as projected by the Revenue, is decided in its favour and the impugned order to the said extent is set aside. Insofar as the question whether the respondent has complied with the Condition 104 of the Notification is concerned, the said question is answered in favour of the respondent in view of the decision of this Court in East India Hotels Ltd. v. Commissioner of Customs, Central Excise and Central GST, New Delhi in CUSAA 5/2020, decided on 31.01.2023(supra).
10. The appeal is disposed of in the aforesaid terms. All pending applications are also disposed of.
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