Aircraft Imported For Private Purposes, No Customs Duty Exemption Allowed: Delhi High Court

The division bench of Justice Vibhu Bhakhru and Justice Amit Mahajan has observed that the appellant has not used the aircraft for providing air transport service for remuneration of any kind. The provision of non-scheduled (passenger) services, as defined under clause (b) of the explanation to Condition No. 104 of the exemption notification, entails providing air transport services to the public at large on the basis of payment of the published tariff.

The aircraft imported by the appellant was used by its officials and the Board of Directors for travelling to various destinations. According to the appellant, use of the aircraft qualified as providing non-scheduled passenger services. Therefore, the appellant met the condition for duty exemption under the notification.

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) dismissed the appellant’s appeal. The Tribunal did not accept that the appellant had complied with the conditions for exemption as set out in Customs Notification No. 21/2002-CUS.

The Tribunal held that the aircraft imported by the appellant was used for private purposes and not for providing non-scheduled passenger or charter) services. Thus, condition No. 104 of the notification was violated.

In terms of Condition No. 104 of the Notification, importers of aircraft are required to furnish an undertaking to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, committing that the aircraft shall be used only for providing non-scheduled passenger services or non-scheduled charter services. If the importer fails to comply with the condition to use the aircraft, the importer would be required to pay an amount equivalent to the duty payable on the aircraft.

The appellant has filed an appeal against the order passed by the CESTAT.

The issue raised was whether the Tribunal had erred in misinterpreting the notification and concluding that the appellant had not complied with the conditions for availing duty exemption under the notification.

The court held that it was necessary for the appellant to publish the tariff for use of the aircraft and make the services available to the public.

"We concur that the conditions of exemption under the notification have not been complied with as the appellant has not used the aircraft for rendering any "air transport service" within the meaning of Rule 3(9) of the Aircraft Rules," the court said.

Case Title: East India Hotels Ltd. Versus Commissioners of Customs, General Excise and Central GST

Citation: 2023 LiveLaw (Del) 112

Date: 31.01.2023

Counsel For Appellant: Advocates S. Ganesh, Narendra M. Sharma, Ankur Sood, Kartik, Shubhangi Tiwari, Bhumi Goyal

Counsel For Respondent: Advocates Harpreet Singh, Suhani Mathur, Jatin Kumar Gaur

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