Aircraft Used Only For Providing Non-Scheduled Passenger Services Entitled For Customs Exemption: CESTAT
Mariya Paliwala
10 Jun 2024 3:15 PM IST
The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the aircraft used only for providing non-scheduled passenger services is entitled to customs exemption.The bench of Binu Tamta (Judicial Member) and P. V. Subba Rao (Technical Member) has observed that the conditions of exemption notification were not complied with as the appellant therein had not...
The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the aircraft used only for providing non-scheduled passenger services is entitled to customs exemption.
The bench of Binu Tamta (Judicial Member) and P. V. Subba Rao (Technical Member) has observed that the conditions of exemption notification were not complied with as the appellant therein had not used the aircraft for rendering any 'Air Transport Service' within the meaning of Rule 3(9) of the Aircraft Rules.
For a service to fall within the meaning of 'air transport service' as defined in Rule 3(9) of the Aircraft Rules, it is essential that the same be provided for some kind of remuneration. Clearly, flight service for no remuneration at all would not qualify to be considered air transport service within the meaning of sub-rule (9) of Rule 3 of the Aircraft Rules.
The appellant imported Helicopter Bell 407, Registration No. VT-RPN, via bill of entry no. 932425 dated March 14, 2008, under Permit No. 02/2000 dated September 13, 2000, issued by the Directorate General of Civil Aviation (DGCA), Government of India. The permit has been renewed from time to time by the DGCA. The appellant also received a 'No Objection Certificate' dated July 27, 2007' from the DGCA for the import or procurement of helicopters and for providing non-scheduled air transport services (passenger) NSOP (passenger). They also availed of exemption under Notification No. 21/2002-Cus dated March 1, 2002 (Sl. No. 347B), as amended by Notification No. 61/2007-Cus dated May 3, 2007.
A show cause notice was issued proposing to demand differential duty under Section 28 of the Customs Act, 1962, on the ground that the appellant has violated Condition No.104 of Notification No.21/2002-Cus., as amended, as the helicopter has been used for NSOP (charter) whereas undertaking has been submitted for NSOP (passenger), and a permit issued for passenger service is not automatically valid for charter services. Secondly, the appellant has not been issuing any tickets for the passengers. Penalties were also proposed for the appellant as well as for individuals.
On adjudication, the impugned order confirmed the differential duty in terms of the undertaking; however, it held that since the duty is not demandable under Section 28 of the Customs Act, no interest can be demanded. The penalty under Section 112(a) of the Customs Act is imposable on the appellant; however, penalties against individuals are liable to be dropped.
The issue raised was whether the permit under NSOP (passenger) can be used for charter purposes.
The tribunal noted that the aircraft imported is not a private aircraft. The definition of 'Private Aircraft' under Rule 3(4) of the Aircraft Rules, 1937, does not warrant the view that if the tariff is not published, the use of the aircraft would be private. The testing point enunciated was that if the aircraft is used for the carriage of persons for remuneration, it is a public transport aircraft and not a private aircraft.
The tribunal has stated that the appellant had obtained the NSOP (passenger) permit in respect of helicopters imported but used the same for NSOP (charter); however, there is no bar on the permit holder of NSOP (passenger) services to provide charter services, which has been squarely upheld by the Larger Bench on the basis of CAR, 1999 and 2000. The crux of the decision is that NSOP (passenger) services, being a much wider category, include charter operations.
The tribunal observed that the helicopter was used only for commercial flights for remuneration, except for the test flights meant for maintenance. Even the use of the helicopter by the officials, the Board of Directors, etc. of the appellant was not without any remuneration. In view thereof, the helicopter falls under the category of 'Private Aircraft'.
Counsel For Appellant: B.L. Narasimhan
Counsel For Respondent: P.R.V. Ramanan
Case Title: Escorts Limited Versus Commissioner of Customs (Preventive)
Case No.: Customs Appeal No. 664 of 2010 (DB)
