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2017 (6) TMI 1015 - AT - CustomsExemption from Customs duty and CVD - N/N. 12/2012-CUS dated 17/03/2012 and N/N. 12/2012-CUS dated 17/03/2012 - import of one aircraft engine - condition No. 21 (relevant to Sl. No. 454 in the table attached in the N/N. 12/2012-CUS) - Held that: - It is manifestly clear that the engine was brought into India only for the purpose of fitting into the aircraft, MSN 3089 and to take the aircraft out of India on termination of lease. The lease was terminated, prematurely, on 29/10/2012 by the appellant. To fly the aircraft out of India, the engine was found necessary and accordingly the import was made. In such factual matrix, we cannot accept the argument of the appellant that on the date of import of engine KFA could still be considered as authorized airline operator and the exemption available in terms of the above notification should be extended to them. As already noted that purpose of exemption is specific and categorical. The aircraft engine should have been for servicing, repair or maintenance of aircraft which is used for operating scheduled air transport service. In the present case the aircraft to which the engine was intended to be fitted is not to be used for operating scheduled air transport service. The lease for aircraft has already been terminated. There is no way the aircraft can be considered as used for operating scheduled air transport service - exemption rightly denied. N/N. 12/2012-CE dated 17/03/2012 - Sl. No. 448 of Notification 12/2012-CUS condition No. 73 - Held that: - the eligibility for exemption under Customs Notification 12/2012-CUS is relevant and applicable to claim exemption under the Central Excise notification. The aircraft to which the imported engine is intended to be fitted is not to be used in scheduled air transport service and the purpose of fitting the engine is, admittedly, to fly the aircraft out of India. Such operation is not covered by the scope of exemption as discussed, at length by the Original Authority and examined by us in terms of above discussion. As such, we are in agreement with the Original Authority regarding denial of exemption to the imported aircraft engine. Confiscation - Section 111 (o) - Held that: - it is an admitted fact that the aircraft engine never left the customs warehouses or cleared for home consumption for any other reason. The engine was intended to be fitted in an aircraft to be flown out of India as the lease agreement for the aircraft has already been terminated. In such situation, we find there is no scope to apply the provisions of Section 111 (o) for confiscation of the engine. There is no concessional import with condition and there is no violation of such condition attracting provisions of 111 (o) - confiscation of the imported engine is not legally sustainable. Time limitation - Held that: - show cause notice was issued on 28/11/2013. The said notice was issued within one year of the assessment - demand not time barred. Penalty - Section 112 (a) of the Customs Act, 1962 - Held that: - The denial of exemption to the engine was mainly on the basis that KFA was no more a scheduled airline operator at the time of import and in any case, the engine was not imported for repair and maintenance of aircraft for scheduled airline operation the import is mainly to take the aircraft out of country. The appellants came into the picture later when the engine was detained for recovery of service tax arrears and also relating to proper maintenance and upkeep of the engine. The appellant had interest in the said engine as a owner. In such situation, we find no justifiable reason for imposition of penalty on the appellant - penalty set aside. Duty Drawback - Held that: - the appellants prayed for granting of drawback of 98% of the Customs duty paid as imported aircraft engine was in fact taken out of country after being fitted into the aircraft. We note that the impugned order and the present appellate proceedings are not with reference to export of the said engine or eligibility or otherwise for drawback on such export. As such, we cannot take up the plea of the appellant in the rpesent proceedings. Denial of exemption on the imported aircraft engine upheld - confiscation and penalty not sustained - appeal allowed - decided partly in favor of appellant.
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