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2022 (9) TMI 807 - AT - CustomsSeeking provisional release of confiscated goods - levy of redemption fine and penalty - Aircraft - whether the use of aircraft imported by the appellant with benefit of exemption from customs duty under serial 347B of notification no. 21/2002-Cus dated 01.03.2002, as amended by notification no. 61 of 2017 dated 03.05.2007, the exemption notification, for providing passenger air transport service to its group company by carrying personnel of the group company for remuneration would amount to violation of Condition No.104 of the said exemption notification? - whether it is open to Customs to contend that such use in not in accordance with the permit for non-scheduled (passenger) services granted by Director General of Civil Aviation, DGCA when the DGCA has not found such use to be in violation of such permit and had renewed the permit from time to time? HELD THAT:- Aircrafts and helicopters are classified under Customs Tariff Heading 88 of the First Schedule to the Customs Tariff Act, 1975. The tariff rate of duty till 28.02.2007 on the import of aircraft was 3% / 12.5%. Subsequently, pursuant to the proposal made in the Finance Bill 2007, exemption notification no. 20/2009 dated 01.03.2007 was issued inserting Entry 346B and Condition No. 101 in the earlier exemption notification dated 01.03.2002, whereby, the effective rate of duty on import of aircraft for scheduled air transport service was made ‘nil’. No exemption was, however, granted to non-scheduled air transport service and private category aircraft. However, with the issuance of the exemption notification dated 03.05.2007, the effective rate of duty on the import of aircraft for non-scheduled air transport service was made ‘nil’. This exemption notification was as a consequence of the statement made by the Hon’ble Finance Minister in the Parliament. The exemption notification dated 03.05.2007 inserted Condition No. 104 which requires at the stage of import, an approval from MCA to import the aircraft for non-scheduled (passenger) service and an undertaking by the importer to the Customs authority that the aircraft would be used only for non-scheduled (passenger) services and that the operator would pay on demand, in the event of his failure to use the aircraft for the specified purpose, an amount equal to the duty payable on the said aircraft but for the exemption under the notification. The use of the aircraft has been in accordance with the scope of non-scheduled (passenger) services and there is no violation of the undertaking to use the aircraft for non-scheduled (passenger) services. It is not possible to sustain the impugned order dated 31.08.2010 passed by the Commissioner in so far as it concerns the appellant. For these reasons, the penalty imposed upon Sudhir Nayak cannot also be sustained - impugned order set aside - appeal allowed.
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