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2015 (6) TMI 151 - CESTAT MUMBAI

2015 (6) TMI 151 - CESTAT MUMBAI - 2015 (329) E.L.T. 235 (Tri. - Mumbai) - Whether the appellant - importer of helicopters, has breached Condition No. 104 contained in Customs Notification No. 21/2002 (as amended by Notification No. 61/2007) rendering it liable to payment of duty on the import of the 2 helicopters, for which it had previously claimed exemption from duty in terms of the said Notification - Held that:- there is no violation by the importer-appellant to the post import condition No .....

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ced on the said Rule 3, and no other material.

The finding of the Revenue that the service provided was not a passenger service as the appellant did not print passenger ticket nor the flights were opened to public is erroneous. We hold that offering the service to public at large includes entering into agreement for providing regular service to a few members of the public on a regular basis over a period of time. The expression person includes the company under various tax laws. Furth .....

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eement wherein the hourly charges and flying charges along with other charges are mentioned for providing service for extended period of time. Accordingly, we hold that the services provided by the importer are in the nature of non-scheduled passenger service.

In view of the clarification dated 8.8.2008, given by the licensing authority DGCA, while interpreting the importers permit, have clarified that the services offered by the appellant under its various contracts is within the sco .....

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ied out by the appellant importer. Thus, the facts in this case are clearly distinguishable from the facts in the King Rotors case and as such, we hold that the learned Commissioner has erred in relying on the earlier ruling of the Tribunal in the case of King Rotors case (supra). - Decided in favour of assessee. - Appeal No. C/865, 869 & 892/12 - Final Order NO. A/949-951/15 EB - Dated:- 29-4-2015 - Anil Choudhary, Member (J) And P S Pruthi, Member (T),JJ. For the Appellants : Shri Atul Nanda, .....

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4 reads as under:- "(i) The aircraft are imported by an operator who has been granted approval by the competent authority in the Ministry of Civil Aviation to import aircraft for providing non-scheduled (passenger) or non-scheduled (charter) services; (ii) The importer furnishes an undertaking to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, at the time of importation that:- a. The said aircraft shall be used only for providing non- scheduled ( .....

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ices other than Scheduled (passenger) air transport services as defined in Rule 3 of the Aircraft Rules, 1937. (c) Non-scheduled (charter) services mean services provided by a nonscheduled (charter) air transport operator, for charter or hire of an aircraft to any person, with published tariff, and who is registered with and approved by Directorate General of Civil Aviation for such purposes, and who conforms to the civil aviation requirement under the provision of rule 133A of the Aircraft Rule .....

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imposition of penalty on the interest component also. For the sake of convenience references are made to the facts as set out from Appeal No. C/869/2012. The appellant-importer has challenged the adjudication order dated 28/5/2012, passed by the learned Commissioner by which the appellant importer has been found to be in breach of the undertaking given by it. It has been held that the appellant importer is not offering non-scheduled passenger services, as under taken by it, but rather is offeri .....

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pters) have been held liable for confiscation under Section 111(d) of the Customs Act, 1962 with option to redeem at ₹ 9 crores. Appeal by the Director - Rajkumar Menon is against imposition of fine/penalty under Section 112 of ₹ 5 lakhs. The Revenue has also filed cross Appeal No. C/869/2012 praying for modification of the impugned order to the extent that penalty ought to have been imposed also on the interest component upon the importer in terms of Section 114A of the Customs Act. .....

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as amended). 3.1 In terms of the notification, the appellant importer submitted an undertaking dated 7.7.2007 to the Customs Department, that the said helicopters will be used only for providing non-scheduled (passenger) services and in the event of failure to comply with such undertaking, it will pay on demand the requisite tariff/duty. The importer subsequently also imported a 2 nd helicopter, serial No. 36097 under the Bill of entry No. 298817 dated 6.10.2007 and filed a similar undertaking, .....

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tered in November, 2007, among others. The Revenue on its perception that the appellant importer is offering 'Charter services' and not 'Passenger services', as undertaken by it, pursuant to enquiry, issued show-cause notices dated 8/8/2011 which was adjudicated and the proposed demand of duty confirmed, with interest and penalty. Further the helicopters were held liable to confiscation, giving option to redeem. 4. Being aggrieved by the impugned order, the importer has filed the .....

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on No. 104 of the said notification as the services offered by the appellant meet the definition of "non-scheduled passenger services" contained in explanation to the said notification. Non-scheduled passenger services means a transport service other than scheduled passenger air transport services as defined in Rule 3 of the Aircraft Rules, 1937. 4.2 Thus all such air transport services which is other than scheduled passenger air transport services, as defined in Rule 3 of the Aircraft .....

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ghts." "Rule 3(49) scheduled Air transport service means an Air transport service undertaken between the same two or more places and operated according to a published timetable with flights so regular or frequent that they constitute a recognizably systematic services, each flight being open to "use by members of the public." 4.3 It is further urged that in order for the services or flights being operated by the importer, to be in compliance with Condition No. 104, it must po .....

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itions as required under the said notification have filed the following facts in tabular chart on the date of arguments which is reproduced herein:- Element of Service offered by the Importer ONGC Contract dated 8 th Aug 2006 [Pg 143 DA] GSPC Contract in November 2007 [Pg 181 DA] IS AIR TRANSPORT SERVICE AS DEFINED UNDER RULE 3(9) Is a transport for person or things Contract for the carrying out ONGC's off shore operations [Recital 1 at Pg 144 DA], for the use of ONGC and its authorized pers .....

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invoices and payment provided for [Clause 10.1 - Pg 187 DA], Operating as a single flight or as series of flights The flights are to operate as a series on a Daily Flight Schedule which is formulated at 6:00 pm the previous day. Non-scheduled Flights also permitted if notified one hour in advance subject to operational and regulatory limitations [Clause 4.2. - Pg 164 DA] The flights were to operate to various locations of wells located in the KG3 Basin [Schedule B - Pg 199 DA] IS OTHER THAN SCHE .....

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g at 6 pm. There is no time table published by the Assessee rather it is ONGC which hands over to the Assessee's crew a manifest prior to departure of the name and number of passengers, cargo, weight and the estimated time of departure and arrival of the flight. [Clause 4.12 - Pg 166DA] No published time table. The Assessee could also be called upon to arrange special sorties when called upon by GSPC for reasons other than directly connected with Rig Operations at their own cost [Clause 2.3 .....

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.1 (ii) - Pg 166] Flying requirement is categorized as less than 100 hours and more than 100 hours per mensem [Clause 6.1 (iii) - Pg. 167DA]. Availability of a helicopter is calculated on a operation day basis in the manner set out in Clause 7.2 [Pg 169-DA]. Payment is therefore as per actual availability and the actual flying hours done by the helicopters [Proviso to Clause 1.1 (b) - Pg 161 -DA] Flying time has been separately defined [Clause 1.1 (i)- Pg 162 DA] The lack of any system or regula .....

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pril 2008, except for 2 flights daily from 26 Apr - 30 Apr carrying passengers ranging from from 0-47 persons on a given day and cargo ranging from 31 kg - 95 kgs [Pg 214 DA] . In Feb 2008, only flights from 19 Feb to 29 Feb, either one or two flights, passengers ranging from 16 - 36, cargo ranging from 0 kgs - 117 kgs [Pg 220, 222 DA] Payment was as per a Service Day Rate [Clause 2.9 - Pg 201 DA] The Assesse could also be called upon by GSPC to arrange special sorties for reasons other than dir .....

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h. On other days between 1-6 flights a day, on some days no flight, passengers from 13-35 on a given day and cargo ranging from 0 kg - 58 kgs [Pg 218 DA] . In Feb 2008 no flights on 3 rd, 5 th, 10 th, 15 th, 17 th, 19 th, 22 nd 24 th to 26 th Feb 08; on other days flights ranging from 1-7 flights per day, passengers ranging from 7-59, and cargo ranging from 0 kgs - 87 kgs [ Pg 226 DA] In Jan 2008 helicopter made available only from 21 st Jan 08 to 31 Jan 08, of which no flights were made on 22 n .....

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ny person, with published tariff, and of who is registered with and approved by the Director General Civil Aviation for such purposes, and who conforms to the Civil Aviation Requirements (CAR) under the provisions of Rule 133A of the Aircraft Rules, 1937, provided that such Air Charter operator is a dedicated company or partnership firm for the above purposes. 4.5 As per definition in explanation (c), for the service to be a charter service it must be the Charter/hire of an aircraft, there must .....

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on, alteration and substitution of helicopters has in fact taken place, will also be seen from the invoices raised in the matter, where it can be seen that the 2 helicopters in question were used as standby helicopters and were swapped and used between contracts, with different companies, as per the mobilization schedules and availability. The fact that the 2 helicopters in question were used as standby helicopters is evident and made out on the face of the appellant's letter dated 21/6/2008 .....

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is a clarification dated 8.8.2008 by the DGCA, which categorically confirms and clarifies that the activity being conducted by the appellant assessee were within the scope of their NSOP. The said letter is reproduced herein for ready reference:- "Reference No. AV 14014/48/97-AT(I) Dated : 08 August, 2008 Global Vectra Helicorp B-314, 3 rd Floor, 19, SV Road, Santacruz, Mumbai Subject: Interpretation of NSOP (Passenger operations) Sir, Reference is made to your letter No. GVHL/DGCA/02/08 da .....

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in paragraph 2 of your above referred letter are for lease charter of aircraft including its operation etc., and not merely a financial lease, the activities are considered to be within the privileges of Non-Schedules Operator's Permit granted to you. Yours faithfully, Sd/- [RP Sahi] Jt. Director General For the Director General of Civil Aviation 5.1 The second error committed by the learned Commissioner is that he has heavily relied on the judgment in the case of King Rotors & Air Char .....

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to Operate Non-Scheduled Air Transport Services (Passengers). In view of the clarification given by the licensing authority (DGCA) there is no alleged violation of Condition No. 104 vide Notification No. 21/02 (as amended) and as such the impugned order is bad and fit to be set aside. 5.3 The appellant further relies on the ruling of the Hon'ble Apex Court in the case of Titan Medical Systems (P) Ltd. vs. Commissioner of Customs - (2003) 9 SCC 133, wherein the hon'ble Supreme Court has .....

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repair and operation etc. On enquiry by the Revenue regarding import condition, King Rotors did not submit any documentary evidence of end-use of the helicopter. In course of further enquiry, the assessee submitted, in part, copies of passenger manifest, documents evidencing payment of lease amount to M/s Brics Leasing & Finance International Ltd., supplier of the helicopter and copy of agreement with Heligo Charter Pvt. Ltd. Further, Heligo Charter in the said case was admittedly found enga .....

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evident from the judgment in King Rotors case of this Tribunal, the Advocate also wanted to rely on the clarification dated 8.8.2008 issued by the DGCA in the case of appellant herein - Global Vectra Helicorp, which was not accepted by this Tribunal. Such facts are not obtained in the present appellant's case and as such the reliance placed by the Commissioner in the adjudication order on the earlier ruling of this Tribunal in the case of King Rotors (supra) is misplaced and thus have erred .....

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ther quoted the words of Lord Denning in the matter of applying precedents- "Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to an .....

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ed its use for purely passenger services and no other. Further, in the case of King Rotors, this Tribunal took notice of the submissions that the assessee-importer holding NSOP, was entitled to use helicopter for charter operations. The licensing authority was aware of the use of aircraft for charter operations and has never objected to it and further the permit was renewed from time to time, which indicates that DGCA have considered and accepted the charter operation to be permissible for NSOP .....

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to M/s. International Air Charter Operations India Pvt. Ltd., clarifying that "an operator having NSOP (passenger) can conduct charter operations as per para 9.2 of the Civil Aviation Requirements, Section 3, Series 'C' Part III." Further reliance was placed on letter dated 15-7-2009 to the Commissioner of Customs in the case of import of helicopter by M/s. Escorts Ltd. clarifying that "operation of charter services is permissible by NSOP (passenger) holder under paragraph .....

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btained by the appellant herein. The Tribunal further took notice in King Rotor case that it is not in dispute that under the Charter Hire Agreement with Heligo, the assessee allowed the helicopter to be used by Heligo for the purpose of mobilizing and demobilizing of personnel of third party companies and for movement of their freight and/or equipment. Under the agreement, Heligo was to reimburse the actual costs incurred by the assessee in sourcing and acquiring spares for maintenance of the h .....

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ion. Under the arrangement in King Rotors' case, the assessee was unable to use the helicopter during the tenure of the agreement for any other purpose but for a prior consent of Heligo. In other words, the total control over the helicopter was with Heligo during the period of contract and accordingly, the helicopter was not being operated for the use or purpose of public, in general. 5.8 So far condition No. 104 as amended is concerned, it strikes out the following definition of Non-Schedul .....

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taken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognizably systematic series, each flight being open to use by members of the public as defined under Rule 3 (49) of the Air Craft Rules, 1937. 5.9 It is further urged that in order for the services/flights being operated by the assessee to be in compliance with Condition No. 104 it must possess all of the elements contained in Rule 3(49), i.e .....

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thin the meaning of the Aircraft Rules, 1937. Whereas the adjudicating authority has only tested whether the service provide by the appellant are charter service and therefore, have come to the conclusion that they are not Non-scheduled Operation Passenger service. The appellant further relies on the ruling of the Hon'ble Supreme Court in the case of Hansraj Gordhandas vs. H.H. Dave, Assistant Collector of Central Excise and Customs - (1969) 2 SCR 253, wherein the Apex Court have observed as .....

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the power looms "for itself. It is well established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax-payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. If such intention can be gathered from the construction of the words of the notification .....

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t of Law or Equity, what the Legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words or by reasonable and necessary implication." It is an application of this principle that a statutory notification may not be extended so as to meet a casus omissus. As appears in the judgement of the Privy Council in Crawford vs. Spooner. "... we cannot aid the legislature's defective phrasing of the Act, .....

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s employed to effectuate the legislative intent..." 5.11 It is further urged that what was required, is that, the Adjudicating Authority test the services of the Appellant against the definition of non-scheduled passenger services under Rule 3 and employ no other aid or mode of interpretation such as the nature of the NSOP, the CARS issued from time to time and the definitions contained therein. 5.12 It is further urged that the impugned order is erroneous as it proceeds on the basis that b .....

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rt service, other than a scheduled air transport service, shall be operated by any air transport undertaking of which the principal place of business is in any country outside India except with the special permission of the Central Government and subject to such terms and conditions as it may think fit to impose in each case. (2) No air transport service, other than a scheduled air transport service, shall be operated by an Indian air transport undertaking unless it holds a Non-Scheduled Operato .....

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d to do so, amounts to Non-Scheduled Operating Passenger Services, is wrong and fit to be set aside. Accordingly, the appellants pray for allowing its appeal and dismissal of the appeal of the Revenue, which is only on the point of imposition of penalty on interest component. 6. The learned Spl. Counsel for the Revenue states that on investigation it was found that global Vectra is not using the helicopter in question for providing Non-Scheduled (Passenger) Service, but had used the helicopter w .....

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f Civil Aviation for import of helicopter for providing non-scheduled (passenger) service under the Customs Notification No. 21/02 (as amended), provides for exemption from payment of Basic Customs Duty subject to the following condition - (i) the aircrafts are imported by an operator who has been granted approval by the competent authority in the Ministry of Civil Aviation to import aircraft for providing Non-Scheduled (Passenger) Services or Non-Scheduled (Charter) Services; and (ii) the impor .....

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nder the notification. Explanation - For the purpose of this entry:- (a) 'Operator' means a person, organization, or enterprise engaged in or offering to engaged in aircraft operation. (b) 'non-schedules (passenger) services' means air transport services other than scheduled (passenger) air transport services as defined in rule 3 of the Aircraft Rules, 1937. (c) 'non-scheduled (charter) services' means Services provided by a non-scheduled (charter) air transport operator& .....

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Notification No. 06/2006 CE dated 01/03/2006 (Under Sr. No. 54E) and condition 24. The aforesaid condition no 24 is identical to condition no 104 to notification number 21/2002-Cus dated 01.03.2002. 6.1 M/s. Global Vectra, were given Permit no. 08/1998 dated 01.01.1999 by DGCA where in they were authorized to import helicopter for providing non schedules (passenger) services.' At the time of import they had declared that these helicopters will be used for providing non scheduled (passenger) .....

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te Petroleum Corporation and Reliance Industries Ltd and have charged them on monthly fixed charge as well as flying hours basis. The copy of agreement submitted by M/s. Global Vectra supports this contention. The issue therefore is whether an importer who has been permitted to import helicopter for providing non schedule (passenger) services can use it for providing charter services. The Adjudicating authority has held that they cannot use the helicopter for providing non Scheduled (charter) se .....

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, 24.12, 24.14. 6.2 The Spl. Counsel states that requirement (b) as mentioned is not determinative of whether the air transport service is "scheduled" or "non-scheduled". The only difference between the two types of Air Transport Service lies in the fact that one is "scheduled" while the other is "non-scheduled", which would mean that 'scheduled' air service involve flight services operated on the basis of published schedules, whereas 'non-sche .....

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senger) also should be open to use by members of the public. As the flight operations in this case were not open to the public, the helicopter cannot be held to have been used for "non-scheduled (passenger) services". 6.3 It is further urged that condition No.104 refers to Rule 3 of the Aircraft Rules in the context of defining the expression "non-scheduled (passenger) services" and accordingly, it is permissible to take aid of the said Rule in ascertaining the connotation of .....

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6.4 As regards the Revenue's appeal learned Spl. Counsel urges that while determining the quantum of penalty under Section 114A of the Customs Act, the adjudicating authority has erred in not taking the interest amount in consideration, whereas the Section provides - person who is liable to pay duty and interest as the case may be, as determined under subsection (2) of Section 28 shall also be liable to pay a penalty equal to the duty or interest so determined. That CBEC has examined this is .....

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tion by the importer-appellant to the post import condition No. 104 of Notification No. 21/07, as amended. Accordingly, under the undertaking given by the importer, it was required to offer only non-scheduled passenger service. Such service has been defined in Explanation (b) of the said Notification as 'Air Transport Service other than a Scheduled Air Transport (Passenger) Services' with reference to Rule 3 of the Aircraft Rules, 1937. Hence, the one and only source of definition and st .....

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the members of the public and must not operate as per the published schedule or time table and/or with regular and systematic flight. On the detailed scrutiny of the clause of the agreement with respective companies, as well as the vouchers or the invoices, etc. raised for the services provided, we find that the appellant importer meets the requirement as per the definition of non-scheduled passenger service. The finding of the Revenue that the service provided was not a passenger service as the .....

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