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M/s. Inter Globe Aviation Ltd. Versus The Commissioner of Customs (Import) , The Commissioner of Customs, Central Excise And Service Tax, Hyderabad-II

2015 (8) TMI 382 - AUTHORITY FOR ADVANCE RULINGS

Classification of goods Duty Exemption Replacement of Seats Applicant intends to import seats of aircraft for replacing existing seats to providing more comfortable flying experience to fliers; that seats requiring repairing due to wear and tear shall also be replaced Whether new seats that were imported for replacing existing seats were said to be for servicing, repair or maintenance of aircraft under Notification No. 12/2012-Cus Held that:- Supreme court opined in Collector of Custom .....

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s were integral part of aeroplane Rule 3 (33C) and Rule 60 of Aircraft Rules, 1937, maintenance inter-alia include replacement, modifications, repairs and servicing Thus, new seats that were being imported for servicing, repair or maintenance of aircraft Decided in favour of Assesse. - Ruling No. AAR/Cus/06/2015 ,Application No. AAR/44/Cus/05/12 - Dated:- 24-7-2015 - V. S. Sirpurkar, Chairman And Shri S. S. Rana, Member ,JJ. For the applicant : Shri Lakshmi Kumaran, Adv For the Department .....

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weight; that in this process, seats requiring repairing due to wear and tear shall also be replaced. Applicant further submits that for such repair and maintenance activity under the aircraft, they had obtained approval from Directorate General of Civil Aviation (DGCA) as required under Civil Aviation Requirements (CAR)-145; that the certificate of approval allows them to carry out minor structural repair; that replacement of seats get covered under such minor structural change; that during the .....

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180 seats; that such aircrafts were originally fitted with the Weber Passenger seats, which have been replaced by Dragonfly brand in 52 aircrafts out of its fleet of 96 aircrafts; that weight of Weber seat is 13 kg, as compared to weight of Dragonfly seat, which is 9 Kg; that applicant has been able to reduce to weight of its one Airbus 320 by 700 Kg approximately; that if there is reduction of 1% in weight, 100 kg of fuel is saved for a flight. 3. This Authority vide order dated 10.02.2014 had .....

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ated 23.03.2013. Therefore, application needs to be rejected as per Section 28 E (2) (a) of the Customs Act, 1962. 4. Section 28 I (2) (a) of the Customs Act, 1962 envisages that the Authority shall not allow the application where the question raised is already pending in the applicant's case before any officer of Customs, the Appellate Tribunal or any Court. It is noticed that the applicant filed application before this Authority on 28.06.2012. However, first Bill of Entry was filed on 15.0 .....

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ith this Authority, only when they sought clarification in respect of Bills of Entry filed. Applicant submits that vide letter dated 01.01.2013, they informed Assistant Commissioner of Customs (Import), Hyderabad i.e. concerned officer, about the same, whereas imports were made from 15.01.2013. This point has not been countered by the Revenue. Therefore, we are convinced that the applicant had informed the Revenue before affecting said imports. In view of above, we hold that activity of import o .....

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ustoms duty subject to fulfillment of condition no. 21 provided therein. The relevant part of condition no. 21 reads as follows:- If imported for servicing, repair or maintenance of aircraft, which is used for operating scheduled air transport service or the scheduled air cargo service, as the case may be; 8. Applicant has mentioned that the terms servicing , repair and maintenance have not been defined under Notification No. 12/2012-Cus. As the benefit is being extended to the aviation industry .....

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ombination of overhaul, inspection, replacement, defect rectification and the embodiment of a modification or repair or test: Rule 60 - Maintenance standards and certification- (I) In this rule, 'maintenance' refer to performance of all work necessary for the purpose of ensuring that the aircraft is airworthy and safe including servicing of the aircraft and all modifications, repairs, replacements, overhauls, processes, treatment, tests, operations and inspection of the aircraft, aircraf .....

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s which are permitted to be undertaken by such approved organizations. As part of the 'minor scheduled line maintenance', it allows such approved organizations to undertake replacement of passenger and cabin crew seats. 11. Applicant relied on the decision of New Holland Tractors (India) Pvt. Ltd. Vs CCE, Noida, [2010(253) ELT 249 (Tri.-Del.)], in support of their contention. Further, applicant submitted that Deputy Director of Airworthiness from Department of Civil Aviation has clarifie .....

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39;Aircraft seats' cannot be considered as 'Spares / Parts' Aircrafts. Further, Revenue submits that the new seats are not meant for replacing damaged or unworkable seats but for up-gradation of the aircraft in order to make it more comfortable as an activity of servicing, repairing or maintenance. Therefore, the benefit of exemption notifications cannot be extended to aircraft seats as they do not qualify as parts of aircraft. 13. It is observed that Notification No. 12/2012-Cus dat .....

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e; b) from so much of the additional duty leviable thereon under sub-section (i) of Section 3 of the Customs Tariff Act, 1975 as is in excess of the additional duty rate specified in the corresponding entry in column 5 of the said Table, subject to any of the conditions, specified in the Annexure to the notification, the condition number of which is mentioned in the corresponding entry in column (6) of said Table. 14. S. No. 454 of above notification (relevant entry of the Table) is reproduced a .....

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aintenance of an aircraft mentioned in clause (ii) of Condition No.(75) Explanation.- The expression scheduled air transport service and scheduled air cargo service shall have the meanings respectively assigned to them in Condition No. 75. 15. Condition No. 75 of the Notification No. 12/2012 dated 17.03.2012 read with Notification No. 334/2012- TRU dated 23.03.2012, is reproduced as under; 75 If,- (i) Imported by an operator or on behalf of the operator, for operating scheduled air transport ser .....

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date of entry. Explanation.- For the purposes of this entry, (a) operator means a person, organization or enterprise engaged in or offering to engage in aircraft operation; (b) scheduled air transport service means an air transport service undertaken 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; and (c) schedu .....

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tification No. 12/2012-Cus is not available to import of aircraft seats. Further, Revenue relied on the judgment in Indian Airlines Vs Collector of Customs [1988 (37) ELT 420 (T)], wherein it was held that benefit of exemption notification no. 145/77-Cus dated 1977 is not to be extended to aircraft seats imported by Indian Airlines, as Heading 94.01/04 and not Heading 88, specifically covers seats of a kind used for aircraft. Notification No. 145/77-Cus dated 9.09.1977 exempted Customs duty levi .....

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mported aeroplane tyres can be exempted from custom duty as aeroplane parts. It was held that neither of the two Notifications places the goods covered by it under any specific head of the Customs Tariff and it appeared that the law makers were conscious of the fact that the goods they are listing for exemption fell under different headings or chapters of the Customs Tariff. For example, of the articles mentioned in Notification No. 145/77-Cus., while rubber tyres and tubes for aeroplanes must f .....

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he chapter head into the notifications, the exemption become possible for all kinds of aeroplane parts described under these notifications. This Larger Bench judgment also negates the decision rendered by the Tribunal, on similar issue and relied upon by the Revenue. 18. Hon'ble Supreme Court in case of Collector of Customs, Bangalore vs. Maestro Motors Ltd. [2004 (174) ELT 289 (SC)] while deciding whether M/s Maruti Udyog Ltd is entitled to benefit of Notification No. 29/83 held that if acc .....

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ation exemption is granted with reference to tariff items in the First Schedule to the Customs Tariff Act, 1975, then the same Rules of Interpretation must apply. In that case the goods will be classified, even for the purposes of the Notification, as they are classified for purposes of payment of customs duty. But where the language is plain and clear effect must be given to it. In this Notification what is exempted is components, including components of fuel efficient motor cars in semi-knocke .....

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ification, even though for purposes of classification they may be considered to be cars. 19. Applicant proposes to import seats of aircraft claiming exemption of Notification No. 12/2012-Cus (S. No. 454), wherein parts (other than rubber tubes) of aircraft of heading 8802 are subjected to nil rate of duty. Contention of the applicant is that seats of aircrafts are parts of aircrafts, thus, Notification No.12/2012-Cus needs to be extended to them. Revenue on the other hand, heavily relying on Gen .....

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w that all parts (other than rubber tubes) of aircraft of Heading 8802 are exempt from Customs duty including seats of aircraft. As per S. No. 454 of subject notification, parts of aircraft of Heading 8802 falling under any Chapter of Customs Tariff are exempt from duty. Tariff item 8802 contains Other aircrafts (For example, Helicopters, Aeroplanes), Spacecrafts (including Satellites) and suborbital and Spacecrafts Launch Vehicles. Applicant proposes to import seats of aircrafts, which is part .....

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rect. 20. The benefit of Notification No. 12/2012-Cus (S.No. 454) is available to parts (other than rubber tubes), of aircraft of heading 8802. There can be no doubt that seats are integral part of the aeroplane. This is also confirmed by the Department of Civil Aviation by clarifying that the seat would form part of the aircraft. Further, it is not possible for the airline to operate the flight without seats. Similarly, one cannot think of passengers travelling in aeroplane without seats. Furth .....

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