TMI Blog2017 (6) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... ting 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ORDER Per: B. Ravichandran The appeal is against order dated 25/06/2014 of Commissioner of Customs (Import and General), New Delhi. The appellant are a company incorporated in the U.S.A. and are engaged in the business of leasing of aircraft, engines and related equipments. The present case relates to import of one aircraft engine through Delhi Customs in the month of November 2012. M/s Kingfisher Airlines Ltd. (KFA), New Delhi filed a bill of entry dated 29/11/2012, through their Custom House Agent, M/s .S. Bedi Co. Pvt. Ltd., New Delhi. The importer claimed exemption from payment of basic custom duty and CVD in respect of aircraft engine, in terms of Notification 12/2012-CUS dated 17/03/2012 (Sl. No. 454) and Notification 12/2012-CUS dated 17/03/2012 (Sl. No. 305) for CVD. The imported goods were examined by the Customs officers on 05/12/2012. Entertaining certain doubt regarding the eligibility of the goods for the claimed exemption, the bill of entry was sent for reassessment. The Assessing Officer, on 06/12/2012, raised queries regarding fulfillment of conditions of the said notifications for claiming exemption. After getting replies from the CHA KFA, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .8625390 dated 29/11/2012 ; 2. Whether the exemption from payment of CVD in terms of Sr. No. 305 of Notification No.12/2012-CE dated 17/03/2012 is admissible to the impugned engine imported vide B/E No.8625390 dated 28/11/2012 ; 3. Whether the impugned engine is liable to confiscation in terms of Section 111 (o) of the Customs Act, 1962 ; 4. Whether the impugned engine has been seized within the limitation period ; 5. Whether the demand of duty in the SCN is barred by limitation period ; 6. What is the role played by each of the Noticees and quantum of penalties leviable on each Noticee, if any . The noticees filed their defence replies and the case was adjudicated by the Original Authority, resulting in the impugned order. The impugned order held that the exemptions from payment of custom duty and CVD are not available to the appellant and the assessment of bill of entry denying the exemption is correct and proper. The appellants were held to be the importers, after due amendment in the bill of entry. The Original Authority ordered for recovery of customs duty of ₹ 8,69,49,646/- as already assessed in the bill of entry, alongwith applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29/11/2012. Such detention was to be considered for relevant date and not the subsequent seizure on 27/11/2013. Considering the original date of detention, the show cause notice is barred by limitation ; (viii) the appellants have not violated any provision of Customs Act, 1962. They came into the picture only to safeguard their commercial interest, due to failure of KFA in their operation as scheduled airline. The appellants acted in utmost good faith on the advice of CHA and KFA. They have never intended to mislead or to misrepresent any fact relevant to the importation of the aircraft engine. (ix) The bill of entry was not duly reassessed. No adjudication on admissibility of exemption claimed by the importer was made. Since, the engine was never cleared out of customs bounded area, the question of payment of duty or interest does not arise ; (x) neither the engine is liable for confiscation nor the appellants are liable for any penalty as there is no offence involved in the importation of the said machine. The conduct of the appellant is not in violation of any of the provisions of Customs Act, 1962 ; (xi) various case laws have been relied upon in support o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, for the said aircraft engine. The Original Authority denied the exemption on the ground that condition No. 21 (relevant to Sl. No. 454 in the table attached in the Notification 12/2012-CUS) has not been fulfilled. The said condition stipulates that parts of aircraft of Heading 8802 are fully exempt, if imported for servicing, repair and maintenance of aircraft, which is used for operating scheduled air transport service or the scheduled air cargo service, as the case may be. It is recorded by the Original Authority that the sole purpose of importing the present aircraft engine was to take back the delivery of aircraft MSN 3089, the lease for which was terminated, even prior to the import of said engine. The said aircraft was intended to be registered with Irish Civil Aviation Authorities. Already, the proceedings for de-registration of aircraft with Indian Civil Aviation register has begun. Application to that effect has been filed with DGCA. Accordingly, the Original Authority concluded that the aircraft MSN 3089 could not have been used in operating air transport service or the scheduled air cargo service for the following reasons :- (a) The said Aircraft was on the AOP ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. Further, all the parties to the dispute categorically admitted that the import of engine is only for the purpose of making the aircraft air worthy an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Thereafter certain detailed enquiries were conducted by the officers by recording statements and calling for documents from KFA, appellant and CHA. We note that the Original Authority invoked the provisions of Section 111 (o) to order confiscation of the imported engine. A plain reading of the above provision will indicate that same is applicable in respect of any goods which were exempted subject to certain condition and upon violation of such condition, the said goods shall be liable for confiscation. We note that in the present case the bill of entry was filed claiming certain exemption. The same was denied at the time of assessment by the Customs Authorities. Hence, the question of allowing any exemption and with condition and thereafter the importer violating such condition does not arise. In fact, we are not in agreement with the observation made by the Original Authority at para 42.3 of the impugned order. It is recorded that when the Department is in possession of evidence that the condition of exemption notification could not be fulfilled, the Department should take preventive action under the provisions of Customs Act, 1962. We are not convinced or persuaded by such r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere that the appellants submitted that the detention ordered by the Customs Authorities immediately after filing of bill of entry, based on the revenue recovery action initiated by the Service Tax Department, Mumbai should be considered as detention or seizure under Customs Act. We find that the said submission is on erroneous appreciation of the factual and legal position. The Customs Authorities in New Delhi acted as per the request of another wing of the same Department who are having confirmed tax arrears of ₹ 63 crores against the importer, who filed the bill of entry. In pursuance of the detention notice issued for recovery of such confirmed arrears, the Customs Authorities, New Delhi acted by detaining the said import cargo. This is a revenue recovery action permissible under law and not a seizure in terms of Customs Act which is for contemplated punitive action against the goods/importer. The detention for revenue recovery is entirely different from seizure under Customs Act. As such, we find no merit in the contention of the appellant on this ground. 18. The last point for determination is the liability of the appellant for penal action. The Original Authority imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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