TMI Blog2020 (3) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... amenable to the conclusion of the aircraft having been imported for own use. Both scheduled and non-scheduled air transport services are clearly not intended for own use but to contend that the aircraft have been so used merely owing to evaluation of usage through the prism of revenue maximising would have consequences for all airlines and other air services operating in the country. It is the conditions of the exemption notification, and not a purported intent, that should be complied with and it is those conditions alone that can be tested for compliance. Our independent findings on merit are not controverted by the grounds of appeal or oral submissions, either on fact or by case law, and stand reinforced. The harmonious construct of the finding on obligation of performance, the lack of acceptability of the sole decision relied upon by Revenue, the consistent stand adopted by the Tribunal in all other decisions, the renewal of the permit to operate as non-scheduled passenger service by the competent statutory authority and the clarifications issued by that authority, in general as well as to the Commissioner of Customs, leaves us with no option but to dismiss the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice, the factual contours of the dispute may be worth recalling. 3. M/s. Airmid Aviation Services Pvt. Ltd., a constituent of the India Bulls group of companies, imported one Challenger 604 (Serial No. 5425) and one Cessna Citation 550 (Serial No. 5501076) vide Bills of Entry No. 163/11-12-2007 and No. 134/7-2-2008 and, against intent to deploy these for non-scheduled air transport (passenger) service , sought exemption from basic customs duty under Notification No. 21/2002-Cus., dated 1st March, 2002 (as amended) and from additional duties of customs under Notification No. 6/2006-C.E., dated 1st March, 2006 (as amended). The aircraft, after assessment to nil duty on the strength of Permit No. 4/2008, dated 30th January, 2008 and upon undertaking, as prescribed in the exemption notification, to use for non-scheduled air transport (passenger) service , were registered as VT-IBR and VT-IBS on 19th December, 2007 and 29th February, 2008 and permit was endorsed for non-scheduled (passenger) service vide letter dated 30th January, 2008 and 17th March, 2008 respectively. Admittedly, the permit was further renewed on 29th January, 2010. 4. It would appear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 3, Air Transport Services C , Part III dated 8 October, 1999 (CAR-III) and Carriage by Air Act, 1972 had undergone substantial change in the corresponding provisions of Civil Aviation Requirement dated 17 May, 2000 (CAR-V) as well as notification dated 30 March, 1973 of Ministry of Tourism Civil Aviation to exclude operators in the domestic territory from the mandates for international passage and that, in circumstances of the specific embargo on sale of individual tickets, the alternatives of invoices and boarding passes adopted by them should be accepted. It was also their submission that, if clause 9.7 of Civil Aviation Requirement of 1999 (CAR-III) continued to subsist, the compliance thereof, by furnishing of sample ticket, would have been insisted upon by the Director General of Civil Aviation which it evidently did not. The noticee claimed that tickets were issued by airline operators only for wider dissemination of exclusions from liability, as covenanted by the Warsaw Convention, 1929 and the Montreal Convention, 1999, and was not to be construed as the distinguishing determinant of a passenger service operator, whether scheduled or non-scheduled. 6. The adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the conditions were incorporated in the scheme for exemption from duties, and exclusion from licencing, with intent to disbar corporate entities from availing the exemptions on import of aircraft for their own use which the adjudicating authority appeared not to have concerned itself with. 8. The exemption notification is, thus, pivotal to the dispute. It is intended to cover - 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 subject to furnishing of undertaking that - (a) The said aircraft shall be used only for providing non-scheduled (passenger) services or non-scheduled (charter) services, as the case may be; and (b) He shall pay on demand, in the event of failure to use the imported aircraft for the specified purpose, an amount equal to the duty payable on the said aircraft but for the exemption under this notification. with the expressions operator , non-scheduled (passenger) services and non-scheduled (charter) services defined therein but with reference, for the latter t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d means of public finance, most often, includes within it a tax policy that has the object of maximising revenue; these are patent in the tariff schedules appendant with the taxing statutes. However, any deviations, absolute or conditional and partial or entire, are exceptions to that objective of tax policy. Governance is not all about, or a limited to, tax collection; policies of the Government formulated by the various departments in the discharge of their respective allocated functions may, at times, be implemented by tweaking the tax rates which, in effect, are the various exemption notifications. As pointed out by Learned Counsel appearing for the respondent, citing the budget speech of Hon ble Finance Minister, the impugned notification was impelled by proposals from the Ministry of Civil Aviation. It is, therefore, inconceivable that the availment, or denial, of the exemption can be decided without reference to the regulatory mechanism enacted for control of the air transportation industry in India. The public interest imperative of expanding air traffic network, of upgrading infrastructure and of strengthening the fleet, was, perhaps, considered to be attainable with such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in possession of non-scheduled operator s permit issued by the Central Government. In Rule 3A scheduled air transport service is defined as - (49) an air transport service undertaken between the same two or more places and operated according to a published timetable or with flights so regular frequent that they constitute recognisably systematic series, each flight being open to use by members of the public and governed by Schedule XI of the said Rules while air transport service is defined in Rule 3 as - (9) a service for the transport by air of persons, mails, or any other thing, animate or inanimate, for any kind of remuneration whatsoever, whether such service consists of a single flight or series of flights; and air transport undertaking as- (9A) an undertaking whose business includes the carriage by air of passengers or cargo for hire or reward; Transport by air for remuneration is, thus, permitted to air transport undertakings that are not scheduled air transport services who obtain non-scheduled operator s permit. These undertakings need not exclusively operate for hire or reward but should be in business that includes transportation for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... privilege of limiting the liability as carrier owing to which the exercise of option not to issue tickets may merely widen liability without compromising status. Carriage of employees of group companies does not alter the status of the aircraft as such employees are not excluded from the larger world of the travelling public. The attempt by Revenue to segregate people into classes that are neither recognised nor acknowledged either in the notification or by the statute governing air transportation is nothing but the imposition of a whimsical and prejudiced template to deny the exemption from duty and as the qualification for import is not compromised at the threshold, as alleged in the grounds of appeal, the requirement of licensing is not any longer an issue in dispute. We, therefore, do not intend to tarry further on that submission though we may advert to the characteristics at a later stage in the decision. 14. The other distinctions that recur in this dispute do not pertain to classification of aircraft which, as we have noted supra, are restricted to three - private aircraft, aerial aircraft and public transport aircraft - with appropriate scaling of regulatory intrusion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orised Representative and the counter mounted by Learned Counsel for the respondents on the entitlement to continue with benefit of exemption. Besides elaborating upon the twin pillars in the memorandum of appeal, viz., that operation of charter flights by holder of permit for non-scheduled passenger service is a breach of undertaking as the exemption scheme considers the two to be mutually exclusive and that, import of private aircraft being the consequential effect of such non-compliance, the privilege of exclusion from possession of import licence is not available to the respondent herein, Learned Authorised Representative drew upon certain decisions that are claimed to cover the issue in dispute. Furthermore, in the grounds of appeal, particular emphasis is placed on the deployment of certain expressions in the notification to allege the breach of the undertaking to operate exclusively for passengers. The specific characteristic of private aircraft has been examined by us supra to concur with the adjudicating authority that there can be no inference from processes, conformed to or otherwise, to give a wider meaning to private aircraft than intended by the Aircraft Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and charter service was the exception, an alternative necessitated by a combination of lack of private aircraft and the desire to freed from the constraints of regularity that is the essence of public access, which required specific permission for each flight and barred from issuing individual passenger tickets; these were intended to ensure that permission to operate charters were not misused for offering public access. With the dismantling of statutory air corporations and migration to open sky policy , non-scheduled passenger service , till then operated as restricted charter without the dignifying recognition of such nomenclature, was transformed as the alternative within the statute for eschewal of the outward manifestation that distinguished charter operation . Ticketing was, thus, more of a mimicking of scheduled air transport service than a statutory qualification of the new permits. In accordance with Rule 133A of Aircraft Rules, 1937, regulation of non-scheduled passenger service was put into place through Civil Aviation Requirements. Thus, the introduction of a class of non-scheduled service in commercial aviation did not, except for the christening, mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity afforded by the Central Government and the respondent could not have undertaken that without the permit described in the notification, the breach thereof would render the regulator complicit which is not alleged anywhere. Therein lies the fatal flaw in the trajectory of the proposition of the customs authorities - the coup de grace can be administered only if there be an offender and, naturally, on committing of an offence. 20. It is suggested in the grounds of appeal that, except for the categorisation, there is no difference between scheduled air transport service and non-scheduled (passenger) operator permit and that usage by employees of group companies makes manifest the want of regularity and accessibility intended by the air transport policy. We have, supra, come to the same conclusion of insignificant differences between the two from a perusal of the legal framework; we, however, are unable to concur that the proposition of Revenue is the logical consequence. It would be tantamount to suggesting that a scheduled air transport service owned the Government of India is barred from affording paid passage to employees of the airline or of the Government. Mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d domain expertise, of officers of customs. Those circumstances justifying, and indeed obligating, autonomous action by customs authorities does not extend to evaluation of matters pertaining to statutory regulation of air space which is not the domain of the appellant herein. 21. Drawing inspiration from the review order, Learned Counsel argued that the concatenation of the expression as the case may be with the separate definitions of the two sub-classes, viz., non-scheduled (passenger) service and non-scheduled (charter) service , in the context of compliance mandated in the exemption notification, can be construed only as intending the two to be mutually exclusive. Learned Counsel for the respondent has placed reliance on the decision of the Hon ble Supreme Court in Sulochana Amma v. Narayanan Nair [1995 (77) E.L.T. 785 (S.C.)] to submit that an Explanation should be interpreted in harmony with the main provision and canvassed for the interpretation accorded to this very expression by the Hon ble Supreme Court in Subramaniam Shanmugam v. M.L. Rajendran and Others [(1987) 4 SCC 215]; we do not think that the decision in re Subramaniam Shanmugam would render us unique ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate orders, are obliged to ascertain legality and propriety within the fundamental injunction in Article 265 of the Constitution and not to harvest tax whenever and wherever and by whatever means. We do not dilate further on this and leave it to the appropriate authority to draw wholesome wisdom from the statutory provisions, the scale of governance and the role of the tax collector in the administrative framework. 23. It has also not escaped our attention that the show cause notice, and the reviewing authority, appeared to have been overwhelmingly influenced by the generally accepted features of scheduled air travel as essential identifiers of non-scheduled operation also without comprehending that non-scheduled is intended as permit for others to operate in tandem with, though not as, scheduled air transportation service. Over the years, many that were charter operators , classed initially as air taxi operators and subsequently within the statutorily recognised non-scheduled operators, went on to become scheduled air transport services ; the notification itself acknowledges the distinction by defining non-scheduled (passenger) service operator as that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iguity in the exemption notification. An ambiguity is noticeable only if the view of the appellant on the distinction between non-scheduled passenger operation and non-scheduled charter operation - that of carrying employees - is not facile. We do not, for reasons cited supra, consider the tax administrator to be the arbiter of airspace control regulation and in the light of the framework established in the Aircraft Rules, 1937, as well its subordinate instruments, are convinced of the lack of ambiguity therein. In concurring with the finding of the original authority on the cross-over flexibility available to the non-scheduled (passenger) operation permit , we do not need to insinuate intent absent in the notification. 25. Learned Authorized Representative further submits that the appeal of Revenue against the decision of the Tribunal in Global Vectra Helicorp Ltd. v. Commissioner of Customs (Import), Mumbai [2015 (329) E.L.T. 235 (Tri. - Mumbai)] has been admitted and is no longer binding precedent as the jeopardy arising therefrom is laid down thus - 14. Article 136 of the Constitution of India confers a special power upon this Court in terms whereof an appeal shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is important to note that legal issues resolved in the Tribunal are, and as happens most often, carried to the constitutional Courts and the consequence of acceptance of the submission of Learned Authorised Representative would require independent finding in each and every disposal by the Tribunal, if necessary by repetition, even on identical facts. Judicial discipline would be consigned to the rubbish heap in a Tribunal that functions through various Benches situated at different locations and under the jurisdictions of several High Courts. Therefore, the relevance of the decision in re Global Vectra Helicorp Ltd., as well as the others handed down by the Tribunal, cannot be wished away with a sweep of the magic wand of jeopardy. 27. Learned Authorised Representative canvassed that the decision of the Tribunal in King Rotors Air Charter P. Ltd. v. Commissioner of Customs (ACC Import), Mumbai [2011 (269) E.L.T. 343 (Tri. - Mum.)] should be followed while urging us to discountenance the reliance placed by respondents upon the decision of the Tribunal in re Sameer Gehlot, declared to be per incuriam in the former. 28. Discipline and binding precedent are articles of faith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Import), Mumbai - 2011 (269) E.L.T. 343 (Tri. - Mum.) = 2011-TIOL-1785-CESTAT-MU and has taken a diagonally opposite view and denied the benefit of exemption notification. and of Learned Counsel therein that - 11.10 it is further urged that the facts of the present case are fully covered by the precedent ruling of this Tribunal in favour of the appellant in the case of CC, New Delhi v. Sameer Gehlot - 2011 (263) E.L.T. 129 (Tri. - Del.) and Global Vectra Helicorp Ltd. v. CC (Import), Mumbai - 2015 (329) E.L.T. 235 (Tri. - Mumbai) = 2015-TIOL-968-CESTAT-MU. Accordingly, Ld. Counsel for the appellant prays for allowing their appeal by setting aside the impugned order and for return of their Bank Guarantee, duly discharged. which, though taken on record, did not prevent the Tribunal from holding that the particular difficulties, impeding the referral Bench in rendering a decision, warranting recourse to Larger Bench is not apparent in the reference order and, noting that the facts relating to the dispute in re King Rotors Air Charter P. Ltd. which, taking a stance contrary to that of the earlier decision in re Sameer Gehlot and thereby cited, in re VRL Logistics Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in King Rotors Air CharterP. Ltd. v. C.C. (ACC Import), Mumbai - 2011 (269) E.L.T. 343 (Tri. - Mumbai). After referring to the earlier decision in Sameer Gehlot, the Tribunal in King Rotors Air Charter, at paragraphs 24.18 and 24.19 of the order proceeded on any independent interpretation of Notification No. 61/2007-Cus. and concluded that though the fact of undertaking takes place at the time of importation, the subjects of undertaking at things of the future. The undertaking requires that the imported aircraft shall be used only for providing non-scheduled passenger services and not for non-scheduled charter services. The second condition of the undertaking is that the duty of customs should be paid on demand by the importer in the event of failure to use the aircraft before the specified purpose. In King Rotors Air Charter violation of the conditions of import to place post-import. The tribunal concluded that this crucial aspect did not receive attention in the Sameer Gehlot case when it view that the condition was only a pre-importation condition. According to the Tribunal in the later decision, the post-importation nature of the subjects of undertaking was not appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alysis supra of the superfluity of the substitution of the Explanation in the exemption notification that erased the expression as the case may be and, ostensibly, obliterated the distinction between non-scheduled passenger service and non-scheduled charter service distinguishes a key finding in re King Rotors Air Charter P. Ltd. but for which, the outcome therein may, in all probability, have been consistent with the various other decisions of the Tribunal. Again supra, we have drawn upon the wisdom of the Tribunal in concluding that the decision in re King Rotors Air Charter P. Ltd. had erroneously declared the earlier decision to be per incuriam which would restore the decision in re Sameer Gehlot as a binding precedent. Moreover, in ignoring the decision in re Sameer Gehlot, the validation conferred by the approval of Hon ble Supreme Court and, thereby, the binding precedent thereof was, obviously, not available to the Tribunal while deciding in re King Rotors Charters P. Ltd. We would be committing an act of judicial indiscipline if we were to ignore that approval merely because the decision impugned before the Hon ble Supreme Court is in conflict with a later deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opter 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 would reimburse the actual costs incurred by the assessee in sourcing and acquiring spares for maintenance of the helicopter. The necessary infrastructure for maintenance of the helicopter would also be provided by Heligo. The entire cost of insurance to cover all liabilities in respect of passengers, cargo, crew, helicopter and third party would be incurred by the assessee and reimbursed to them by Heligo. Heligo would also pay monthly remuneration to the pilots of the assessee. They would also bear the costs of maintenance of the helicopter and also the costs of fuel and consumables required for its operation. On a perusal of the charter-hire agreement between the assessee and Heligo, we find that Heligo chartered/hired the helicopter for their exclusive use and they incurred the entire costs of operation and maintenance of the helicopter and even the cost of insurance to cover all liabilities. One significant term of the contract was that the helicopter shall be utilized solely for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-scheduled operators and their operations and says : In such operations, the operators shall not publish their time schedules as the operations are of non-scheduled nature.] Other features are common for both scheduled and non-scheduled services. It would follow that, like scheduled air transport service (passenger), non-scheduled air transport service (passenger) 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 . and raised as a contention in the grounds of appeal, as well as the show cause notice, does not appear to hold true. The appellation of scheduled and its contra have naught to do with schedules, or timetables, but with the class to which air transport services are assigned. The former has a permanent, and the highest, status under Aircraft Rules, 1937 with privileges accorded by international conventions on freedoms of the air while the latter is a status arising from not being scheduled but by permit. That is all the more reason to discard the decision as distinguishable on facts and findings. 34. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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