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TMI Blog2020 (3) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under the Foreign Trade Policy for imporation and that offering of the imported aircraft on charter was not violative of the conditions for exemption accorded to 'non-scheduled (passenger) service' operator. Those findings are contested by Revenue in these proceedings. 2. In thus dropping the demand for duty and relieving the imports from restrictions of licencing regime, the adjudicating authority did not, however, appear to be convinced by the claim of the noticee therein that customs authorities would be encroaching upon the jurisdictional competence of other statutory authorities in ascertaining the utilisation and deployment of aircraft after importation or that the obtention of permit from Directorate General of Civil Aviation for operating as 'non-scheduled (passenger) service' sufficed to fulfil the obligation in the undertaking prescribed by the notification. Findings on these, not strangely, are not impugned in the appeal of Revenue and, in the absence of any memorandum of cross-objection from the respondent, are beyond the scope of challenge in, or coverage by, our decision. Before adverting to the submissions of Learned Authorised Representative for confirming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion as 'non-scheduled (passenger) service', entailing regular deployment between two or more cities and accessibility to the 'travelling public', was breached in totality by predominant usage for group employees that was the prerogative of 'non-scheduled (charter) service' operators with consequent default categorization as 'private aircraft.' From this, it would appear that the investigators presumed that Aircraft Rules, 1937 admitted only to categorization as 'scheduled passenger service' or 'private aircraft' and the consequences of the latter could be avoided only by conforming to definition of 'non-scheduled (passenger) service' or 'non-scheduled (charter) service' by the grace of the exemption notification. 5. In their defence against the allegations in the show cause notice, the noticee therein, and respondents herein, sought to draw support from the Civil Aviation Requirement in Section 3, Air Transport Services 'C' Part III, dated 8 October, 1999 (CAR-III), the corresponding provisions in Civil Aviation Requirement dated 17 May, 2000 (CAR-V) amended on 1 June, 2010 and the clarifications dated 22 August, 2008, 15 July, 2009 and 20 July, 2010 issued by the Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing review of the impugned order by the designated Committee of Chief Commissioners in exercise of authority conferred by Section 129D(1) of Customs Act, 1962, seeks contrary outcome as the judicial sanctification accorded to principle of strict construction of exemption notifications with no latitude for implied eligibility in the absence of express intent was alleged to have been overlooked. It was also contended that the original authority had erred in concluding that the 'non-scheduled (passenger) service' permit issued to the respondent had not been compromised by alternative deployment for charter as the notification, by employing the expression 'as the case may be', clearly intended these to be mutually exclusive activities and that sustaining of the findings of the original authority would defeat the separated eligibility and differing regulation embodied in Civil Aviation Requirement. It is also pointed out that the interchangeability, recognised only by the amendment in Finance Act, 2011, impliedly precluded eligibility prior to that. The discarding of the allegation of having operated as 'private aircraft' is questioned in the face of default categorization by exclusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with companies or firms that are permitted to carry out charter operators, who are eligible for the exemptions and continue to be while in that capacity. The status, and eligibility thereof, is contingent upon approval under Rule 134A of Aircraft Rules, 1937, for passenger services, and, for charterers, the existence of published tariff besides registration and approval by the Director General of Civil Aviation, and conformity with Civil Aviation Requirement issued under Rule 133A of Aircraft Rules, 1937. 10. The foundational inevitability of recourse to Aircraft Rules, 1937 for extending the benefit of a tax emption assigns a critical, and inavoidable, significance to that statutory instrument. Doubtlessly, tax on import, or manufacture, of aircraft arises from the sovereign authority vested in Parliament and any exemption thereto, emanating from the statutory delegation to the Central Government, is the preserve of the Department of Revenue. However, imposition of tax, or forbearance therefrom, are not necessarily, and almost certainly not, motivated by ways and means. Exemption, undoubtedly an element of tax policy, is unfailingly also an aspected manifestation of general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensive, as they are, bear the legislative sanction for strict, and undeviating, enforcement in proportion to the unfavourable consequence of non-regulation. Policies are, therefore, tuned to be in accord with such regulation. In the context of such mirroring of policy, any statutory instruments must, in the absence of an inherent explanation, be calibrated with the statutes governing the sector. As far as air services are concerned, there is a detailed exposition on the genesis of the exemption in the decision of the Tribunal in Dove Airlines Pvt. Ltd. v. Commissioner of Customs (Prev.), New Delhi [2014 (313) E.L.T. 292 (Tri. - Del.)] which serves to remind that policy-making in Government is not subordinate to revenue maximization and that every exemption is not to be viewed through the prism of compensatory quantification. 12. The notifications under the two indirect tax statutes, though differently worded in the perspective of the taxable event, is substantially of identical effect. As per Aircraft Rules, 1937, air transport service can be undertaken only by a 'scheduled air transport service' which, till 1994, was the exclusive monopoly of the two air corporations in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1937, the statutory categorisation of aircraft is restricted to private aircraft, public transport aircraft and aerial aircraft each having its clearly demarcated role in carriage of persons and goods or undertaking of assignment with remunerative work as the distinguishing feature of the latter two. As there is no allegation of carriage of persons in the impugned aircraft without remuneration, there can be no cavil on the finding of the original authority that these are not 'private aircraft' notwithstanding the plea in the grounds of appeal that conformity to 'ticketing requirements' and availability to the travelling public cannot but be the criteria that distinguishes 'private aircraft' from others. In our opinion, these elements may serve to sustain a claim by an operator but the absence thereof is not the disqualification argued by Learned Authorised Representative. 'Private aircraft', by their very definition, do not operate for remuneration and cannot issue tickets. Tickets are only the outward representation of a contract in which remuneration is at the core. As long as that is not in question, non-conformity with ticketing process cannot be perceived as operating for no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -divisions. The dispute, therefore, that requires resolution is thus confined to the alleged disqualification arising from charter operations prior to the merger of Civil Aviation Requirements. 15. We take note that, in the impugned order, the adjudicating authority has chosen to discard the decision of the Tribunal in Commissioner of Customs, New Delhi v. Sameer Gehlot [2011 (263) E.L.T. 129 (Tri. - Del.)] rendered in the challenge mounted by Revenue to the dropping of proceedings initiated against the very respondent herein for alleged breach of the conditions in the very same exemption notification on import of a rotary wing aircraft with a casual and peremptory remark to the effect that - '150C. The facts in... related to demand under section 28 alone, while the extracts from show cause notice in the previous paragraph make it clear that the present facts are different......' and referred to only in the limited context of the plea that Section 28 of Customs Act, 1962 could not have been invoked. This, in our opinion, is tantamount to non-consideration of a decision that is a binding precedent to resolve the entirety of demand, and of detriment, in the show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion systems in the aircraft industry, the statute and the statutory instruments issued thereunder have not lagged; the response to those imperatives are promptly accommodated in articulations of policy - promulgation as Civil Aviation Requirement and notification as Aeronautical Information Services - emanating from the regulator, the Director General of Civil Aviation. The scheme and intent of exemption notification, having deployed expressions referred to, and defined in, the Aircraft Rules, 1937 as well as in the statutory instruments empowered by Section 133A of Aircraft Rules, 1937, cannot, in the absence of meaning assigned to them within the exemption notification itself, be subject to interpretation de hors the said Rules; any other course of action would be weighed down by subjective bias motivated only by disinclination to allow the benefit. 18. 'Charter operation' is, undoubtedly, acknowledged as an independent permissible activity in the exemption notification but the Aircraft Rules, 1937 is devoid of a definition for that expression. Yet 'charters' were always allowed to operate, stringent though it be, as exceptions to the general policy under the Aircraft Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each a subordinate grouping of the preceding group, to constitute a separate class of 'non-scheduled operator.' It would, therefore, be safe to conclude that operation of 'charter service', being a dilution of 'non-scheduled passenger service', is also no less of compliance than deployment in the latter. 19. A corollary to be addressed is the enlargement of the frame of dispute by the present appeal : whether compliance with the notification is sufficed by deployment in consonance with the undertaking furnished or, conversely, prescribes alternative deployment. We would presume, in the light of the stipulation in the notification pertaining to 'charter operation', that it is not the submission of Revenue that the Central Government is not competent to permit such operations. It is also not the case of Revenue that the permit of the respondents herein has been endorsed for 'charter operations'; nor can we conceive that the regulated environment of 'physical control', to use a phrase that is easily perceptible to tax administration, would have countenanced operations not contemplated by the permit. Hence, the allegedly non-permissible 'charter operation' appears to have been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Customs Act is concerned, the same is to be covered by the provisions of the Customs Act. The relevant decision thereupon takes note of the concerned provisions of the Act as well is reproduced below : "6. Learned Counsel placed reliance upon a communication to Collectors of Central Excise issued by the Central Board of Excise and Customs... xxxx 9. We do not find in the provisions of the Import and Export Policy or the Handbook of Procedures issued by the Ministry of Commerce, Government of India, anything that even remotely suggests that the aforesaid power of the Customs authorities had been taken away or abridged or that an investigation into such alleged breach could be conducted only by the licensing authority. That the licensing authority is empowered to conduct such an investigation does not by itself preclude the Customs authorities from doing so.' 17. The decision in the aforesaid case, which is of the Coordinate Bench, binds us.' However, the applicability of those decisions to the present situation is not as apparent as pressed upon us by Revenue. In those disputes, the Export Import Policy, and its successor Foreign Trade Policy, accorded exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to suggest the mutual exclusivity of the options for outcomes that converge. In other words, with the undisputed availability of two modes of consummating the mandate in the notification, the expression 'as the case may be' itself is stultified and the precautionary superfluity resorted to, by the drafter, is devoid of argumentative weightage. It could, per contra, be posited that this distinguishment is inevitable in the hierarchical context of regulation of civilian airline sector that has always denied a cross-over from aircraft hire to individual passenger hire while enabling the reverse. As renewal was afforded by Director General of Civil Aviation in the present circumstances, and as the implication of such renewal is the continued approval for operations, it is no longer open to suspicion that the respondents have rendered ineligible operations. In construct, from industry practice and by regulatory approval, it can be gleaned that the expression 'as the case may be' is of no significance in implementation of the exemption. 22. A travesty in this submission should not be allowed to pass unnoticed as the deployment of this very expression with reference to the juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys. Even in the more widely used railway network, Bradshaw and zonal publications of train schedules are no longer in vogue. The dynamics of air fare determination does not detract either from existence as 'scheduled air transport services' and can hardly be considered a determinative of status. We find no evidence on record that there was lack of regularity in the deployment of the aircraft or that any paying passenger was turned away for any reason. In the absence of such, carriage of certain passengers at a rate less than that in the tariff cannot be held against the respondent. 24. Another approach to the same objective of validating the interpretation posited by tax administrators was to lay emphasis on the principle of strict interpretation in affording the benefit of exemption notifications for which Learned Authorized Representative relied upon the decisions of the Hon'ble Supreme Court in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company [2018 (361) E.L.T. 577 (S.C.)] and in Novopan India Ltd. v. Collector of Central Excise and Customs, Hyderabad [1994 (73) E.L.T. 769 (S.C.)]. The letter and spirit of these judgments have not gone unnoticed by us. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quential detriments, decided upon by the original, and appellate, authority or by the appellate authority in favour of an importer. Two issues were before the Hon'ble Supreme Court in re West Coast Paper Mills Ltd. - that the order impugned therein originated from a Tribunal whose decisions were not only not subject to appeal under the relevant statute but also required a separate suit for consequential relief and that absence of stay of such order rendered that to be the relevant date for reckoning the period of limitation under Limitation Act, 1963 for instituting recovery. It was on that specific issue of determination of the period of exclusion that the Hon'ble Supreme Court was called upon to take notice of its interim order, arising from proceedings under Article 136, with the implication of reasoning that inheres in the mutation to civil appeal and to hold that- '41. Grant of stay of operation of the judgment may not be of much relevance once the Court grants special leave and decides to hear the merit.' The appeal, under Customs Act, 1962, from decisions of the Tribunal are a statutory remedy which, by admittance, does not carry with it the same presumption. The pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Transport and Travels Ltd. v. Commissioner of Customs, New Delhi [2018-TIOL-3620-CESTAT-DEL = 2019 (369) E.L.T. 1367 (Tri. - Del.)], the submission of Learned Authorised Representative therein that '12......... only the persons of RADAGPL or their nominees have used and/or travelled in the said aircraft. Further, issue of ticket is a pre-condition for operating as NSOP. The appellants have misuse (sic) the exemption notification as the appellant company is the subsidiary of RADAGPL and M/s. Swan Sorority Finance (P) Limited, which are companies under the management of 'Reliance Anil Dhirubhai Ambani Group'. It is further stated that the tariff for operating as NSOP is not published and as such the duty is demanded for violation of post-import condition No (ii) (a) of the said Notification No. 21/2002-Cus. as amended. Ld AR further states that similar issue arose in the case of VRL Logistics Ltd. v. CC, Ahmedabad - 2015 (316) E.L.T. 494 (Tri. - Ahmd.) have been referred to Larger Bench, vide an interim order dated 22-10-2014 by the Ahmedabad Bench of this Tribunal. As such, the matter may be kept in abeyance until the receipt of the opinion of the Larger Bench. The co-ordinate B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, while deciding upon the application for waiver of pre-deposit in Punj Lloyd Aviation Ltd. v. Commissioner of Customs (Preventive), New Delhi [2014 (302) E.L.T. 553 (Tri. - Del.)], the Tribunal noted that - '3. On this very issue there is a conflict of precedents. A Division Bench of the Tribunal in C.C., New Delhi v. Sameer Gehlot - 2011 (263) E.L.T. 129 (Tri. - Del.) in substantially similar factual circumstances ruled that the exemption Notification incorporates only pre-import conditions and no separate post-import condition is enumerated; the post-import conditions requiring and approval from DGCA and undertaking to be furnished at the time of importation have already been fulfilled and the exemption was granted at the time of import; in the circumstances, the importers cannot be charged with violation of pre-import conditions on the basis of circumstances arising after the import. Another reason recorded by the Tribunal for holding in favour of the assessee and against the Revenue was that since the exemption Notification exempts both types of aircrafts, those used for non-scheduled passenger services and those used for non-scheduled charter services and the exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded and ignored if it is rendered in ignorantium of a statute or a binding authority-vide State of U.P. v. Synthetics and Chemicals Ltd. - (1991) 4 SCC 139. In Sameer Gehlot, this Tribunal had clearly noticed provisions of exemption Notification No. 21/2002-Cus., dated 1-3-2002 but has also reproduced condition No. (4) thereof. The judgment also noticed provisions of the D.G.F.T. Notification No. 2 (RE-2006)/2004-2009, dated 7-4-2006 and thereafter the scope of the exemption Notification. In the circumstances, the interpretation of the exemption Notification in Sameer Gehlot could not be characterised per incuriam. For the nonce, suffice it to observe, prima facie, on established principles of per incuriam, that the decision in Sameer Gehlot was not per incuriam.' 30. As observed therein, notwithstanding the premise on which the later decision of the Tribunal in re King Rotors & Air Charter P. Ltd. assumed the privilege of discarding earlier decision in re Sameer Gehlot, the recognition of a conflict in diametrically opposed opinions on the denial of exemption notification cannot be wished away. In the circumstances, we are called upon to ascertain the feasibility of discardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the existence of previous decisions on similar disputes, and, thereby, insinuating a 'hostage corollary' to disturb the rule, the facts, and issues, in re King Rotors & Air Charter P. Ltd., noted thus : '24.3 In any case, the appellants have not produced any clarification of DGCA to the contra. They claim to have requested the said authority by letter dated 17-2-2009 for a clarification on the point, but they are yet to obtain any clarification issued by DGCA to third parties on the particular facts of their cases cannot be pressed into service in the appellants' case. We have also seen assertive averments in the assessee's appeal to the effect that the Customs authorities themselves received DGCA's clarification in the appellant's favour on the scope of the subject permit. But these assertions are yet to be substantiated. They remain ipse dixit. Nobody has stood in the way of the appellants themselves obtaining similar clarification from DGCA or in the way of their gathering information from DGCA under the Right to Information Act regarding the clarification which is said to have been given to Customs authorities. The onus to prove that DGCA has clarified in favour of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use the copter (during the tenure of the agreement) for any other purpose without the prior consent of Heligo. They did not have any control over the manner in which the helicopter was used by Heligo (who professedly entered into charter contracts with "third party companies" in respect of the aircraft which was accordingly used for transporting the personnel of these companies) and the copter operations were not open to members of the public. Where the helicopter would not come within the meaning of "passenger aircraft", the flight operations cannot be called "non-scheduled (passenger) services".' are substantially different with consequences to compliance. 33. The distinction between 'scheduled' and 'non-scheduled' posited in - '24.7 ... Any such dissection of the definition of "scheduled air transport service " as attempted by the counsel is not warranted to obtain the meaning of "non-scheduled air transport service". This is because requirement (b) mentioned by him is not determinative of whether the air transport service is "scheduled" or "non-scheduled". To our mind, the only difference between the two types of air transport service lies in the simple fact that one i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 35. We take note that the impugned order has placed reliance on various clarifications issued by Director General of Civil Aviation. That these are in favour of the aircraft operators is not in dispute. 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 clarifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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