TMI Blog2008 (1) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... V. Reddi, Chairman]. - The applicant is a private limited company incorporated in India under the Companies Act, 1956. Its foreign collaborators are stated to be German Companies by name Lufthansa Technik Immobelien - und Verwaltungsgesellschaft mbH (for short "LTIV") which owns 95% shares in the applicant-company and Lufthansa Technik AG (hereinafter referred to as LHT) which owns 5% shares. At present it is engaged in the business of providing technical, consultancy and logistic services to Airline Companies in India and/or LHT and its group companies. According to the averments in the application, the applicant proposes to start certain other business activities which are classified under four heads as follows : New Business 1 : Setting up an engine maintenance, repair and overhaul shop (for short 'Engine MRO Shop') in India for servicing the aircraft belonging to Indian airline companies operating scheduled air transport/air cargo services. New Business 2 : Setting up an Engine MRO Shop in India for servicing the aircraft belonging to foreign airline companies operating scheduled air transport service/air cargo service. New Business 3 : Importation of aircraft components ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt import of certain aircraft related materials and consumables necessary for providing the services. (ii) receipt of the aircraft engine from the airline company in India. (iii) Disassembly of the aircraft engine into aircraft engine modules by the applicant at its workshop in India. (iv) Inspection of the aircraft engine modules at the workshop in India and inspection of the modules. (v) Shipping the defective aircraft engine modules to LHT or its group companies, outside India. (vi) Disassembly of the aircraft engine modules into aircraft engine parts by those companies and their inspection. (vii) Repairing or overhauling of the aircraft engine parts and replacement of the parts that are beyond 'economical repair'. (viii) Reassembly of aircraft engine parts into aircraft engine modules by LHT or its group companies. (ix) Export of repaired aircraft engine modules by LHT (from outside India) to the applicant in India (x) Reassembly of repaired aircraft engine modules to full aircraft engine by the applicant at its workshop in India. (xi) Undertaking aircraft engine test-run as per the manufacturer's specification and in case the engine does not meet the specific requirements duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Basic Customs duty under Entry 348 of the Notification Number 21/2002-Cus. dated March 1, 2002 (as amended)? (b) Whether re-import of engine modules necessary for provision of the services to Indian airline companies would be exempt from payment of Additional Customs duty under Entry 54B of Notification No. 6/2006-CE dated March 1, 2006 (as amended)? 3. The claim for basic customs duty exemption in respect of the proposed activities is founded on the Notification No. 21/2002-Cus. dated 1.3.2002 as amended from time to time. By this notification issued under sub-section (1) of section 25 of Customs Act, the Central Government exempted the imported goods of the description specified in column 3 of the Table and falling within the Chapter, Heading or sub-heading of the First Schedule to Customs Tariff Act as specified in the corresponding entry of the column 2 of the Table from so much of the duty of customs leviable thereon under the said First Schedule as is in excess of the amount calculated at the rate specified in the corresponding entry in column 4 of the said Table, subject to the conditions if any specified in column 6 of the Table. It also exempts additional duty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " shall have the meanings respectively assigned to them in Condition No. 101." 3.3 At this juncture, we may extract Condition No. 101 applicable to Entry 346B which speaks of "all goods falling under Chapter 8802 (except 8802 60 00" i.e., spacecraft etc.) "If, - (i) imported by an operator or on behalf of the operator, for operating scheduled air transport service or scheduled air cargo service, and such aircraft is used for operating the scheduled air transport service or the scheduled air cargo service, as the case may be; or (ii) the said aircraft is not registered or not intended to be registered in India, and brought into India for the purpose of a flight to or across India, and which is intended to be removed from India within six months from the 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 system ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction…" In that case, the Supreme Court pithily stated the implication of the rule of construction enunciated above, in the following words: "do not extend or widen the ambit at the stage of applicability. But once that hurdle is crossed, construe it liberally." (vide para 4) It was held therein that the applicant did not satisfy the first requirement and therefore the question of giving liberal construction did not arise. It may be relevant to mention that in that case, the Supreme Court, with a view to clear the ambiguity and to avoid "inequitable results " was inclined to hold that the expression "any factory" occurring in the notification meant any new factory. 4.3 In Commissioner of Customs (Imports), Mumbai v. Tullow India Operations Limited - 2005 (189) E.L.T. 401 the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t" - that is the terminology used in the Notification (21/2002-Cus). Does it include consumables such as lubricants, oils and greases? Obviously, the answer should be in the negative. They are not raw-material even in the widest sense of the expression. Common parlance and dictionary meaning - both negate the interpretation suggested by the applicant's counsel. 5.1 The meaning of the word 'raw material' as given in various dictionaries may be noted: (i) Chambers Twentieth Century Dictionary : "Often in the natural state that serves as the starting point of a manufacturing or technical process and that out of which something is made or madeable or may develop". (ii) The New International Webster's Dictionary and Thesaurus of the English Language "Unprocessed material (animal, vegetable, or mineral) needed and used in manufacturing, as contrasted with finished products. (iii) The New Oxford American Dictionary : "The basic material from which a product is made." (iv) Words and Phrases (Permanent Edition, Vol. 36) : "The term "raw material" not necessarily meaning crude material in its natural state, but including products made from crude material, which have undergone man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , cannot be considered to be raw material in the manufacture of paper. It was contended by the Revenue's counsel that the goods to become raw material must, either in their original or altered form endure as a composite element of the end-product. The Revenue's contention was not accepted by the three Judge bench of the Supreme Court. The question was formulated by their Lordships in the following terms: "The question, in the ultimate analysis, is whether the input of Sodium Sulphate in the manufacture of paper would cease to be a "Raw Material" by reason alone of the fact that in the course of the chemical reactions this ingredient is consumed and burnt-up." Then, it was observed that "the expression 'raw material' is not a defined term. The meaning to be given to it is the ordinary and well-accepted connotation in the common parlance of those who deal with the matter". 5.5 The Supreme Court then addressed the question whether the ingredients which were burnt up or consumed in the chemical reactions qualify themselves as raw material for the end-product. The following pertinent observations were made to answer the above question: "One of the valid tests, in our opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw material'. "They may be used for purposes incidental to mining, but are not integral thereto". 5.9 While not disputing the fact that the lubricants and oils used in the course of servicing or overhauling the engine, etc. are not raw materials in the ordinary or commercial sense, the learned Sr. Counsel for the applicant stressed that the expression 'raw material' read in conjunction with the immediately following phrase "for servicing" would comprehend even the consumable items mentioned above. The learned counsel submits that having regard to the context in which the expression 'raw materials' occurs, it must be understood in a very wide sense, notwithstanding its ordinary and plain meaning; otherwise it is difficult to think of any raw material used in the course of servicing. Reliance is placed on the following observation of the Supreme Court in TELCO vs. State of Bihar - 1994 (74) E.L.T. 1993 (S.C.) = 1994 (6) SCC page 479 at 485. "The ordinary common sense understanding is that it (raw-material) is something from which another new or distinct commodity can be produced. When it is used in a taxing statute, it may have related meaning depending on the context in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms is also nil. Under Sl. No. 54B of that notification, parts of aircraft of Heading 8802 are subjected to nil rate of duty subject to fulfillment of Condition No. 22 of the same notification. Condition No. 22 reads as follows : "If- (i) intended for servicing, repair or maintenance of aircraft owned by Government of India, State Governments, Public Sector Undertakings of the Central Government or the State Governments; or (ii) intended for servicing, repair or maintenance of aircraft, which is used for operating scheduled air transport service or scheduled air cargo service, as the case may be. Explanation - The expressions "operator", "scheduled air transport service" and "scheduled air cargo service" shall have the meanings respectively assigned to them in condition 21 above. 6.2 The expression 'operator' is not used in Condition No. 22. Obviously, an inadvertent slip has surfaced in the Explanation. 6.3 Condition No. 21 defines the above two expressions as follows: 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of engine without which the engine would disintegrate and therefore they are parts. 6.6 The real test that has to be applied is whether such items are regarded or known as parts of aircraft in common or commercial parlance or whether the persons in the aviation field consider them as such. Referring to the earlier decisions, it was reiterated by the Supreme Court in G.S. Auto International Ltd. vs. Collector of Central Excise, Chandigarh - 2003 (152) E.L.T. Page 3, that the true test for classification is the test of commercial identity and not the functional test. It needs to be ascertained as to how the goods in question are referred to in the market by those who deal with them, be it for the purposes of selling, purchasing or otherwise", in that case the question arose whether the nuts, bolts and washers of various descriptions were to be regarded as parts of automobile in which case they would fall under the residuary Tariff Item No. 68 of the Central Excise Act (as it then stood) or they should be classified under Tariff Item No. 52 which refers to nuts, bolts, threaded or tapped and screws of base metal or alloys thereof………." The Supreme Court referred to the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are used for general purposes and are items of common usage, it is clear from the above letter by an authority intimately connected with civil aviation, the articles sought to be imported ought to be classified as parts of aircraft. These parts are specifically shown in the catalogue of aircraft parts and are understood as such in aviation circles. In fact, recognizing this position the learned Departmental Representative has fairly stated at page-I of the written submissions that the nuts, bolts, rivets, clamps, couplings, etc. referred to at page 129 of the application are not raw material but they can be regarded as parts. 6.8 However, the claim for exemption under Sr. No. 54B of the Notification No. 6 of 2006-C.E. is sought to be resisted by the department on the ground that condition No. 22 thereof disentitles the applicant to avail of the nil duty relief provided in respect of parts of aircraft. According to the Revenue, it is only the Government of India, State Governments and Public Sector Undertakings specified in clause (i) and the operators of scheduled air transport or air cargo services mentioned in clause (ii) that can invoke the benefit but not a third party imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to advert to one more aspect arising out of the same business activity. In page 59 of the application, basic duty exemption is also claimed in respect of "all kinds of temporary materials and consumables such as nuts, bolts, rivets, screws, clamps, couplings, joints, angles, and similar goods that are used directly or indirectly in the process of servicing an engine and are incorporated/injected into the goods that are being repaired including those that may be spoilt or wasted during the process of servicing an engine or in the course of repairing the aircraft engine" on the footing that they are parts of aircraft. However, no specific question is framed in this regard. The next question i.e. Question No. 1(b) relates to additional duty and the notifications relevant to basic and additional duty being almost similar, whatever conclusion is reached vis-a-vis Question No. 1(b), it would be equally applicable to basic duty on the articles covered by Question 1(b). Question 2(a) 7. This question relates to re-import of engine module which is in the nature of sub-assembly of engine for the purpose of offering repair and maintenance services to the Indian airline companies opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. 102. On the facts stated by the applicant which are set out supra, the applicant's imports satisfy all the requirements laid down in the exemption Notification No. 21/2002. There is no dispute that engine modules are parts of aircraft falling under Heading No. 8802. The import is for the specific purpose of repairing and delivering the aircraft engine to be attached to the aircraft belonging to the Indian airline company and that aircraft is used for operating scheduled air transport/cargo service. The applicant imports the said engine parts pursuant to and in the course of fulfillment of contracts entered into with the operators of s.a.t.s. and s.a.c.s. Instead of the aircraft operator himself attending to the repair and servicing of engine, the operator enters into a contract under which the applicant accomplishes that job. It is needless to say the obvious that the engine repair and overhaul is essential for the maintenance of aircraft. It directly contributes to the repair and maintenance of aircraft. It follows, therefore, that the applicant by undertaking the engine repairs at the instance of the aircraft operator, can be said to have imported the parts (engine modul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, as per Condition No. 103 governing Sl. No.347-A of Notification No. 21/2002, exemption is specifically restricted to the import of aircraft by the Aero Club of India, New Delhi or an approved flight Training Institute. 7.5 The Revenue's contention that if the notification permitted third party import, an undertaking or certificate of proper utilization of imported goods must have been stipulated, does not appeal to us. We have not been told that wherever third party import is exempted, such requirements are invariably laid down. True, it may have been prescribed in some cases such as Entry 347-C (as introduced in 2007) which lays down a condition as to furnishing of undertaking. But, it is not an invariable rule. In fact, the undertaking is required to be furnished under the said Entry even if the importer himself is the user of aircraft. We may however clarify that even without a specific provision for furnishing such a certificate or declaration, the Department is not powerless to take such measures or precautions as may be considered necessary to ensure that the goods imported are not diverted for a different purpose. Such a power is implicit or incidental to the grant of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MRO Shop in India for servicing the aircraft belonging to foreign airline companies: Question No.3 (a) : Whether re-import of engine modules necessary for provision of the services to Foreign airline companies would be exempt from payment of Basic Customs duty under Entry 346D of Notification Number 21/2002-Cus. dated March 1, 2002 (as amended)? 9.1 The question extracted above is formulated in the same manner as question No. 2(a). However under the proposed business no. 2 the import of engine modules is for the purpose of repairing the aircraft engines belonging to foreign airline companies. According to the applicant, the benefit of exemption under Notfn. 21/2002 is equally available to the import of parts made for repairing/servicing of the engines to be fitted into the aircrafts of foreign airline enterprises. 9.2 In this business, the nature of activities carried out at the workshop are substantially the same as in the first business. However, this category of business involves the importation of the defective engines sent by the foreign airlines to the applicant. Another noteworthy difference is that unlike in New Business 1, where the airline company in India enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of maintenance and repair of aircraft belonging to foreign airlines located outside India, it having entered into a contract with those airline companies for that purpose. In the course of executing such services as per the contract, LHT finds defects in the engine. The engine is removed and dispatched to the applicant in India. After disassembly, the applicant exports the defective engine 'modules' to LHT. LHT repairs or replaces the damaged engine parts and accessories. The rectified engine modules are then dispatched by LHT to the applicant in India. The applicant reassembles the engine modules so as to restore the complete engine and subjects the engine to tests, if found in order, the applicant exports the aircraft engine to the foreign airline owner, again, as per the instructions of LHT. 9.5 On these facts, can it be said that the applicant will be importing/reimporting the repaired engine modules for servicing, repair or maintenance of aircraft (of a particular description) within the meaning of Condition No. 102 of Notfn No. 21/2002-Cus? After giving our anxious consideration, we find the answer in the negative and the applicant's claim for exemption should fail. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different jobs to different persons. The applicant is one such who undertakes at the instance of LHT an important job connected with the engine repair/reassembly. That does not mean that the applicant imports the engine modules for servicing, repairing or maintaining the aircraft. It is only the applicant's principal - LHT that has assumed the responsibility for the repair and maintenance of engine which in its turn directly contributes to the maintenance of aircraft itself. But, the role of applicant is different. An importer who merely undertakes the repair of defective engine or some other component of aircraft at the instance of actual repairer of aircraft and sends it back to him cannot be said to have imported the goods for repairing or maintaining the aircraft, though the act of repairing the engine facilitates the maintenance of aircraft by the person incharge of such repair and maintenance outside India. We are of the view that the language of the crucial phrase in Condition No. 102 and collocation of the words employed therein would keep the applicant's import out of the ambit of Sl. No. 346-D read with Condition No.102(i). It is axiomatic that an exemption notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Sl. No. 346-D, must be one operated as 'scheduled air transport service' or 'scheduled air cargo service', as defined in the Explanation to Condition No. 101. The said definitions have already been noticed Supra (vide para 3.3). The crucial question then arises : Does the expression 'scheduled air transport service' comprehend an air transport service registered and operating anywhere in the world according to a published time-table? The same question arises in relation to scheduled air cargo service as well. The argument of the applicant's counsel is that there are no words of limitation and therefore any commercial aircraft belonging to any airlines enterprise - Indian or foreign and regularly operating between two or more places anywhere in the world would be scheduled air transport service as defined in the Explanation to Condition No. 101. It need not have Indian base or Indian operations at all, argues the counsel. We are unable to accept this contention. 9.10 Before discussing this point, we consider it appropriate to advert to the genesis of the expressions scheduled air transport and cargo services and the legislation governing the aircrafts in India. 9.11 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of airlines. The expression "aircraft used for operating scheduled air transport/air cargo service" occurring in Condition No. 102 can mean aircraft operating anywhere in the world or it can mean aircraft operated from and within India. 9.18 In our view, 'the scheduled air transport service' contemplated by the Explanation to Condition No. 101 cannot be given such an extended meaning as to comprehend the scheduled flights operating anywhere in the world. That is not at all the purpose of the exemption nor can it be said that its language is so compulsive as to accord such a wide meaning. The absence of restrictive words, by itself, is not a clinching factor. 'Scheduled air transport service' (for short s.a.t.s.) has acquired a definite connotation in our country having regard to the provisions of Air Craft Rules. The Aircraft Rules furnish the key to understand the width and amplitude of that expression occurring in the relevant Condition of the notification. It is reasonable to think that the 'scheduled air transport service' referred to in the notification is no different from what is contemplated by Aircraft Rules. The tenor of clause (i) and the collocation of the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the decision of the Supreme Court in TELCO v. State of Bihar - 1994 (74) E.L.T. 193 (S.C.) = 1994 6 S.C.C. pg. 479. In that case, their Lordships were considering the notification issued under section 13(1)(b) of the Bihar Finance Act, 1981. It provided for concessional rate of tax for industrial raw materials (inputs), (emphasis supplied). The question that arose for consideration was whether items such as tyres, batteries purchased by the dealer for use in the manufacture of vehicles could avail of the concessional rate. After stating that "ordinary sense of understanding of raw materials is that it is something from which another new and distinct commodity can be produced", the Court observed: "When it is used in a taxing statute, it may have related meaning depending on the context in which in has been used. Then, the Court having observed that the word "raw materials, has no fixed meaning and may vary with the use to which it is put," stated thus : "For instance, batteries, tyre and tubes or by themselves finished products. They on their own cannot be considered to be raw material. But, when it is used for manufacture of a vehicle, then it becomes raw material fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcraft. We cannot accept this extreme contention. The activity involved here is the repair of aircraft engine which would fall more appropriately within the ambit of expressions - repair and maintenance. It would be doing violence to common sense, ordinary understanding and commercial parlance to regard engine parts as raw materials used for servicing the aircraft. We have therefore no hesitation in rejecting the applicant's claim reflected in the alternate question. 11. Question No.3 (b) : Whether re-import of engine modules necessary for provision of the services to Foreign airline companies would be exempt from payment of Additional Customs duty under Entry 54B of Notification Number 6/2006-C.E. dated March 1, 2006 (as amended)? The reasons given with reference to Question 3(a) will equally hold good for negativing the applicant's claim for exemption from additional Customs Duty in the light of the Central Excise Notfn. No. 6/2006. The language of the relevant Entry and Condition in this notification is identical to the Customs Notfn. No. 21/2002, the only difference being the phrase "imported for" is used in Condition No. 102 of Customs Notification whereas the phrase "int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efers to a technical document titled "Component operating and storage limits" prepared by Lufthansa Technik which prescribes the need to remove certain components from the aircraft after a defined number of operating flight hours. The applicant states that it proposes to charge a monthly lease fee based on the manufacturer list price "for the specific parts given to the airline". 12.3 The following questions are raised by the applicant - 4.(a) Whether Importation of the components by the Applicant for subsequent provision of the same to the pre-identified airlines in India would be exempt from payment of basic Customs duty under Entry 346D of Notification Number 21/2002-Cus. dated March 1, 2002 (as amended)? (b) Whether Importation of the components by the applicant for the said purpose would be exempt from payment of additional Customs duty under Entry 54B of Notification No.6/2006-C.E. dated March 1, 2006 as amended? 13. Question No. 4 (a) : It seems to us that the applicant will not forgo the eligibility for exemption under Condition No. 102 of Entry 346-D, notwithstanding the view taken by us with reference to New Business No. 2. Though on the first impression, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ably linked with the aircraft maintenance. We therefore see no reason to deny the benefit of exemption to the applicant. 13.2 Before parting with discussion on this question, we may advert to one contingency that might occur. There may be parts which remain unutilized by the date of expiry of Contract or which may become useless in course of time. If such parts are sold in open market, would the importer like the applicant forfeit the duty exemption already availed of? Should they be subjected to duty in such an event? These questions may arise, but we are not called upon to answer these debatable questions. However, it is desirable that a specific provision is made in the notification to cover such situations, to obviate unnecessary controversies in future. 14. New Business 4 - Question Nos. 5(a) to (f) and 6 (a) and (b) : Setting up a regional pool in India for providing aircraft components to Airlines (known as 'Regional Pool', in commercial parlance). 14.1 This new business involves building up a regional pool of aircraft components in India and entering into arrangements with various airline companies for provision of access to such components from the pool to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consign the repaired component (or a similar component) to the Regional Pool provider for the purposes of replenishing the pool which was depleted by reason of what is stated in para (iv) above. Accordingly, where the MRO service provider is located outside India, the airline would instruct the said MRO service provider to export the serviceable component to the Applicant. Consequently, the importation of the serviceable component from the offshore MRO service provider would be effected by the Applicant. (vii) In case the unserviceable component is repaired in India by the Applicant himself, or is got repaired by an Indian MRO service provider, then the repaired component would be shipped to the Regional Pool by the Applicant/Indian MRO Service Provider as per specific direction of the airline company. (viii) In addition and in exceptional situation, serviceable components from the Regional Pool may also be sold to an airline, based upon a requisition from such airline. In such an event, parts sold from the regional pool would not be replenished. (ix) In consideration of the applicant providing its customer with the right to use the Regional Pool components, the Applicant wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as amended)? (f) Whether importation of the component by the Applicant for subsequent sale on an exceptional basis (drawn from the Regional Pool) to an airline in India for replacement of unserviceable part by the airline would be exempt from payment of Additional Customs duty under Entry 54B of Notification Number 6/2006-C.E. dated March 1, 2006 (as amended)? 14.4 6. In relation to re-import of repaired components by the applicant for subsequent provision of these to airlines as Regional Pool: (a) Whether re-importation of the repaired components by the applicant for subsequent provision of the same to the airline via release to the Regional Pool would be exempt from payment of Basic Customs duty under Entry 346D of Notification Number 21/2002-Cus., dated March 1, 2002 (as amended)? (b) Whether re-importation of the repaired components by the applicant for subsequent provision of the same to the airline via release to the Regional Pool would be exempt from payment of Additional Customs duty under Entry 54B of Notification Number 6/2006-C.E. dated March 1, 2006 (as amended)?" 15. Re : Question Nos. 5 (a) and (b) The importation of aircraft components/spare parts for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As discussed supra in the context of new Business No. 3, there must be a proximate and inseparable link between the import by the applicant and the service, repair or maintenance of aircraft. Such link must be there from the beginning and throughout. The sales of aircraft parts imported for a different purpose can never be brought under the scope of exemption. It is not the object of the exemption to facilitate duty free imports of aircraft parts for an eventual sale. 16.1 Hence, questions 5(e) and (f) have to be answered against the applicant. 17. Question Nos. 5 (c) and (d) The exemption of basic Customs duty or additional Customs duty is not available if the parts imported are meant to be leased out to the foreign airlines. First of all, the foreign airline to which the party leases out does not run a 'scheduled air transport service' in the sense in which we have interpreted. Further, as pointed out supra while discussing Question Nos. 5 (e) (f), the parts imported for the purpose of building up a regional pool to cater to the maintenance requirements of the airlines in India cannot be allowed to be diverted for the purpose of selling or leasing out the same to so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned with the maintenance/repair of aircraft or its engine but it is undertaken by LHT - a foreign based company and secondly because a foreign airline does not come within the ambit of the expression 'scheduled air transport service' or 'scheduled air cargo service.' Alternative Question : The claim for exemption under Entry 348 (raw material) is untenable as engine modules cannot be considered to be raw materials. TELCO case relied upon by the applicant is distinguishable. Question 3(b) : For the same reasons, the claim for additional Customs duty exemption is negatived. New Business No. 3 : Import of aircraft components for providing a 'home-base service' to pre-identified airlines in India operating scheduled air transport service or scheduled air cargo service. Question 4 (a) : Customs duty exemption is available for the reason that the activity of the applicant is in the nature of joint enterprise directly aimed at proper maintenance of aircraft, although the applicant itself does not undertake the job of fixing up/inserting the parts, which is done by the airlines themselves. Question 4(b) : Additional Customs duty exemption is also available for the same rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
