TMI Blog2023 (12) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... n No. 104 of the notification merely because on one occasion one aircraft had been used without remuneration? - HELD THAT:- In reply to the show cause notice the appellant had pointed out that in regard to the aircraft VT-RAN which was imported on 13.11.2007, the first flight was undertaken on 25.01.2008 and the second flight was undertaken on 27.01.2008. The second flight was for crew familiarization and it had two pilots and Mr. Sunil Godhwani and Mrs. Dhillon, who as prospective users were travelling on the flight only for experiencing the aircraft. The flight was also from Delhi-Raipur-Bagdogra-Delhi with no stoppage time at the airports. Thus, it cannot be urged by the department that Condition No. 104 of the notification had been violated merely because one particular flight was undertaken without any remuneration - the order dated 30.09.2010 passed by the Commissioner confiscating the imported aircrafts/helicopters with an option to the appellant to redeem the same after payment of redemption fine and also confirming the demand of customs duty with interest and penalty cannot be sustained. The appellant would, therefore, be entitled to refund of the redemption fine paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission to import aircrafts/helicopters and the DGCA granted the no objection certificate for import of aircrafts/helicopters for operating non-scheduled operator services. Permit No. 1/1998 dated 16.01.2006 was issued by the DGCA initially to Ran Air Services Limited and subsequently on change of name of the company, a fresh permit dated 27.03.2009 was issued in the name of Religare Aviation Limited (the appellant). 3. The following aircrafts/helicopters were imported by the appellant but VT-REO at serial no. 4 crashed on 03.08.2008: S. No. Name of the aircrafts/helicopter Registration No. Date 1. 2001 King Air B200 VT-RSM 12.11.2007 2. 2000 King Air B200 VT-REM 12.11.2007 3. Hawker 800 XP VT-RAN 13.11.2007 4. 2000 Bell 430 VT-REO 13.11.2007 5. 1998 King Air B200 VT-RSN 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 104. (i) the aircraft are imported by 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 (ii) the importer furnishes an undertaking to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, at the time of importation 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 his 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. 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) non-scheduled (passenger) services means air transport services other than scheduled (passenger) air transport services as defined in rule 3 of the Aircraft Rules 1937. (c) non-scheduled (charter) services means serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 without consideration. 8. The appellant filed a reply to the show cause notice denying the allegations made in the show cause notice. The appellant also pointed out that all Group Companies had been billed and only one flight on 27.01.2008 was a test flight for crew familiarization and not for travelling. In connection with this flight, the appellant pointed out that: (i) The flight was taken on aircraft VT-RAN which is a Hawker 800 (9-seater) that was imported on 13.11.2007; (ii) The first flight on this aircraft was on 25.01.2008 and the second flight was taken on 27.01.2008; (iii) Since the aircraft was new, the second flight was for crew familiarization; (iv) The flight had two pilots (crew) and one Mr. Sunil Godhwani and Mrs. Dhillon who admittedly are prospective users and have used the aircraft in the future; (v) They were travelling on the flight only for experiencing the aircraft; and (vi) The flight, as is evident from Flight Report Book, shows that it was a flight from Delhi-Raipur-Bagdogra-Delhi and there was no stoppage time at the airports. 9. The Commissioner, however, by order dated 30.09.2010, confirmed the demand after record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise for consideration are whether non-scheduled (passenger) services permit would qualify as non charter services permit also and whether the appellant would qualify for providing charter service. 13. These issues were decided by the Larger Bench of the Tribunal in VRL Logistics and the relevant paragraphs of the decision are reproduced below: Use of Aircraft for only non-scheduled (passenger) services ***** 55. Air transport service has been defined in rule 3 (9) of the Aircraft Rules to mean service for transport by air of persons for any kind of remuneration whatsoever. There is no dispute that the appellants have used the aircraft for the transport of persons for remuneration. There is no stipulation or restriction or a condition in the said definition that a tariff should be published or that such service should be rendered only on per-seat basis and not by chartering or about the category or class of persons to be transported. Thus, the contention of the department that the appellants have rendered air transport service to their group companies by carrying personnel of their group companies is not of any relevance as there is no prohibition in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r) air transport service defined in rule 3(49), it is a non-scheduled (passenger) service within the meaning of clause (b) of the Explanation to the exemption notification. 66. It needs to be noticed that Condition No. 104 specifically refers to the definitions contained in the Aircraft Rules as also Civil Aviation Requirements issued under the provisions of rule 133A of the Aircraft Rules. Both, CAR 1999 that deals with non-scheduled (passenger) services operator and CAR 2000 that deals with non-scheduled (charter) services operator define a non-scheduled air transport services (passenger) in the same manner as defined in clause (b) of the Explanation to Condition No. 104. 67. CAR 1999 contains the following relevant provisions: (a) There will be no restriction on the type and seating capacity of the aircraft to be importer/acquired by the applicant. (b) Non-scheduled operators can conduct charter/non-scheduled operations for transportation by air of persons, mail or goods. In such operations, the operators shall not publish their time schedules as the operations are of non-scheduled nature. 68. It is, therefore, clear that an operator providing non-scheduled (p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants hire the aircrafts to customers pursuant to tenders/negotiations. The purpose of having a published tariff is, therefore, substantially complied with. 88. Learned special counsel for the appearing for the department submitted that the aircraft is being provided for private use and is not available to use by the public. 89. Learned counsel for the appellants submitted that the aircraft is available not only to group companies but also to other customers. 90. In the first instance, personnel of companies which are group companies of the appellant are also members of public. The aircraft is, therefore, available for used by the public. Even otherwise, this cannot be a reason to hold that the air transport service provided by the appellants would fall outside the scope of non-scheduled (passenger) service. (emphasis supplied) 15. The Larger Bench also held that there is no requirement to issue air tickets and the relevant paragraphs of the decision are as follows: Requirement of issuing air-tickets 100. The definitions of air transport service and non-scheduled (passenger) service do not stipulate any restriction or condition that such service sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y event, in terms of paragraph 3 of the CAR 2000, no tickets are required to be sold for carrying out charter operations. 105. This apart, even if air tickets are not issued to the passenger, it may only lead to non fulfillment of the liability. The consequence is itself mentioned in rule 3(2) to the Second Schedule. Thus, there cannot be any violation of the conditions, if tickets are not issued. (emphasis supplied) 16. The Larger Bench also held that remunerative flights qualify as a air transport services and would be covered under the exemption. This is clear from paragraph 55 of the order of the Larger Bench, which paragraph has been reproduced above. 17. The Delhi High Court in Global Vectra Helicorp also held that non-scheduled passenger permit can also cover non scheduled charter services and the relevant portion of the judgment is reproduced below: 26. Mr. Harpreet Singh, learned counsel appearing for the Revenue, submits that the present appeal also raises an additional question whether the helicopters imported for non-scheduled (passenger) services could be used for non-scheduled (charter) services. He submits that the said question was not covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of an aircraft used for providing non-scheduled (passenger) services or non-scheduled (charter) services. Accordingly, if the aircraft is used for either of the aforesaid purposes, the Condition No.104 of the Exemption Notification would be satisfied. 30. The expression non-scheduled (passenger) services is defined to mean air transport services other than the scheduled (passenger) air transport services . 31. The expression air transport services is defined under sub-rule (9) of Rule 3 of the Aircraft Rules, which reads as under: (9) Air transport service means 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; 32. In East India Hotels Ltd. (supra), this Court had noted that the term air transport service is defined in wide terms and would cover transport by air of humans, animals, mails or any other thing, animate or inanimate. However, for a service to fall within the meaning of air transport service as defined in Rule 3(9) of the Aircraft Rules, it is essential that the same is provided for some k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -scheduled (passenger) services, shall not be construed to be a violation of the conditions of import at concessional rate of duty. 37. Although, the requirements of Condition No.104 of the Exemption Notification are unambiguous but the aforesaid explanation inserted by way of amendment of Condition No.104 of the Exemption Notification amply clarifies that the exemption condition would be satisfied if the aircraft imported is used for non-scheduled (passenger) services or non-scheduled (charter) services. (emphasis supplied) 18. It is not in dispute that the aircrafts were used by Group Companies for consideration, except on one occasion where one aircraft was used without remuneration. The Delhi High Court in East India Hotels clearly held that since the appellant therein had used the aircraft for transporting senior officials of related entity and their family members on remuneration basis, the appellant had not violated Condition No. 104 of the notification and after noticing the provisions paragraph 2.5 of CAR, the Delhi High Court observed as follows: 34. A plain reading of paragraph 2.5 also indicates that its contents are in conformity with the definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. No. Aircraft Type Aircraft Regn. Assessable Value (in Rs.) Redemption fine % to Assessable Value Proportionate Redemption Fine (in Rs.) Rede -mption fine paid Bank Guarantee 1. VT-RSM Super King Air B200 13,94,28,048 14.76 2,05,78,957 2,05,78,957 1,77,04,975 2. VT-REM Super King Air B200 12,84,82,173 14.76 1,89,51,587 1,89,51,587 1,63,04,879 3. VT-RAN Hawker 800 XP 35,70,04,195 14.76 5,26,92,224 5,26,92,224 4,53,33,423 4. VT-REO Bell 430 24,75,28,275 14.76 3,65,34,064 NA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, be appropriate to refer to the Larger Bench decision of the Tribunal in Advance Mechanical Works and the relevant paragraphs are reproduced below: The facts in the referral order are set out in paragraphs 1 2 of the order. The issue pertains to whether interest is payable on redemption fine which had to be refunded when the order in which it was ordered, was set aside by a higher judicial forum. The Hon ble Member who heard the appeal, was of the opinion that the decision in Sheela Foam Pvt. Ltd. v. CCE, Noida [2003 (154) E.L.T. 522 (Tri. - LB)] granting interest on refund of pre-deposit of duty, has been rendered without taking into consideration the Supreme Court s decision in Orient Enterprises [1998 (99) E.L.T. 193 (S.C.)] and therefore calls for a re-examination by a still Larger Bench particularly in view of the provisions contained in Section 11BB of the Central Excise Act. 2. The Larger Bench is constituted to examine whether the decision rendered in Sheela Foam is in conflict with the decision in Orient Enterprises of the Supreme Court. The two decisions cited supra dealt with facts entirely different and are set out hereunder. In Sheela Foam Pvt. Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be held to be of universal application, the Apex Court observed. The direction for payment of interest in such cases was by way of consequential relief along with the main relief of setting aside the order imposing the tax or duty. The Court while disposing off civil appeal No. 914/92 (Orient Enterprises case referred to above), observed that the contention that interest is payable on the amount deposited towards redemption fine under an adjudication order while the amount had been refunded after the said order was set aside, cannot be maintained even under Article 226 of the Constitution of India. 4. The referral order is concerned with the same issue, i.e., whether interest is payable on the redemption fine while refunding it. The issue is fairly covered by the decision of the Apex Court in Orient Enterprises supra. The circumstances under which interest is payable on the delayed refunds are enumerated in the Central Excise Act as well as Customs Act presently. The decision in Sheela Foam Pvt. Ltd. pertains to deposit made towards duty during the course of investigation and is not in regard to fine paid in pursuance of an adjudication order. The Apex Court clearly held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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