Commissioner Of Customs, (Preventive), New Customs House, New Delhi vs. M/S. Global Vectra Helicorp Limited

Facts

The Revenue (Commissioner of Customs) appealed an order by the Customs, Excise & Service Tax Appellate Tribunal (Tribunal) dated September 22, 2022. The Tribunal's order disposed of an appeal filed by the respondent, M/s. Global Vectra Helicorp Ltd., and Revenue's cross-objections. The core issue concerned compliance with Condition No. 104 of Exemption Notification No. 21/2002-Cus, as amended. The Commissioner had issued a show cause notice alleging that three helicopters imported by the respondent, availing the exemption, were not used for their stated purpose of 'non-scheduled air transport (passenger) service'. Specific allegations included using helicopters for private services to a group company and long-term lease to another company, violating the exemption conditions. The Adjudicating Authority confirmed a duty demand of ₹21,21,95,030/- and penalty for two helicopters (VT-AZU and VT-AZV), but dropped the demand for a third (VT-AZX). The Tribunal, however, allowed the respondent's appeal and rejected Revenue's cross-objections.

Held

The Court held that Condition No. 104 of the Exemption Notification would be satisfied if the imported aircraft was used for either non-scheduled (passenger) services or non-scheduled (charter) services. The definition of 'air transport service' under Rule 3(9) of the Aircraft Rules, 1937, requires remuneration, which was established. The Court noted that paragraph 2.5 of the Civil Aviation Requirement (CAR), Section 3, Air Transport Series ‘C’ Part-III, explicitly allows non-scheduled operators to operate revenue charter flights for group companies, provided it is for remuneration. The Court found the Revenue's contention that the respondent was not permitted to use helicopters for non-scheduled (passenger) services because they were imported for non-scheduled (charter) services to be insubstantial, as the condition would be satisfied by either use. The Court also referred to an explanation added by Notification No. 21/2011-Cus to Condition No. 104, which clarified that use for non-scheduled (charter) services or non-scheduled (passenger) services would not be a violation. Therefore, no substantial question of law arose. The impugned order, to the extent it held that Customs Authorities could take action based on an importer's undertaking only when DGCA held permit conditions violated, was set aside.

Key Issues

1. Whether the respondent violated Condition No. 104 of Exemption Notification No. 21/2002-Cus by using imported helicopters for purposes other than non-scheduled (passenger) air transport services? The Revenue argued that the respondent failed to comply with Condition No. 104 of the Exemption Notification. It contended that the helicopters were used for private services to a group company (M/s Vectra Aviation Pvt. Ltd.) and on a long-term lease to M/s Dhillon Aviation Pvt. Ltd., which constituted a violation. The Revenue also alleged non-compliance with Civil Aviation Requirement, Section 3, Air Transport Service ‘C’, Part 3, by not issuing passenger tickets as per the Carriage by Air Act, 1972, and charging fixed monthly charges. The Revenue relied on the Adjudicating Authority's findings. The respondent argued that the Adjudicating Authority had travelled beyond the allegations in the show cause notice. It contended that the helicopters were used for passenger services for remuneration, which satisfied Condition No. 104. The respondent also pointed to the definition of 'air transport service' and the Civil Aviation Requirement (CAR) allowing non-scheduled operators to operate revenue charter flights for group companies. The respondent relied on the Tribunal's interim order in M/s VRL Laboratories Ltd. v. Commissioner of Customs, Ahmedabad.