East INDIA Hotels LTD. vs. Commissioner Of Customs, Central Excise And Central GST, New Delhi

Facts

The appellant, East India Hotels Ltd., imported an aircraft on 21.05.2007 and filed a Bill of Entry. They submitted an undertaking to the Assistant Commissioner of Customs, committing to use the aircraft solely for providing non-scheduled (passenger) or non-scheduled (charter) services, as required by Condition no. 104 of Customs Notification No. 21/2002-CUS, as amended by Notification 61/2007-CUS, to avail duty exemption. The customs authorities issued a Show Cause Notice on 27.06.2008, alleging violation of the undertaking and evasion of customs duty amounting to approximately ₹13.92 crores. The Commissioner of Customs (Appeal) passed an order on 27.07.2010, confiscating the aircraft. The Customs, Excise and Service Tax Appellate Tribunal (Tribunal) dismissed the appellant's appeal on 14.01.2020, holding that the aircraft was used for private purposes, violating Condition no. 104.

Held

The High Court held that the appellant had not complied with Condition no. 104 of the Customs Notification No. 21/2002-CUS, as amended by Notification 61/2007-CUS. While the Court disagreed with the Tribunal's interpretation that non-scheduled (passenger) services strictly required offering services to the public at large on a published tariff, it agreed with the conclusion that the appellant had not met the condition. The Court reasoned that the appellant had not used the aircraft for providing air transport services for remuneration of any kind. The decisions in Reliance Transport and Global Vectra Helicorp Ltd. were distinguished, with the Court noting that in Reliance Transport, the aircraft was used for remuneration, and in Global Vectra Helicorp Ltd., the service provided was for remuneration. Therefore, the question of law was answered in the negative. The appeal was disposed of in terms of this finding.

Key Issues

1. Whether the learned Tribunal erred in misinterpreting Customs Notification No. 21/2002-CUS, as amended by Notification 61/2007-CUS, and concluding that the appellant had not complied with the conditions for availing duty exemption under the Notification, specifically Condition no. 104. Appellant's contention: The appellant argued that its use of the aircraft for its officials and Board of Directors qualified as providing non-scheduled (passenger) services, thus fulfilling the condition for duty exemption. They relied on the DGCA permit to operate for non-scheduled (passenger) services and claimed no adverse action was taken by DGCA. They also referred to the Tribunal's decisions in Reliance Transport v. Commissioner of Customs and Global Vectra Helicorp Ltd. and Ors. v. Commissioner of Customs (Import) and Ors. Respondent's contention: The respondent, through the Commissioner of Customs, argued that the aircraft was used for private purposes and not for providing non-scheduled (passenger) or non-scheduled (charter) services, thereby violating Condition no. 104 of the Notification. The Tribunal's findings were based on Civil Aviation Requirement Rules, air transport circulars, and a DGCA letter classifying non-revenue charter flights as private flights.