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Date of Decision: 01.03.2023
& CM APPL. 10001/2023 COMMISSIONER OF CUSTOMS, (PREVENTIVE), NEW CUSTOMS HOUSE, NEW DELHI ..... Appellant
Through: Mr Ravi Prakash, Senior Standing Counsel with Mr
Aman Rewaria, Advocate.
Through: Mr Sandeep Sethi, Senior Advocate with Mr Vishnu
Sharma, Mr Manan Shishodia and Mr Prakhar Agarwal, Advocates.
HON'BLE MR. JUSTICE AMIT MAHAJAN VIBHU BAKHRU, J.
JUDGMENT
1. The Revenue has filed the present appeal impugning an order dated 08.09.2022 (Final Order No.50822-23/2022 – hereafter ‘the impugned order’) in Customs Appeal No. 640/2010 and Customs Appeal No. 642/2010, passed by the Customs Excise and Service Tax Appellate Tribunal (hereafter ‘the Tribunal’).
2. The respondent had filed the appeal being Customs Appeal NO. 640 of 2010, impugning an order-in-original dated 31.08.2010, whereby the Adjudicating Authority (Commissioner of Customs) had, inter alia, raised a demand of ₹57,42,63,453/- (Rupees fifty seven crore, forty two lakhs, sixty three thousand, four hundred and fifty three only) and further imposed a penalty of ₹16,00,00,000/- (Rupees sixteen crore only) under Section 112(a) of the Customs Act, 1962 (hereafter ‘the Customs Act’). In addition, the Adjudicating Authority had also directed confiscation of the aircraft imported by the respondent (hereafter ‘the aircraft’), under Section 111(o) of the Customs Act with an option to redeem the same by payment of a redemption fine of ₹40,00,00,000/- (Rupees forty crores) under Section 125 of the Customs Act. The allegation against the respondent is that it had not complied with the undertaking furnished in terms of the Condition No.104 of the Notification No.21/2002-Cus. dated 01.03.2002 as amended by the Customs Notification No.61/2007-CUS dated 03.05.2007. In terms of the Condition No.104, the aircraft is required to be used for providing non-scheduled (passenger) services. According to the Adjudicating Authority, the respondent had not complied with the said condition and had used the aircraft for private purposes and not for providing non-scheduled (passenger) services.
3. The Tribunal allowed the respondent’s appeal by the impugned order. The Tribunal found that the aircraft was used in accordance with the permit granted by the Director General of Civil Aviation (DGCA) and the aircraft was used for remuneration. The Tribunal decided the appeal in view of an interim order dated 08.08.2022 passed by the lager Bench of the Tribunal in Customs Appeal No.74/2010 captioned M/s VRL Logistics Ltd. v. Commissioner of Customs, Ahmedabad. The operative part of the impugned order reads as under:
37. The use of the aircraft has, therefore, been in accordance with the scope of non-scheduled (passenger) services and there is no violation of the undertaking to use the aircraft for nonscheduled(passenger) services.
38. It is, therefore, for all the reasons stated above, not possible to sustain the impugned order dated 31.08.2010 passed by th eCommissioner in so far as it concerns the appellant. For these reasons, the penalty imposed upon Sudhir Nayak cannot also be sustained.
39. The impugned order dated 31.08.2010 is, accordingly, set aside and Customs Appeal No. 640 of 2010 and Customs Appeal No. 642 of2010 are allowed.”
4. In the aforesaid context, the Revenue has projected the following questions for consideration of this Court: “i. Whether in the facts and circumstances of the case the Hon’ble Tribunal is right in holding that the Customs Authority cannot examine whether the appellants have fulfilled the condition of exemption notification. ii. Whether in the facts and circumstances of the case the Hon’ble Tribunal has misinterpreted the notification and concluded that the respondent company has complied with the conditions for availing duty exemption under the notification. iii. Whether in the facts and circumstances of the case the Hon’ble Tribunal is right in holding that nonscheduled (passenger) operator can carry out charter service. iv. Whether in the facts and circumstances of the case the Hon’ble Tribunal is right in holding that there is no obligation on the part of the respondent company to issue tickets to the passengers.”
5. Insofar as the first question is concerned, the same is covered in favour of the Revenue and against the assessee by a recent decision of this Court in East India Hotels Ltd. v. Commissioner of Customs, Central Excise and Central GST, New Delhi in CUSAA 5/2020, decided on 31.01.2023. The question whether an undertaking, as furnished in terms of the Condition No.104 of the Notification in question is complied with or not is required to be considered by the Custom Authorities. The Custom Authorities are not bound by the decision of the DGCA.
6. The other questions relate to whether the respondent had complied with the Condition No.104 of the Notification and had used the aircraft for providing non-scheduled (passenger) services. The said question is also covered by the decision in East India Hotels Ltd. v. Commissioner of Customs, Central Excise and Central GST, New Delhi (supra).
7. It is not disputed that the respondent has provided the said services for remuneration. In the aforesaid view, notwithstanding that the respondent has not published its tariff for providing the said services, it has nonetheless complied with the conditions of providing non-scheduled (passenger) services as defined in the Explanation to the Condition No.104 of the Notification in question.
8. In view of the above, the question no.(i), as projected by the Revenue, is decided in its favour and the impugned order to the said extent is set aside. Insofar as the question whether the respondent has complied with the Condition No.104 of the Notification is concerned, the said question is answered in favour of the respondent in view of the decision of this Court in East India Hotels Ltd. v. Commissioner of Customs, Central Excise and Central GST, New Delhi (supra).
9. The appeal is disposed of in terms of the aforesaid terms. All pending applications are also disposed of.
VIBHU BAKHRU, J AMIT MAHAJAN, J MARCH 1, 2023