Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(CESTAT) 432

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Dilip Gupta, President, Hemambika R. Priya, Technical Member
Indian Metal and Ferro Alloys Limited – Appellant
Versus
Commissioner of Customs (Preventive) – Respondent
CUSTOMS APPEAL NO. 70 OF 2010 | CUSTOMS APPEAL NO. 72 OF 2010 | CUSTOMS APPEAL NO. 73 OF 2010 | CUSTOMS APPEAL NO. 102 OF 2010

Advocates:
For the Appellants/Petitioners: Shri Tushar Jarwal, Shri Vikrant Maheshwari, Ms. Daliya Singh
For the Respondents: Shri P.R.V. Ramanan, Shri Rakesh Kumar, Shri Girijesh

Violation of customs exemption conditions for aircraft importation justifies confiscation but requires proven intent for penalties.

Headnote:(A) Customs Act, 1962 - Sections 111(d), 111(o), 112(a), 28 - Exemption Notification - Import of aircraft for non-scheduled air transport services - Appellant violated conditions of notification by using aircraft for private purposes - Confirmation of confiscation of aircraft justified - Penalties imposed upon individuals set aside due to insufficient mens rea. (Paras 31-34)

Facts of the case:
The appellant imported a helicopter intending to use it for non-scheduled air transport services, but it was found to be used for private purposes, violating the conditions of the customs exemption notification.

Findings of Court:
The confiscation of the helicopter due to misuse was upheld, while penalties on executive officers were deemed inappropriate as they lacked intent to violate customs regulations.

Issues: The legal interpretations surrounding exemption conditions for aircraft importation and the applicability of penalties under the Customs Act were critical to the judgment.

Ratio Decidendi: Conditions pertaining to the use of imported aircraft must be strictly adhered to for exemption claims; violation led to justified confiscation of the aircraft, but penalties required evidence of intent which was lacking.

Result: Customs Appeal No. 70 of 2010 dismissed; Appeals No. 72 and 73 allowed; Penalties set aside; Appeal No. 102 dismissed.

Table of Content
1. contestation over helicopter's intended use under exemption notification. (Para 1 , 5 , 11 , 19)
2. details surrounding execution of the customs exemption undertaking. (Para 12 , 30)
3. determination of misrepresentation leading to confiscation and judgment on penalties. (Para 31 , 32 , 34)

JUSTICE DILIP GUPTA:

Customs Appeal No. 70 of 2010 has been filed by Indian Metal and Ferro alloys Limited, the appellant for setting aside that portion of the order dated 24.11.2009 passed by the Commissioner (Preventive), New Customs House, New Delhi, the Commissioner that confiscates Robinson R-44 Raven II Helicopter, the Helicopter under section 111(o) of the Customs Act, 1962 , the Customs Act but an option has been given to the appellant to redeem the same on payment of redemption fine. The order also confirms the demand of duty in terms of the undertaking dated 18.10.2007 given by the appellant.

2. Customs Appeal No. 72 of 2010 has been filed by Bhaijayant Panda, Vice Chaiman of the appellant, to assail that portion of the order dated 24.11.2009 passed by the Commissioner that imposes a penalty of Rs. 10 lacs upon him under section 112(a) of the Customs Act.

3. Customs Appeal No. 73 of 2010 has been filed by Rajeev Lala, Senior Managar (Corporate affairs) of the appellant, for assailing that portion of the order dated 24.11.2009 passed by the Commissioner that imposes a penalty of Rs. 2 lacs upon him under section 112 of the Customs Act.

4. Customs Appeal No. 102 of 2010 has been filed by the department to assail that portion of the order dated 24.11.2009 passed by the Commissioner with a prayer that the matter be remanded to the Commissioner for the purpose of enhancing penalty imposed upon Bansidhar Panda, Executive Chairman of the appellant and Baijayant Panda, Vice Chaiman of the appellant.

5. The appellant is a company incorporated under the Companies Act and has its registered office at Bomikhal, Rasulgarh. The appellant imported Robinson R-44, Ravin II Helicopter to expand its fleet. It was granted a Non Scheduled Air Transport Services (Passenger) Permit by the Director General of Civil Aviation, DGCA Ministry of Civil Aviation, MCA. It is said that the permit was renewed by DGCA from time to time.

6. The appellant then applied to the MCA for grant of a No-Objection Certificate for the import of the Helicopter through an application dated 05.03.2007 and the appellant received the No-Objection Certificate from the MCA on 05.09.2007.

7. The Helicopter was imported by the appellant by a Bill of Entry dated 08.10.2007. The appellant through Rajeev Lala also furnished an undertaking dated 08.10.2007 to Assistant Commissioner of Customs, New Delhi mentioning that it had imported the Helicopter for non- scheduled air transport services (passenger) and undertook to pay on demand an amount equal to the duty payable on the Helicopter, in the event of failure in using the Helicopter for the specified purpose.

8. The appellant had imported the aircraft claiming customs duty exemption under Notification No. 61 of 2017 dated 03.05.2007, the Exemption Notification that amended the earlier Exemption Notification No. 21 of 2002 dated 01.03.2002. Prior to importing the aircraft, the appellant had obtained the no objection certificate from DGCA on 05.09.2007 to operate the aircraft for non scheduled air transport (passenger) services.

9. The Exemption Notification dated 03.05.2007, on which revolves the entire controversy, grants „nil‟ rate of duty on import of aircraft for non-scheduled (passenger) services as well as non-scheduled (charter) services subject to Condition No. 104 that is required to be fulfilled by an importer of the aircraft for availing the benefit of the Exemption Notification. The relevant portion of the said Exemption Notification is reproduced below:

“In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is ne

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