Aircraft imported under exemption notifications for non-scheduled (passenger) services can be legally used for non-scheduled (charter) services without violating the conditions of the exemption.

P.V.SUBBA RAO

1. M/s Privilege Airways Pvt. Ltd.¹Privilege and its Director Shri Sarang Wadhawan²Wadhawan, C/506/2010& C/507/2010 filed these appeals to assail the order dated 30.07.2010³Impugned order passed by the Commissioner of Customs (Preventive), New Delhi in which he denied the benefit of exemption notification no.21/2002-Cus (S.No. 347B) for the Falcon 2000 aircraft imported by Privilege and confirmed demand of duty of Rs. 19,76,50,325/- under section 28 of the Customs Act, 1962⁴Act, confiscated the aircraft and imposed redemption fine of Rs. 15,00,00,000/- under section 125 of the Act and imposed a penalty of Rs. 5,00,00,000/- on Privilege under section 112(a) of the Act and penalty of Rs. 20,00,000/- under section 112(a) of the Act on Shri Wadhawan.

2. Nobody appeared on behalf of the appellants. Nobody has been appearing on behalf of the appellants after the previous counsel Shri Narasimhan had withdrawn his Vakalatnama on 6.9.2024. Registry was directed to issue notices to the appellants and the Department was also requested to attempt to serve the appellants and the matter was directed to be listed on 15.10.2024. Thereafter, the matter was listed on several dates but none appeared on behalf of the appellants.

3. We have heard learned special counsel for the Revenue and perused the records.

4. Privilege imported Falcon 2000 jet aircraft claiming conditional exemption notification no. 21/2002-Cus (S.No. 347B) which provided for exemption to aircrafts imported into India for providing Non-Scheduled (passenger) services or non-Scheduled (charter) services. Relevant portion of the 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 necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue),No. 21/2002-Customs, dated the 1st March, 2002 which was published in the Gazette of India, Extraordinary, vide number G.S.R. 118(E) of the same date, namely:-

In the said notification,-

(A) In the Table,-

(i) xxxxxxxx

(ii) after S. No. 347 and the entries relating thereto, the following S. Nos. and entries shall be inserted,namely:-

xxxxxxxx

(B) in the Annexure, after Condition No. 102 and the entries relating thereto, the following Conditions shall be inserted, namely:-

xxxxxxxxxx

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 offer