2026-VIL-1592-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs – Import of aircraft - Conditions for exemption under Notification No. 21/2002-Cus - Violation of post-import conditions - The Appellant imported an aircraft claiming exemption from duty under Notification No. 21/2002-Cus subject to condition no. 104 which required that aircraft be used only for providing non-scheduled charter services with requisite approval from DGCA. An NOC to operate non-scheduled charter services had expired on 23.09.2007 with express intimation that no further extension would be granted. The Appellant began commercial charter operations on 29.12.2007 after expiry of the NOC and operated without any valid NSOP permit - The Revenue demanded duty alleging violation of the condition of exemption and proposed confiscation of aircraft - Whether the customs authorities have jurisdiction to demand duty for post-import violation of conditions of exemption notification or whether such matters fall exclusively within jurisdiction of DGCA and whether goods are liable to confiscation when conditions are violated - HELD - Once the registration is cancelled and an application for revocation of cancellation is filed and rejected and thereafter the appellate authority restores the registration, the taxpayer is functioning as a regular taxpayer. Section 111(o) of the Act makes goods liable to confiscation where goods exempted subject to any condition from duty are imported and the conditions are not observed unless non-observance is sanctioned by the proper officer - The proper officer has the function to determine if conditions for exemption from duty are violated. Customs authorities have jurisdiction in matters of assessment of duty and recovery of duty for non-fulfilment of conditions of exemption notifications. The interpretation of licences or permits issued by DGCA can be done only by DGCA but where there is no licence or permit for the relevant period the DGCA has no role and customs authorities can adjudicate the matter - The Appellant operated aircraft for over 100 hours commercially without approval which constituted unauthorised operations and violation of the substantive conditions of exemption - The Appellant cannot be said to have used the aircraft exclusively for the specified purpose hence the undertaking to pay duty on demand was triggered. The goods are liable to confiscation under section 111(o) of the Act. Duty is recoverable under section 125(2) of the Act and the limitation under Section 28 does not apply - The duty confirmed is upheld but the matter is remanded to re-compute duty considering actual cost of transport and transit insurance instead of notional values. Penalties imposed are upheld - the impugned order is modified and the appeal of the importer is partly allowed to the extent of directing re-computation of the duty payable reckoning the actual cost of transport and transit insurance of the aircraft instead of notional values under Rule 9(2) of the Valuation Rules. Rest of the impugned order is upheld
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