Custom, Excise & Service Tax Tribunal
M/S Global Vectra Helicorp Ltd vs Commissioner Of Customs (Import), ... on 19 February, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II Appeal No. C/865, 869 & 892/12 (Arising out of Order-in-Original No. CC/MAK/12/2012-13/ADJ/ACC(I) dated 28.5.2012 passed by the Commissioner of Customs (Import), Mumbai). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) Honble Shri P.S. Pruthi, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Global Vectra Helicorp Ltd. Commissioner of Customs (Import), Mumbai Mr. P. Rajkumar Menon Appellant (C/865/12) (C/869/12) (C/892/12) Vs. Commissioner of Customs (Import), Mumbai M/s Global Vectra Helicorp Ltd. Respondents Appearance: Shri Atul Nanda, Sr. Advocate with Ms. Rameeza Hakeem, Advocate for Appellant- assessee Shri V.K. Singh, Spl. Counsel for Respondent Revenue CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) SHRI P.S. PRUTHI, MEMBER (TECHNICAL) Date of Hearing: 19.02.2015 Date of Decision: .2015 ORDER NO. Per: Anil Choudhary
The issue in these cross appeals is whether the appellant importer of helicopters, has breached Condition No. 104 contained in Customs Notification No. 21/2002 (as amended by Notification No. 61/2007) rendering it liable to payment of duty on the import of the 2 helicopters, for which it had previously claimed exemption from duty in terms of the said Notification. Condition No. 104 reads as under: -
(i) The aircraft are imported by an operator who has been granted approval and by the competent authority in the Ministry of Civil Aviation to import aircraft for providing nonscheduled (passenger) services or non-scheduled (charter) services and
(ii) The importer furnishes an undertaking to the Deputy Commissioner of Customs or Asst. 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 nonscheduled (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 purposes, 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 enterprises engaged in or offering to engage in aircraft operation;
(b) Non-scheduled (passenger) services means, air transport services other than scheduled (passenger) air transport services as defined in Rule 3 of the Aircraft Rules, 1937.
(c) Non-scheduled (charter) services means services provided by a non-scheduled (charter) air transport operator, for the charter on a hire of an aircraft to any person, with the published tariff, and who is registered with and approved by the Directorate General of Civil aviation for such purposes, and who conforms to the civil aviation requirement under the provision of Rule 133A of the Aircraft Rules 1937.
Provided that such Air Charter operator is a dedicated company or partnership firm, for the above purposes.
Notification No. 21/02 stood amended by Notification No. 61/07, which provided for exemption of additional duty of customs also.
2. Appeal No. C/865/2012 is filed by the M/s Global Vectra Helicorp Ltd., the importing Company, Appeal No. C/892/2012 is filed by Rajkumar Menon, the director of the importing company, and Appeal No. C/869/2012 is filed by the Commissioner of Customs for imposition of penalty on the interest component also. For the sake of convenience references are made to the facts as set out from Appeal No. C/869/2012. The appellant-importer has challenged the adjudication order dated 28/5/2012, passed by the learned Commissioner by which the appellant importer has been found to be in breach of the undertaking given by it. It has been held that the appellant importer is not offering non-scheduled passenger services, as undertaken by it, but rather is offering non-scheduled (Charter) services, thereby, is in breach of the Condition No. 104 of Notification No. 21/2002, thereby is disentitled to the exemption and duty liability have been adjudicated along with interest and penalties. The appellant importer have been found to be in breach of post import conditions contained/given in the exemption notification (as amended) rendering it liable to pay duty of Rs.13,95,21,783/ with the equal amount of penalty under Section 114A and the goods (helicopters) have been held liable for confiscation under Section 111(d) of the Customs Act, 1962 with option to redeem at Rs.9 crores. Appeal by the Director - Rajkumar Menon is against imposition of fine/penalty under Section 112 of Rs.5 lakhs. The Revenue has also filed cross Appeal No. C/869/2012 praying for modification of the impugned order to the extent that penalty ought to have been imposed also on the interest component upon the importer in terms of Section 114A of the Customs Act.
3. The facts in brief are that the appellant importer has a fleet of helicopters which it offers for non-scheduled (passenger) services as defined in clause 3 of the Aircraft Rules, 1937. The appellant have entered into contract with several companies for transportation of their personnel, materials etc. The appellant imported one helicopter serial No. 36422 under the bill of entry No. 190480 dated 7/7/2007 and claimed Customs duty exemption in terms of the exemption Notification No. 21/2002 (as amended).
3.1 In terms of the notification, the appellant importer submitted an undertaking dated 7.7.2007 to the Customs Department, that the said helicopters will be used only for providing non-scheduled (passenger) services and in the event of failure to comply with such undertaking, it will pay on demand the requisite tariff/duty. The importer subsequently also imported a 2nd helicopter, serial No. 36097 under the Bill of entry No. 298817 dated 6.10.2007 and filed a similar undertaking, and availed exemption.
3.2 The appellant importer was operating these helicopters along with its other helicopters, under contract of service for providing transport of passengers and materials to certain companies. These contracts were mainly with oil companies for transportation of their person and materials to and from various oilrigs and other locations. One of the contract was with ONGC, contact dated 10/8/2006, and another contract was with Gujarat State Petroleum Corporation Ltd. entered in November, 2007, among others. The Revenue on its perception that the appellant importer is offering Charter services and not Passenger services, as undertaken by it, pursuant to enquiry, issued show-cause notices dated 8/8/2011 which was adjudicated and the proposed demand of duty confirmed, with interest and penalty. Further the helicopters were held liable to confiscation, giving option to redeem.
4. Being aggrieved by the impugned order, the importer has filed the present appeal. Learned Counsel have urged the following grounds among others in order to interpret what is a nonschedule passenger service, only the strict language of the exemption Notification, the conditions set out therein and the aids of interpretation contained therein can be relied upon. The definitions in the Notification itself and the Aircraft Rules, 1937, and no other material or source can be relied upon.
4.1 It is further urged that there has been no breach of Condition No. 104 of the said notification as the services offered by the appellant meet the definition of "non-scheduled passenger services" contained in explanation to the said notification. Non-scheduled passenger services means a transport service other than scheduled passenger air transport services as defined in Rule 3 of the Aircraft Rules, 1937.
4.2 Thus all such air transport services which is other than scheduled passenger air transport services, as defined in Rule 3 of the Aircraft Rules, 1937, would amount to being non-scheduled passenger services in terms of Notification No. 21/2002 particularly Condition No. 104 therein. Rule 3(9) defines Air transport service and Rule 3(49) defines scheduled Air transport services, as under:
Rule 3(9) Air transport service means a service for the transport by Air of persons, mails or any other thing, animate or animate, for any kind of remuneration whatsoever, whether such services consist of one single flight or series of flights. Rule 3(49) scheduled Air transport service means an Air transport service undertaken between the same two or more places and operated according to a published timetable with flights so regular or frequent that they constitute a recognizably systematic services, each flight being open to "use by members of the public. 4.3 It is further urged that in order for the services or flights being operated by the importer, to be in compliance with Condition No. 104, it must possess all the elements contained in rule 3(9) and none of the elements contained in Rule 3(49). The service must be for the transportation of person or things, for remuneration, operating as a single flight or a series of flights and such flights offered by it must be open to public and not to operate on a published timetable with the regular and/or systematic flights which constitute a recognizably systematic series. The appellant have in order to demonstrate that it have complied with the conditions as required under the said notification have filed the following facts in tabular chart on the date of arguments which is reproduced herein: Element of Service offered by the Importer ONGC Contract dated 8th Aug 2006 [Pg 143 DA] GSPC Contract in November 2007 [ Pg 181 DA] IS AIR TRANSPORT SERVICE AS DEFINED UNDER RULE 3(9) Is a transport for person or things Contract for the carrying out ONGCs off shore operations [Recital 1 at Pg 144 DA], for the use of ONGC and its authorized personnel [Clause 4.1 Pg 164 DA] and for carriage of passengers and cargo [Clause 4.4. Pg 165 DA].
Contract for air logistics, support of airlifting of GSPCs crew including when needed medivac[Schedule B- Pg 199DA] Is for remuneration For a contract price [Clause 1.9 Pg145 DA]in terms of payments set out [Clause 7.0 Pg 149DA] and for monthly and hourly and various other heads of charges listed out[Clause 11 Pg 172DA] Contract Price defined [Clause 1.16 Pg 184 DA], the making of invoices and payment provided for[Clause 10.1- Pg 187 DA], Operating as a single flight or as series of flights The flights are to operate as a series on a Daily Flight Schedule which is formulated at 6:00pm the previous day. Non- Scheduled Flights also permitted if notified one hour in advance subject to operational and regulatory limitations[Clause 4.2.- Pg 164 DA] The flights were to operate to various locations of wells located in the KG3 Basin [Schedule B- Pg 199 DA] IS OTHER THAN SCHEDULED (PASSENGER) AIR TRANSPORT SERVICE AS DEFINED UNDER RULE 3(49) Not open to public Helicopters were provided exclusively for the use of ONGCs personnel [Clause 2.1- Pg 163 DA] The contract was the use of the crew including, GSPCs and its third partys personnel and essential cargo. [Schedule B- Pg 199DA]. It was therefore not open to the public No published time table There is no published time table in advance. Flights as per daily flight schedule decided the prior evening at 6 pm. There is no time table published by the Assesse rather it is ONGC which hands over to the Assesses crew a manifest prior to departure of the name and number of passengers, cargo, weight and the estimated time of departure and arrival of the flight. [Clause 4.12- Pg 166 DA] No published time table. The Assesse could also be called upon to arrange special sorties when called upon by GSPC for reasons other than directly connected with Rig Operations at their own cost [Clause 2.3 Pg 200 DA] No systematic / regular flights so as to constitute a recognizable systematic series As seen from above, there is no pre-determined system/ series of flights and only a schedule of flights which may be determined the priorevening and which may vary from day to day. This may also non-scheduled flights on a given day.
In fact the contract contemplates that in an given case, for an offshore operation, the helicopter may be required to be away from base for 15 days at a stretch [Clause 6.1.(ii)- Pg 166] Flying requirement is categorized as less than 100 hours and more than 100 hours per mensem[Clause 6.1(iii) Pg 167DA]. Availability of a helicopter is calculated on a operation day basis in the manner set out in Clause 7.2 [Pg 169-DA]. Payment is therefore as per actual availability and the actual flying hours done by the helicopter [Proviso to Clause 1.1.(b)- Pg 161 DA] Flying time has been separately defined [Clause 1.1(i)-Pg 162 DA] .
The lack of any system or regularity may be seen from the existence of a definition of aTemporary Base Station from where temporarily the helicopter could be called upon to have its operations/ facilities [Clause 1.1(s)- Pg 162 DA] Even on the number of aircraft, ONGC has an option to seek 2 additional helicopters for offshore operations after 90 day notice [Clause 2.2. Pg 163 DA] The invoices upon which the Department has relied will show a random patterns of flights, persons ranging from:
* No flights in April 2008, except for 2 flights daily from 26 Apr- 30 Apr carrying passengers ranging from from 0-47 persons on a given day and cargo ranging from 31 kg- 95 kgs [Pg 214 DA] * In Feb 2008, only flights from 19 Feb to 29 Feb, either one or two flights, passengers ranging from 16- 36, cargo ranging from 0 kgs- 117kgs[Pg 220,222 DA] Payment was as per a Service Day Rate [Clause 2.9 Pg 201 DA] The Assesse could also be called upon by GSPC to arrange special sorties for reasons other than directly connected with Rig Operations at their own cost [Clause 2.3 Pg 200 DA] The invoices upon which the Department has relied will show a random patterns of flights, persons ranging from:
* In April 2008, no flights on 5,11,13,28 Apr and on other days1- 6 flights per day, passengers from 8-32 persons on a given day and cargo ranging from 0 kg- 60 kgs [Pg 216 DA] * In March 2008, no flights on 2nd to 5th March, 7th, 8th, 10th, 13th, 14th, 16th, 21st, 23rd, 30th& 31st March. On other days between 1- 6 flights a day, on some days no flight, passengers from 13-35 on a given day and cargo ranging from 0 kg- 58kgs[Pg 218 DA] * In Feb 2008 no flights on 3rd, 5th, 10th, 15th, 17th, 19th, 22nd 24th to 26th Feb 08; on other days flights ranging from 1- 7 flights per day, passengers ranging from 7- 59, and cargo ranging from 0 kgs- 87 kgs[Pg 226 DA] * In Jan 2008 helicopter made available only from 21st Jan 08 to 31 Jan 08,of which no flights were made on 22nd 26th and 27th Jan 08; on other days flights ranging from 1- 7 flights per day, passengers from 9- 56 [Pg 230 DA] 4.4 It is further urged that by no stretch of imagination the services offered by the appellant importer, come under the definition of non-scheduled - Charter as contained in explanation (c) of the Condition No. 104 which provides that non-scheduled Charter services means - services provided by a non-scheduled (Charter) Air transport operator, for Charter or hire of an aircraft to any person, with published tariff, and of who is registered with and approved by the Director General Civil Aviation for such purposes, and who conforms to the Civil Aviation Requirements (CAR) under the provisions of Rule 133A of the Aircraft Rules, 1937, provided that such Air Charter operator is a dedicated company or partnership firm for the above purposes.
4.5 As per definition in explanation (c), for the service to be a charter service it must be the Charter/hire of an aircraft, there must be a published Tariff issued by the importer, the importer must be registered and approved with the DGCA for such purposes and must confirm to the Civil aviation Requirements under Rule 133A of Aircraft Rules. In the present case there was no Charter/hire of an Aircraft, rather under the contract with ONGC under clause 3.1, 9 helicopters were listed which were to be provided and none of the helicopters involved in the present appeal are even mentioned in the contract. That in reality such addition, alteration and substitution of helicopters has in fact taken place, will also be seen from the invoices raised in the matter, where it can be seen that the 2 helicopters in question were used as standby helicopters and were swapped and used between contracts, with different companies, as per the mobilization schedules and availability. The fact that the 2 helicopters in question were used as standby helicopters is evident and made out on the face of the appellant's letter dated 21/6/2008, enclosing the invoices wherein it is stated that:
3. Here it is pertinent to note that the aircraft VT AZT (36422) and VT AZW (36097) being the standby aircraft, the Revenue generated from such aircrafts have been associated with the invoices of other aircrafts. The same is distinguished from the flight manifest.
5. The appellant further urges that while passing the impugned order, the learned Commissioner has failed to appreciate that in the particular case of the appellant, there is a clarification dated 8.8.2008 by the DGCA, which categorically confirms and clarifies that the activity being conducted by the appellant assessee were within the scope of their NSOP. The said letter is reproduced herein for ready reference: -
Reference No. AV 14014/48/97-AT(I) Dated : 08 August, 2008.
Global Vectra Helicorp B-314, 3rd Floor 19, SV Road, Santacruz, Mumbai Subject: Interpretation of NSOP (Passenger operations).
Sir, Reference is made to your letter No. GVHL/DGCA/02/08 dated 4 August, 2008 on the above subject.
The Non-Scheduled Operators Permit entities the Permit holder to use the aircraft endorsed on the Permit for hire and reward, i.e., for commercial activity. This may include per seat hiring of the capacity of the aircraft or a full aircraft charter.
The NSOP holder may also enter into a long or short terms lease contract to provide aircraft to a client, including its operation, maintenance and other associated services.
Since the activities mentioned in paragraph 2 of your above referred letter are for lease charter of aircraft including its operation etc., and not merely a financial lease, the activities are considered to be within the privileges of Non-Scheduled Operators Permit granted to you.
Yours faithfully, Sd/-
(RP Sahi) Jt. Director General For the Director General of Civil Aviation 5.1 The second error committed by the learned Commissioner is that he has heavily relied on the judgment in the case of King Rotors & Air Charter Pvt. Ltd. Vs. Commissioner of Customs 2011 (269) ELT 343, wherein the facts are quite different. It is further urged that in view of the clarification by DGCA, which is the licensing authority, the issue stands settled in favour of the appellant. It is further urged that NSOP certificate issued to the appellant carries a phrase Permit to Operate Non-scheduled Air Transport Services (Passenger/Cargo/Charter).
5.2 Further, Appendix 1 of the NSOP, however, uses the language Permit to Operate Non-Scheduled Air Transport Services (Passenger). In view of the clarification given by the licensing authority (DGCA) there is no alleged violation of Condition No. 104 vide Notification No. 21/02 (as amended) and as such the impugned order is bad and fit to be set aside.
5.3 The appellant further relies on the ruling of the Hon'ble Apex Court in the case of Titan Medical Systems (P) Ltd. vs. Commissioner of Customs (2003) 9 SCC 133, wherein the Hon'ble Supreme Court has held that it would be for the licensing authority to take action on any much mis-representation and it was not for the Customs authority to deny the benefit of an exemption notification based on such alleged mis-representation. It is further urged that in the case of King Rotors (supra), the importer had entered into an agreement with one Heligo Charter Pvt. Ltd. and under such agreement it parted with the possession of the helicopter to Heligo Charter, which was taking care of its maintenance, repair and operation etc. On enquiry by the Revenue regarding import condition, King Rotors did not submit any documentary evidence of end-use of the helicopter. In course of further enquiry, the assessee submitted, in part, copies of passenger manifest, documents evidencing payment of lease amount to M/s Brics Leasing & Finance International Ltd., supplier of the helicopter and copy of agreement with Heligo Charter Pvt. Ltd. Further, Heligo Charter in the said case was admittedly found engaged in providing helicopter services to other company on charter basis. That the Heligo Charter was maintaining log-book for flight operation, obtaining the necessary permission, approval from the DGCA and paying salary to the pilot, paying the fuel bill and Heligo Charter did not have any payable tariff and did not issue any flight tickets to the passenger. Further, King Rotors could not furnish any clearance from the DGCA as to the compliance of the licensing condition as a NSOP. It is further evident from the judgment in King Rotors case of this Tribunal, the Advocate also wanted to rely on the clarification dated 8.8.2008 issued by the DGCA in the case of appellant herein Global Vectra Helicorp, which was not accepted by this Tribunal. Such facts are not obtained in the present appellants case and as such the reliance placed by the Commissioner in the adjudication order on the earlier ruling of this Tribunal in the case of King Rotors (supra) is misplaced and thus have erred in arriving at erroneous conclusion.
5.4 The appellant further relies on the ruling of the Apex Court in the case of Alnoori Tobacco Products 2004 (170) ELT 135 (SC), wherein the Hon'ble Supreme Court with respect to the issue of applying precedents have observed that circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. The Apex Court have further quoted the words of Lord Denning in the matter of applying precedents Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect. In deciding such cases, one should avoid the temptation to decide cases (as said by Cardozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.
Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it. 5.5 It is further urged that NSOP license did not permit the lease of aircraft to other persons/companies and clearly DGCA while issuing such permit had only intended its use for purely passenger services and no other. Further, in the case of King Rotors, this Tribunal took notice of the submissions that the assessee-importer holding NSOP, was entitled to use helicopter for charter operations. The licensing authority was aware of the use of aircraft for charter operations and has never objected to it and further the permit was renewed from time to time, which indicates that DGCA have considered and accepted the charter operation to be permissible for NSOP (Passenger). Further, reliance was placed by Counsel of King Rotor on clause 9.2 of Passenger CAR, which reads thus: -
Non-scheduled operators can conduct charter/non-scheduled operations for transportation by air of persons, mail or goods. In such operations, the operators shall not publish their time schedules as the operations are of non-scheduled nature. 5.6 Further, reliance was placed on the clarificatory letter issued by DGCA being letter dated 15.12.2009, issued to M/s. International Air Charter Operations India Pvt. Ltd., clarifying that an operator having NSOP (passenger) can conduct charter operations as per para 9.2 of the Civil Aviation Requirements, Section 3, Series C Part III. Further reliance was placed on letter dated 15-7-2009 to the Commissioner of Customs in the case of import of helicopter by M/s. Escorts Ltd. clarifying that operation of charter services is permissible by NSOP (passenger) holder under paragraph (para 9.2) of Passenger CAR.
5.7 In para 24.3 of the judgment of King Rotors case (supra), this Tribunal has observed that they have not produced any clarification of DGCA to the contra. The assessee claimed to have requested the said authority by letter dated 17-2-2009 for a clarification on the point, but they are yet to obtain any. The Tribunal further observed that nobody has stood in the way of the appellant King Rotors in obtaining a similar clarification with reference to clarification obtained by the appellant herein. The Tribunal further took notice in King Rotor case that it is not in dispute that under the Charter Hire Agreement with Heligo, the assessee allowed the helicopter to be used by Heligo for the purpose of mobilizing and demobilizing of personnel of third party companies and for movement of their freight and/or equipment. Under the agreement, Heligo was to reimburse the actual costs incurred by the assessee in sourcing and acquiring spares for maintenance of the helicopter. The necessary infrastructure for maintenance of the helicopter would also be provided by Heligo. The entire cost of insurance to cover all liabilities in respect of passengers, cargo, crew, helicopter and third party would be incurred by the assessee and reimbursed to them by Heligo. Heligo would also pay monthly remuneration to the pilots of the assessee. They would also bear the costs of maintenance of the helicopter and also the costs of fuel and consumables required for its operation. Under the arrangement in King Rotors case, the assessee was unable to use the helicopter during the tenure of the agreement for any other purpose but for a prior consent of Heligo. In other words, the total control over the helicopter was with Heligo during the period of contract and accordingly, the helicopter was not being operated for the use or purpose of public in general.
5.8 So far condition No. 104 as amended is concerned, it strikes out the following definition of Non-Scheduled Passenger Service that: -
(a) Non-scheduled Passenger Service means air transport service other than scheduled (passenger) air transport service as defined in Rule 3 of the Air Craft Rules, 1937.
From the definition of scheduled (passenger) aircraft service under the Air Craft Rules, 1937, it is evident that such service is to be provided as per published schedule and tariff, which is not so in the case of the appellant herein. Further, schedule of air transport service undertaken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognizably systematic series, each flight being open to use by members of the public as defined under Rule 3(49) of the Air Craft Rules, 1937.
5.9 It is further urged that in order for the services/flights being operated by the assessee to be in compliance with Condition No. 104 it must possess all of the elements contained in Rule 3(9) and none of the elements contained in Rule 3(49), i.e. it must be for transport of persons or things, must be for any kind of remuneration and must operate as a single flight or a series of flights. It must be open to the public, must not operate on a published time table, must not be a flight so regular or systematic to constitute a recognizable systematic series.
5.10 It is further urged that all that the adjudicating authority was required to test was - whether or not the service of the assessee are non-scheduled passenger services within the meaning of the Aircraft Rules, 1937. Whereas the adjudicating authority has only tested whether the service provide by the appellant are charter service and therefore, have come to the conclusion that they are not Non-scheduled Operation Passenger service. The appellant further relies on the ruling of the Hon'ble Supreme Court in the case of Hansraj Gordhandas Vs. H.H. Dave, Assistant Collector of Central Excise and Customs (1969) 2 SCR 253, wherein the Apex Court have observed as follows: -
5. We are unable to accept the contention put forward on behalf of the respondents as correct. On a true construction of the language of the notifications, dated July 31, 1959 and April 30, 1960 it is clear that all that is required for claiming exemption is that the cotton fabrics must be produced on power-looms owned by the cooperative society. There is no further requirement under the two notifications that the cotton fabrics must be produced by the Co-operative Society on the powerlooms for itself.It is well established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax-payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. If such intention can be gathered from the construction of the words of the notification or by necessary implication therefrom, the matter is different, but that is not the case here. In this connection we may refer to the observations of Lord Watson in Salomon v. Salomon & Co.:
Intention of the legislature is a common but very slippery phrase, which, popularly understood may signify anything from intention embodied in positive enactment to speculative opinion as to what the legislature probably would have meant, although there has been an omission to enact it. In a Court of Law or Equity, what the Legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words or by reasonable and necessary implication. It is an application of this principle that a statutory notification may not be extended so as to meet a casus omissus. As appears in the judgment of the Privy Council in Crawford v. Spooner.
... we cannot aid the legislature's defective phrasing of the Act, we cannot add, and mend, and, by construction, make up deficiencies which are left there.
Learned Counsel for the respondents is possibly right in his submission that the object behind the two notifications is to encourage the actual manufacturers of handloom cloth to switch over to powerlooms by constituting themselves into Cooperative Societies. But the operation of the notifications has to be judged not by the object which the rule-making authority had in mind but by the words which it has employed to effectuate the legislative intent. 5.11 It is further urged that what was required, is that, the Adjudicating Authority test the services of the Appellant against the definition of non-scheduled passenger services under Rule 3 and employ no other aid or mode of interpretation such as the nature of the NSOP, the CARS issued from time to time and the definitions contained therein.
5.12 It is further urged that the impugned order is erroneous as it proceeds on the basis that because the assessee has not published a tariff, hence it is using the imported helicopters exclusively for charter hire service. This is evidently an incorrect application of the law. Under Rule 135, the Aircraft Rules, 1937 it is only air transport undertakings offering scheduled air transport services operating in accordance with Rule 134(1) and (2) that are required to publish their tariff.
5.13 As regards the Non-Scheduled Air Transport Services, Rule 134A provides that (1) No air transport service, other than a scheduled air transport service, shall be operated by any air transport undertaking of which the principal place of business is in any country outside India except with the special permission of the Central Government and subject to such terms and conditions as it may think fit to impose in each case.
(2) No air transport service, other than a scheduled air transport service, shall be operated by an Indian air transport undertaking unless it holds a Non-Scheduled Operators Permit granted by the Central Government.
Further, Rule 135 provides that every air transport undertaking operating in accordance with sub-rule (1) and (2) of rule 134, shall establish tariff having regard to all relevant factors, including the cost of operation, characteristics of service, reasonable profit and the generally prevailing tariff.
5.14 Thus, the conclusion arrived at by the Commissioner on the basis that the appellant assessee was required to publish tariff and having failed to do so, amounts to Non-Scheduled Operating Passenger Service, is wrong and fit to be set aside. Accordingly, the appellants pray for allowing its appeal and dismissal of the appeal of the Revenue, which is only on the point of imposition of penalty on interest component.
6. The learned Spl. Counsel for the Revenue states that on investigation it was found that Global Vectra is not using the helicopter in question for providing Non-Scheduled (Passenger) Service, but had used the helicopter with call sign VT AZW for exclusive charter services at Mumbai for ONGC and British Gas Exploration and Production India Ltd ( BGEP) and that helicopter with call sign VT AZT for exclusive charter services at Rajhamundary to Gujrat State petroleum Corporation and Reliance Industries Ltd., on monthly fixed charge as well as flying hours basis. Thus, M/s Global Vectra have violated the conditions of the exemption notification. It is admitted fact that Global Vectra have the approval from Ministry of Civil Aviation for import of helicopter for providing non-scheduled (passenger) service under the Customs Notification No. 21/02 (as amended), provides for exemption from payment of Basic Customs Duty subject to the following condition
(i) the aircrafts 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 purpose of this entry:-
(a) Operator means a person, organization, or enterprise engaged in or offering to engaged in aircraft operation.
(b) non schedules (passenger) services means air transport services other than scheduled (passenger) air transport services as defined in rule 3 of the Aircraft Rules, 1937.
(c) non scheduled (charter) services means services provided by a non-scheduled (charter) air transport operator, for charter or hire of an aircraft to any person, with published tariff, and who is registered with and approved by Directorate General of Civil Aviation for such purposes, and who conforms to the civil aviation requirement under the provisions of the rule 133A of the Aircraft Rules, 1937;
Provided that such Air Charter operator is a dedicated company or partnership firm for the above purposes.
M/s Global Vectra also claimed exemption from payment of Additional duty of customs in terms of Notification No. 06/2006 CE dated 01.03.2006 (Under Sr. No. 54E) and condition 24. The aforesaid condition no 24 is identical to condition no 104 to notification number 21/2002-Cus dated 01.03.2002.
6.1 M/s Global Vectra, were given Permit no 08/1998 dated 01.01.1999 by DGCA where in they were authorized to import helicopter for providing non schedules (passenger) services. At the time of import they had declared that these helicopters will be used for providing non scheduled (passenger) services and furnished an undertaking to this effect before Dy. Commissioner of Customs. On investigation it was found that M/s Global Vectra had not used these helicopters for providing non schedules (passenger) services but had used the helicopter with call sign VT AZW for exclusive charter services at Mumbai for ONGC and British Gas Exploration and Production India Ltd( BGEP) and that helicopter with call sign VT AZT for exclusive charter services at Rajhamundary to Gujrat State petroleum Corporation and Reliance Industries Ltd and have charged them on monthly fixed charge as well as flying hours basis. The copy of agreement submitted by M/s Global Vectra supports this contention. The issue therefore is whether an importer who has been permitted to import helicopter for providing non schedule (passenger) services can use it for providing charter services. The Adjudicating authority has held that they can not use the helicopter for providing non Scheduled (charter) services whereas the appellant has claimed otherwise. That this issue has been examined by the Honble CESTAT in the matter of KING ROTORS & AIR CHARTER P. LTD. vs C.C. (ACC & IMPORT), MUMBAI 2011 (269) ELT 343 ( Tri-MUM) and Honble tribunal has held that as per wording used in the notification helicopter imported for providing passenger services can not be used for providing Charter services. The paras of the judgments relied on are 24.1, 24.2, 24.4, 24.5, 24.8, 24.9, 24.10, 24.11, 24.12, 24.14.
6.2 The Spl. Counsel states that requirement (b) as mentioned is not determinative of whether the air transport service is scheduled or non-scheduled. The only difference between the two types of Air Transport Service lies in the fact that one is scheduled while the other is non-scheduled, which would mean that scheduled air service involve flight services operated on the basis of published schedules, whereas non-scheduled air transport service is without any published time schedule. This has been so provided in clause 9.2 of Passengers CAR, which deals with non-scheduled operators and their operations and says: In such operations, the operators shall not publish their time schedules as the operations are of non-scheduled nature. Further, the common feature for both scheduled and non- scheduled services, as would follow, like scheduled air transport service (passenger), non-scheduled air transport service (passenger) also should be open to use by members of the public. As the flight operations in this case were not open to the public, the helicopter cannot be held to have been used for non-scheduled (passenger) services.
6.3 It is further urged that condition No. 104 refers to Rule 3 of the Aircraft Rules in the context of defining the expression non-scheduled (passenger) services and accordingly, it is permissible to take aid of the said Rule in ascertaining the connotation of the word passenger used in the expression non-scheduled (passenger) service. Further reference is made to Rule 3(39) which defines passenger aircraft and Rule 3(45) which defines public transport. As the appellant have provided service to particular companies, it cannot be said that they have used the helicopter for transport of the general public. Accordingly, it is urged that impugned order is correct and suffers from no illegality or impropriety.
6.4 As regards the Revenues appeal, learned Spl. Counsel urges that while determining the quantum of penalty under Section 114A of the Customs Act, the adjudicating authority has erred in not taking the interest amount in consideration, whereas the Section provides person who is liable to pay duty and interest as the case may be, as determined under subsection (2) of Section 28 shall also be liable to pay a penalty equal to the duty or interest so determined. That CBEC has examined this issue in consultation with Ministry of Law and vide circular No 61/2002 Cus dated 20.09.2002 issued from the file No 437 /9/98 Cus IV has clarified that penalty under section 114A of the Customs Act, 1962 should be equivalent to duty and interest.
Accordingly, it is prayed that this Tribunal be pleased to dismiss the appeal of the assessee and allow the appeal of the Revenue by imposing penalty on the interest component.
7. Having considered the rival contentions, we find that there is no violation by the importer-appellant to the post import condition No. 104 of Notification No. 21/07, as amended. Accordingly, under the undertaking given by the importer, it was required to offer only non-scheduled passenger service. Such service has been defined in Explanation (b) of the said Notification as Air Transport Service other than a Scheduled Air Transport (Passenger) Service with reference to Rule 3 of the Aircraft Rules, 1937. Hence, the one and only source of definition and strictly interpreting the exemption Notification, reliance has to be placed on the said Rule 3, and no other material. On reading the definition of Air Transport Service under Rule 3(9) with the definition of Scheduled Air Transport Service under Rule 3(49), it is evident that in order to classify as the non-scheduled passenger service, the service must be for transportation of persons or things for remuneration, operating to a single flight or a series of flight which must be opened to the members of the public and must not operate as per the published schedule or time table and/or with regular and systematic flight. On the detailed scrutiny of the clause of the agreement with respective companies, as well as the vouchers or the invoices, etc. raised for the services provided, we find that the appellant importer meets the requirement as per the definition of non-scheduled passenger service. The finding of the Revenue that the service provided was not a passenger service as the appellant did not print passenger ticket nor the flights were opened to public is erroneous. We hold that offering the service to public at large includes entering into agreement for providing regular service to a few members of the public on a regular basis over a period of time. The expression person includes the company under various tax laws. Further, company also forms part of the general public. The members of the public (company included) due to requirement of its business enters into the agreement with the service providers for providing of service over an extended period of time, may be weeks, months or years, it cannot be said that the service was not provided to public. Further, printing of ticket is not an essential element and such a requirement is not there, where the services are provided on the basis of published tariff or agreement wherein the hourly charges and flying charges along with other charges are mentioned for providing service for extended period of time. Accordingly, we hold that the services provided by the importer are in the nature of non-scheduled passenger service. Further relying on the ruling of the Apex Court in the case of Titan Medical (supra), we hold that in view of the clarification dated 8.8.2008, given by the licensing authority DGCA, while interpreting the importers permit, have clarified that the services offered by the appellant under its various contracts is within the scope of NSOP for passenger permit. DGCA being the appropriate licensing authority, is the best judge to decide as to whether the activity of the importer come within the ambit of the license issued to the appellant by it.
7.1 Further, we find that in the case of the appellant unlike in the case of King Rotors case (supra), there is no surrender of the helicopter in question and all the activities as the service provider, such as maintenance/insurance, salaries to the Pilot etc. have been carried out by the appellant importer. Thus, the facts in this case are clearly distinguishable from the facts in the King Rotors case and as such, we hold that the learned Commissioner has erred in relying on the earlier ruling of the Tribunal in the case of King Rotors case (supra).
8. Thus, in view of our aforesaid findings, we allow the appeals of the appellant assessee and its Director and dismiss the appeal of the Revenue. The impugned order is set aside.
(Pronounced in Court on ..)
(P.S. Pruthi) (Anil Choudhary)
Member (Technical) Member (Judicial)
Sinha
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