Case nº Ruling No. AAR/CUS/25/2016 in Application No. AAR/44/CUS/6/2015 of AAR Cases, July 22, 2016 (case In Re : Prajesh Marketing Ltd. Vs)

JudgeFor Appellant: Shri Abhinav Jaganathan and S. Vasudevan, Advocates and For Respondents: Shri Govind Krishna Dixit, AR
PresidentV.S. Sirpurkar, Chairman, S/Shri S.S. Rana and R.S. Shukla, Members
DefenseService
Resolution DateJuly 22, 2016
Issuing OrganizationAAR Cases

Court Information AAR Cases
Citation 2016 (340) ELT 437 (AAR)
Judgment Date 22-Jul-2016
Party Details In Re : Prajesh Marketing Ltd. Vs 
Case No Ruling No. AAR/CUS/25/2016 in Application No. AAR/44/CUS/6/2015
Judges V.S. Sirpurkar, Chairman, S/Shri S.S. Rana and R.S. Shukla, Members
Advocates For Appellant: Shri Abhinav Jaganathan and S. Vasudevan, Advocates and For Respondents: Shri Govind Krishna Dixit, AR
Acts Service

Ruling:

1. M/s. Prajesh Marketing Limited (hereinafter also referred to as applicant) is a public limited company proposing to import aircraft for providing non-scheduled (charter) service. Applicant intends to charter the aircraft imported to related companies, primarily for use by the related company''s top executives, Directors, investors, promoters and their family members/friends, as revenue flights.

2. Applicant submits that the benefit of Notification No. 12/2012-Cus. (Sr. No. 453), dated 17-3-2012 is subject to the Condition No. 77 prescribed in the notification. As per Condition No. 77, the benefit of the notification is available as long as:

a. the aircraft is 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

b. the importer gives an undertaking that the imported aircraft shall be used only for providing non-scheduled (passenger) services or non-scheduled (charter) services. Thus, as long as the importer is a NSOP (Non-Schedule Operator''s Permit) holder and the imported aircraft is used for providing non-scheduled (passenger) services or non-scheduled (charter) services, the benefit of Notification No. 12/2012-Cus. (Sr. No. 453) is available. The purview of non-scheduled (passenger) services or non-scheduled (charter) services and the activities permitted by NSOP holder is specified by the Civil Aviation Requirements, 2010, dated 1-6-2010 (''CAR''). Paragraph 2.5 of the CAR permits a non-scheduled operator to operate revenue charter flights for a company within its group companies, subsidiary companies, sister concern, associated companies, own employees, including Chairman and Members of the Board of Directors of the company and their family members, provided it is operated for remuneration, whether such service consists of a single flight or series of flights over any period of time. Thus exemption under Notification No. 12/2012-Cus. (Sl. No. 453) is available to the NSOP permit holder as long as the imported aircraft is used for revenue flights, no matter who is travelling by the aircraft and irrespective of for how long the flight is chartered or leased. The only condition to be fulfilled by the NSOP holder is that the flights undertaken should be against payment/remuneration. Therefore, even if the applicant leases/charters the imported aircraft to related companies for use by their board members, employees, investors and their friends and families, the benefit will be available to the applicant as long as the applicant is paid for the use of the flight by the related company. Similarly, even if the applicant''s own board members, employees, investors, or their families and friends use the aircraft, the benefit will be available as long as the applicant receives remuneration for the services rendered.

3. Applicant has sought rulings on following questions:

Whether the benefit of the Notification No. 12/2012-Cus. is available to NSOP holder for the following categories of revenue flights proposed to be undertaken:

(a) Use by the permit holder''s employees/directors/investors and their family/friends, not necessarily for business purposes.

(b) Charter the aircraft to group companies for use by their employees/directors/investors and their family/friends, not necessarily for business purposes.

(c) Lease the aircraft to group companies for use by their employees/directors/investors and their family/friends, not necessarily for business purposes.

4. Revenue inter alia submits that as per the language of the Notification No. 12/2012-Cus., non-scheduled (passenger) services and non-scheduled (charter) services are two distinct and mutually exclusive categories of services, as is clear from the expressions "only" and "as the case may be" used in the above text; that it is settled law that an exemption notification has to be construed strictly and there has to be strict...

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