Issue:- Complete stay admissible if issue is governed by conflicting decisions.

PJ/Case Law/2013-14/2105

Case:- PUNJ LLOYD AVIATION LTDVsCOMMISSIONER OF CUSTOMS

Citation:-2014-TIOL-19-CESTAT-DEL

Brief facts:- The appellant imported aircrafts approved by DGCA for providing non-scheduled passengers service. The imported aircraft were however used for non-scheduled charter services. Customs duty exemption was availed on the import of aircraft in terms of General Exemption Notification No.21/2002, as amended by Notification No.61/2007. Proceedings were initiated by Customs authorities for recovery of duty, interest and penalties on the ground that conditions of the exemption notification were transgressed. According to Revenue, the user of aircrafts imported for use for non-scheduled passenger services as non-scheduled charter services, amounts to transgression of condition No.104 of the exemption Notification.

On this very issue there is a conflict of precedents.

Appellant’s contention:- The appellant contented while citing the case of a Division Bench of the Tribunal in C.C., New Delhi vs. Sameer Gehlot - 2011 (263) ELT 129 (Tri-Del.)carrying substantially similar factual circumstances ruled that the exemption Notification incorporates only pre-import conditions and no separate post-import condition is enumerated; the post-import conditions requiring an approval from DGCA and undertaking to be furnished at the time of importation have already been fulfilled and the exemption was granted at the time of import; in the circumstances, the importers cannot be charged with violation of pre-import conditions, on the basis of circumstances arising after the import. Another reason recorded by the Tribunal for holding in favour of the assessee and against the Revenue was that since the exemption Notification exempts both types of aircrafts, those used for non-scheduled passengers services and those used for non-scheduled charter services and the exemption was available for use in either category, there was no violation. The above decision was referred to with the approval in the Final Order No. C/237-238/11 dated 3.6.2011 in Dove Airlines Pvt. Ltd. vs. C.C. (Prev.), New Delhi.

Respondent’s contention:-Revenue on other hand presented a contrary view by another Division Bench of this Tribunal in King Rotors & Air Charter P. Ltd. C.C. (ACC & Import), Mumbai - 2011 (269) ELT 343 (Tri-Mumbai)= (2011-TIOL-1785-CESTAT-MUM).After referring to the earlier decision in Sameer Gehlot, the Tribunal in King Rotors & Air Charter, at paragraphs 24.18 and 24.19 of the order proceeded on an independent interpretation of Notification No.21/2002-Cus. as amended by Notification No.61/2007-Cus. and concluded that though the factum of undertaking takes place at the time of importation, the subjects of undertaking are things of the future. The undertaking requires that the imported aircraft shall be used only for providing non-scheduled passenger services and not for non-scheduled charter services. The second condition of the undertaking is that the duty of customs should be paid on demand by the importer in the event of failure to use the aircraft for the specified purpose. In King Rotors & Air Charter violation of the conditions of import took place post-import. The Tribunal concluded that this crucial aspect did not receive attention in the Sameer Gehlot case when it took the view that the condition was only a pre-importation condition. According to the Tribunal in the later decision, the post importation nature of the subjects of undertaking was not appreciated by the Bench (in Sameer Gehlot), while taking the view that the requirement of undertaking to be made by the importer was a pre-importation condition.

Reasoning of judgment:-At the stage of the proceedings, the bench said they were not required to go into the issue whether, the interpretation of the Customs Notifications in Sameer Gehlot or the contrary interpretation in the latter King Rotors, is the correct view. The issue is whether King Rotors is right in characterising the interpretation of the Notification by the Bench in Sameer Gehlot, as per incuriam. In Tribunal’s considered view, where the Court applies its mind to a particular statute or instrument, its conclusion even if erroneous cannot be characterized as per incuriam. 'Incuria' literally means 'carelessness'. In practice, per incuriam means per ignorantium. Accordingly, the quotable in law is avoided and ignored if it is rendered in ignorantum of a statute or a binding authority - vide State of U.P. vs. Synthetics and Chemicals Ltd. (1991) 4 SCC 139 = (2002-TIOL-723-SC-CT). In Sameer Gehlot, this Tribunal had clearly noticed provisions of exemption Notification No. 21/2002-Cus, dated 1.3.2002 but has also reproduced condition No.(4) thereof. The judgment also noticed provisions of the DGFT Notification No. 2(RE-2006)/2004-2009, dated 7.4.06 and thereafter the scope of the exemption Notification. In the circumstances, the interpretation of the exemption Notification in Sameer Gehlot could not be characterised per incuriam. For the nonce, suffice it to observe, prima facie, on established principles of per incuriam, that the decision in Sameer Gehlot was not per incuriam.

Undisputedly, interpretation of the relevant Notifications in Sameer Gehlot and in King Rotors & Air Charter are diametrically in conflict. Ld. Counsel for the appellants herein and the ld. A.R. for respondent/Revenue are in unison in submitting that the decision in Sameer Gehlot and in King Rotors andAir Charter as well, are the subject matter of appeals by Revenue and the assessee respectively, before the Supreme Court. In these circumstances, there is a potential for resolution of the conflict, in the interpretation of Customs Notification No.21/2002-Cus as amended by Notification No.61/2007-Cus.

The above conflict was noticed by another Divisional Bench in Deccan Charterers Ltd. vs. C.C., Allahabad - 2013 (291) ELT 565 (Tri-Ahmd.), while disposing of a stay application and granting waiver of pre-deposit and stay of recovery of the adjudicated liability pending disposal of the appeal. The Tribunal recorded the factum of conflict and that appeals are pending before the Supreme Court.

In Malaysia Airline System Behhad vs. C.S.T., Delhi- (2013-TIOL-1479-CESTAT-DEL), this Tribunal while disposing of the stay application preferred by the appellants therein reiterated the established principle that where there are conflicting views between two decisions on the same subject matter, an arguable case can be said to have been presented and there was justification for grant of waiver of pre-deposit and stay of all further proceedings for realization of the adjudicated liability.

Each of the assessees/appellants herein has also furnished a bank guarantee to cover the extent of the adjudicated liability to duty, as assessed. It also requires to be noticed the DGCA vide letter dated 1.9.2009 (addressed to one of the assessees herein - M/s Punj Lloyd Aviation Ltd.) had clarified that an operator having a non-scheduled passenger operation clearance from DGCA can conduct non-scheduled charter operations as per paragraph 9.2 of the Civil Aviation requirements.

For the above reasons, the bench was satisfied that the petitioners/appellants have made out a strong prima facie case; and we therefore grant waiver of pre-deposit and stay all further proceedings for realization of the respective adjudicated liability, pending disposal of the appeals. The petitioner/appellants shall however keep the bank guarantees alive during tendency of the appeals. Stay applications are disposed of accordingly.

Decision:- Stay granted.

Comment:-The gist of this case is that when the issue is ambiguous due to conflicting decisions, complete stay may be granted subject to furnishing of proper security like bank guarantee etc.

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PJ/Case Law/2013-14/2105

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