M/s. Jet Airways (India) Ltd. vs Commissioner Of Customs (Air Cargo)

The appellants M/s.Jet Airways (India) Ltd. have preferred the above MA and the appeal. Vide the MA, it was requested that the change of address and also on appointment of Resolution Professional under Insolvency and Bankruptcy Code, 2016 be taken on record. Learned Counsel for Shri Tarun Kumar Govil appearing for the appellant submits that during the hearing held on 24.08.2021 it was enquired as to whether a moratorium imposed by the NCLT has been lifted under Section 14 of the Insolvency Code.

Learned Counsel submits that NCLT has vide order dated 22.06.2021, issued on 20.07.2021 has accepted the Resolution Plan submitted by consortium of M/s.Murari Lal Jalan and Mr. Florian Fritsch and have ordered, inter alia, as follows :

a. It shall be binding on the Corporate Debtor, its employees, members, creditors, including the Central Government, any State government or any local authority to whom a debt in respect of the payment arising under any law for the time being in force is due, guarantors and other stake holders involved in the Resolution Plan.

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i. The Memorandum of Association (MoA) and Articles of Association (AoA) shall accordingly be amended and filed with the Registrar of Companies (RoC) concerned for information and record. The Resolution Applicant, for effective implementation of the Plan, shall obtain all necessary approvals, under any law for the time being in force, within such period as may be prescribed.

j. Henceforth, no erstwhile creditors of the Corporate Debtor can claim anything other than the liabilities taken over by the Resolution Applicant.

k. The moratorium under Section 14 of the Code shall cease to have effect from this date.

l. The Monitoring Committee shall supervise the implementation of the Resolution Plan and shall file Status Report of its implementation before this Authority from time to time, preferably every quarter." Learned Counsel submits that moratorium under Section 14 of the Insolvency Code ceases to exist on the issue of this order.

Coming to the merits of the case, Ld. Counsel for the appellant submits that appellants have re-imported air craft engines and parts thereof which were exported for the purposes of repairs/reconditioning etc; they have availed the exemption contained in Notification No.46/2017 dated 30.06.2017; as per this notification the additional duty, integrated tax, compensation cess were completely exempted and customs duty was limited to the value of fair cost of repairs carried out including the cost of materials used in the repairs plus Insurance and freight. He submits that initially, at the time of import, the appellants have paid the duty under protest as may be seen from the letter dt.04.09.2017; appellants have filed refund claim subsequently which was rejected by the original authority and such rejection was upheld by Commissioner (Appeals) vide the impugned order No.21/2018 dated 12.02.2018.

Learned Counsel for the appellant further submits that the wordings of the notification are very clear and there was no scope for ambiguity and need for assigning any different meaning to the wordings in the notification; the issue is no longer res integra; The Principal Bench of this Tribunal has already decided the issue in favour of appellant themselves vide Final order No.50004-50063/2021 dated 13.01.2021.

Learned Authorised Representative Ms.K. Komathi for the department reiterates the findings of OIO and OIA.

Heard both sides and perused the records of the case.

We find that as submitted by Ld. Counsel for the appellants that the moratorium imposed under Section 14 of the Insolvency Code has been lifted by NCLT vide its order cited above. Therefore, the proceedings, if any, can be continued. Moreover, the crux of the issue, as submitted by the Learned Counsel, is that even though the moratorium was imposed, it was on the claims by creditors and it was not applicable to the instant case which does not deal with any demand against the appellant but involves, on the contrary, a claim by the appellant themselves. On perusal of the order of NCLT, we find that, either way, the proceedings can be continued. We also find that the second request of the appellant for change of address can also be incorporated in the cause title. Accordingly, Miscellaneous Applications filed by appellants can be allowed. The Miscellaneous applications stand accordingly disposed off.

Coming to the merits of the case, on a reading of the notification, we find that it is very clear from the preamble of the notification that whole of additional duty, integrated tax, compensation cess leviable thereon respectively under sub-sections (1), (3), (5), (7) and (9) of Section 3 of Customs Tariff Act, are wholly exempt as in excess of amount indicated in the corresponding entry in Column 3 of the said Table. We find that at Sl.No.2 it is provided as follows:

TABLE

Sl.No.

Description of goods

Conditions

(1)

(2)

(3)

2.

Goods, other than those falling under Sl.No.1 exported for repairs abroad

Duty of customs which would be leviable if the value of reimported goods after repairs were made up of the fair cost of repairs carried out including cost of materials used in repairs (whether such costs are actually incurred or not), insurance and freight charges, both ways.

It is very clear that additional duty, integrated tax, compensation cess are exempted and customs duty would be limited to be taxed on the value of the fair cost of repairs carried out including cost of materials used in repairs, insurance and freight charges.

We also find that case involving identical case in respect of appellant themselves has been decided by the Principal Bench of this Tribunal vide order cited above. We find that the Principal Bench having gone at length into this issue have observed as follows:

"43. It would be seen that the aforesaid Notification refers to the duties of customs leviable thereon which is specified in the said first schedule, the additional duty leviable thereon under section 3 of the Tariff Act and special duty of customs leviable under section 68(1) of the Finance Act, whereas the instant Exemption Notification refers to duty of customs leviable thereon which is specified in the said First Schedule and the integrated tax, compensation cess leviable thereon respectively under sub-sections (7) and (9) of section 3 of the Tariff Act. Thus, the additional duty leviable thereon under Section 3 of the Tariff Act and special duty of customs leviable under section 68(1) of the Finance Act have been replaced by the integrated tax under section 3(7) and compensation cess under section 3(9) of the Tariff Act. It cannot, therefore, be contended that "duty of customs" referred to in the condition against serial no. 2 of the Exemption Notification would include integrated tax.

The inevitable conclusion that follows from the aforesaid discussion is that the absence of mention of integrated tax and compensation cess in column (3) under serial no. 2 of the Exemption Notification would mean that only the basic customs duty on the fair cost of repair charges, freight and insurance charges are payable and integrated tax and compensation cess are wholly exempted.

It would, therefore, not be necessary to examine the contention of learned Authorised Representatives of the Department that in case of any ambiguity in an Exemption Notification, the benefit should go to the Revenue. It would also not be necessary to examine the remaining contentions advanced by the learned Counsel for the

Appellant that the activity of repairs is "supply of service" or that the activity would not fall under the category of „import of service‟ under the Integrated Tax Act since the necessary ingredients mentioned therein have not been fulfilled.

In view of the above, we find that the impugned order is not sustainable and accordingly it is set aside. In the result, the appeal is allowed with consequential relief, if any, as per law. Miscellaneous application is also allowed.

(Pronounced in court on 23.09.2021)