18% IGST On Aircraft Integrated Drive Generators, Starter Generators; CESTAT Quashes Customs Duty Demand Against Indigo

The New Delhi Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that integrated drive generators (IDGs) and starter generators imported for use in aircraft engines are classifiable under Customs Tariff Heading (CTH) 8501 and not under CTH 8511 and attracts 18% GST, by setting aside substantial customs duty demands, interest, and penalties raised against InterGlobe Aviation Ltd. and its customs broker. The Tribunal comprising Justice Dilip Gupta (President), and P.V. Subba Rao (Technical Member) has observed that gas turbine engines are fundamentally different from reciprocating spark-ignition and compression-ignition engines because functions such as intake, compression, combustion, and exhaust occur in separate sections rather than in the same combustion chamber. The dispute revolved around the classification of “integrated drive generators” and “starter generators” imported by the airline for use in turboprop and turbofan aircraft engines. The Customs Department had alleged that the goods were wrongly classified under CTH 8501/8502 attracting 18% IGST, whereas according to the Department, the goods were correctly classifiable under CTH 8511 attracting 28% IGST. The Tribunal noted that the integrated drive generator is an aircraft component that supplies electrical power to various aircraft systems including lighting, air-conditioning, and other electrical equipment. It incorporates a brushless AC generator and a constant speed drive system to ensure stable electrical frequency despite fluctuations in engine speed. Similarly, the starter generator was described as a dual-purpose unit attached to the aircraft engine gearbox. It initially functions as a motor to start the aircraft engine and thereafter operates as a DC generator supplying electrical power to aircraft systems once the engine reaches self-sustaining speed. The Department argued that since turboprop and turbofan engines are internal combustion engines, all generators used in conjunction with such engines would fall under CTH 8511, which specifically covers electrical starting or ignition equipment and generators used with internal combustion engines. However, the Tribunal rejected this interpretation and held that CTH 8511 applies only to generators used in conjunction with spark-ignition or compression-ignition internal combustion engines and not gas turbine engines such as turboprop and turbofan engines. The Bench observed that a separate tariff heading, CTH 8411, specifically exists for gas turbines, demonstrating that gas turbine engines are distinct from conventional spark-ignition and compression-ignition internal combustion engines classified under CTH 8407 and 8408. Therefore, goods used with gas turbine engines could not automatically be classified under CTH 8511. The Tribunal held that the imported goods were correctly classifiable under CTH 8501 as electric generators. It specifically ruled that the integrated drive generator would fall under CTI 8501 62 00, while the starter generator would fall under CTI 8501 32 20. The Bench also observed that although the importer had initially classified some imports under CTH 8502, the importer was entitled to claim a different classification during reassessment proceedings. It further recorded that the classification dispute was revenue neutral because both CTH 8501 and 8502 attracted 18% IGST during the relevant period. On the issue of limitation, the Tribunal held that the extended period under Section 28(4) of the Customs Act could not be invoked merely because the Department disagreed with the importer’s classification. The Bench observed that a classification dispute by itself does not establish suppression of facts or intent to evade duty. The Tribunal further held that once the invocation of the extended limitation period failed, the penalty imposed under Section 114A of the Customs Act also became unsustainable because such penalty requires proof of collusion, wilful misstatement, or suppression of facts. The penalty imposed on the customs broker, C.G. Logistics Ltd., under Section 117 of the Customs Act was also quashed. The Tribunal held that the customs broker merely acted on the basis of documents and instructions supplied by the importer and could not be penalised for alleged inconsistencies in tariff classification. Accordingly, CESTAT set aside both the adjudication orders dated 30 January 2023 and 23 September 2022 and allowed all three appeals filed by InterGlobe Aviation Ltd. and C.G. Logistics Ltd. Case Details Case Title: Interglobe Aviation Ltd. Versus Principal Commissioner of Customs Citation: JURISHOUR-1207-CES-2026(DEL) Case No.: 11.05.2026 Date: 11.05.2026 Counsel For Appellant: B.L. Narasimhan, Ms. Anjali Singh and Ms. Kruti Parashar, Advocates Counsel For Respondent: Nikhil Mohan Goyal, Authorized Representative Click Here To Read Order Read More: Jio IPO: 10 Unique Features Every Investor Must Know Before Investing

18% IGST On Aircraft Integrated Drive Generators, Starter Generators; CESTAT Quashes Customs Duty Demand Against Indigo

Membership Required

Latest articles

Unauthenticated Foreign Customs Documents Can’t Establish Pakistani Origin of Imported Dry Dates: CESTAT

Wrong Service Classification Alone Can’t Justify Extended Limitation Without Proof of Tax Evasion: Rajasthan High Court

No Right To Representation Against Anti-Dumping Findings: Delhi High Court

Coal Purchasers Can’t Be Saddled with Clean Energy Cess or Penalty Without Proof of Knowledge: Gauhati High Court

More like this

Unauthenticated Foreign Customs Documents Can’t Establish Pakistani Origin of Imported Dry Dates: CESTAT

Wrong Service Classification Alone Can’t Justify Extended Limitation Without Proof of Tax Evasion: Rajasthan High Court

No Right To Representation Against Anti-Dumping Findings: Delhi High Court

About us

Company

Categories