No Violation Of Exemption Condition: CESTAT Quashes DRI’s Customs Duty Demand on Imported Aircraft

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside a ₹8.84 crore customs duty demand, along with interest, penalty, and confiscation orders by which the Directorate of Revenue Intelligence (DRI) had alleged misuse of duty exemptions granted for the import of a Learjet 60XR aircraft, claiming the operator violated mandatory conditions for non-scheduled air transport services. The Tribunal, led by Justice Dilip Gupta (President) and Member (Technical) P.V. Subba Rao, held that the company had operated well within the framework prescribed for Non-Scheduled Operator Permit (NSOP) holders, and that DRI’s findings were legally untenable. The appellant/assessee, Decore Exxoils, formerly Bhaskar Essoils Pvt. Ltd., imported a Learjet 60XR aircraft in December 2010 by claiming concessional customs duty under Notification No. 21/2002-Cus and Notification No. 6/2006-CE. The exemption was available to entities engaged in non-scheduled (passenger or charter) air transport operations. The company operated the aircraft under a valid DGCA-issued NSOP since January 2011. However, in June 2015, DRI seized the aircraft on allegations that the aircraft was being used privately by promoters of the Dainik Bhaskar Group. No tickets or tariff were issued as required under CAR 2010. The company was not a “dedicated” air charter operator, and imported spare parts were misused. A show cause notice demanded ₹8.84 crore in differential customs duty and proposed confiscation under Sections 111(d) and 111(o) of the Customs Act. The CESTAT categorically rejected the core allegations, citing binding precedents from the Delhi High Court and a Larger Bench of the Tribunal.1. Charter Flights Can Be Provided to Group Companies The Tribunal referred to the Delhi High Court judgment in Global Vectra Helicorp Ltd., which clarified that NSOP holders may legally operate revenue charter flights for group entities, and non-scheduled passenger operators may also undertake charter services and vice versa. The Tribunal noted that Decore Exxoils had charged remuneration for all flights, including those performed for its group companies, thus meeting the definition of “air transport service”. The Additional Director General had held that failure to issue individual passenger tickets violated CAR 2010. CESTAT disagreed, holding for charter operations, a single consolidated document suffices, CAR 2010 does not mandate publishing a tariff for non-scheduled operators, and non-issuance of individual tickets does not invalidate NSOP operations. DRI had argued the company was primarily in the business of oil extraction. The Tribunal examined the Memorandum and Articles of Association and concluded, “Air transport service is a principal objective of the company; therefore, it meets the criterion of being dedicated for air charter operations.” The CESTAT held that Decore Exxoils had complied fully with the import conditions, stating, “The appellant had not violated condition 104 of the Exemption Notification. The aircraft was used strictly within the scope of the NSOP.” A major setback for DRI was the Tribunal’s finding that extended limitation under Section 28(4)—meant for cases involving fraud, collusion, or wilful suppression—was wrongly invoked. CESTAT observed the adjudication order did not establish any intention to evade duty, Suppression must be deliberate, which was not proven, and Long-standing Supreme Court judgments mandate strict interpretation of "suppression". Quoting Pushpam Pharmaceuticals, the Tribunal reiterated, “Suppression must be deliberate and with the intent to evade duty. Mere omission does not constitute suppression.” The Tribunal thus allowed the appeal in full, restoring complete relief to Decore Exxoils. Case Details Case Title: M/s. Decore Exxoils Pvt. Ltd. Versus Customs Commissioner Case No.: CUSTOMS APPEAL NO. 50247 OF 2018 Date: 24.11.2025 Counsel For Appellant: Shivek Trehan Counsel For Respondent: N.M. Goyal, Authorised Representative Click Here To Read Order Read More: Govt. Reconstitutes Supreme Court Panel of Advocates for Central Govt. Litigation

No Violation Of Exemption Condition: CESTAT Quashes DRI’s Customs Duty Demand on Imported Aircraft

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