ZEST AVIATION PRIVATE LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) This writ petition is directed against the seizure memo dated 29.12.2012 issued by the respondents whereby the petitioners Aircraft - Challenger 604- MSN-5629 (with two General Electric CF-34-3B Engines Sr. No.950423 and 950422) from Bombardier Aerospace Inc., USA has been seized. The writ petition is also directed against the order dated 29.01.2013 issued by the respondents whereby the said Aircraft, which was seized purportedly under Section 110 of the Customs Act, 1962 ("Act? for short) by the DRI, Ahmedabad, was directed to be provisionally released under Section 110A of the said Act subject to the fulfillment of the conditions as under: -

(2.) The petitioner had been issued a Non-Scheduled Operator?s Permit (NSOP) and was entitled to carry on Non-Scheduled Air Transport Services. The terms of the said services have been specified in the Civil Aviation Requirement (CAR) dated 01.06.2010 issued under Rule 133A of the Aircraft Rules, 1937 by the Director General of Civil Aviation. It is the case of the petitioner that a Non-Scheduled Operator is allowed to operate revenue charter flights for a company within its group companies, subsidiary companies, sister concerns, 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. In other words, what the petitioner is submitting is that even employees of the petitioner-company and family members of the Board of Directors of the company can use the services of the aircraft provided the same are for remuneration. On the other hand, the respondents alleged in the seizure memo that the aircraft was being used by the promoters of the petitioner-company and not for passenger service or charter service a NSOP-holder was required to do under the Civil Aviation Rules and the conditions of the notification under which the said aircraft was imported. The said aircraft was imported by the petitioner under the Customs notification No.12/2012 and the Central Excise Notification No.12/2012. The said aircraft was imported on 4.5.2012 and the bill of entry of that date was assessed to duty and the aircraft was cleared for home consumption on payment of the concessional rate of duty of 2.5% as against the normal 3% duty that was applicable for imports of such aircrafts. The petitioner paid duty amounting to Rs. 1,67,95,428/-. According to the petitioner by virtue of the said exemption, the petitioner saved approximately Rs. 10.5 crores by way of duty. On the other hand, it is the case of the respondents that the differential duty amount was Rs. 12 crores.

(3.) The question, whether or not the petitioner has violated the conditions of the exemption under the said two notifications, has to be adjudicated upon. As of now, no show cause notice has been issued to the petitioner. According to the learned counsel for the respondents, the show cause notice would be issued in due course. That being the position, the issue as to whether the petitioner contravened any conditions of the exemption claimed by it would be adjudicated upon by the adjudicating authority and we do not wish to enter into that arena of controversy. The limited point that is before us is whether the conditions imposed under the provisional release order dated 29.01.2013 are reasonable or are they too harsh and burdensome on the petitioner. If we go back to the conditions which have been imposed by the provisional release order of 29.1.2013, we find that the petitioner has been required to execute a bond for the provisional release of the aircraft for the sum of Rs. 70 crores. According to the petitioner, the value of the aircraft is approximately Rs. 67 crores whereas according to the respondents, the market value of the aircraft is Rs. 70 crores and that is why the bond for the said amount of Rs. 70 crores has been insisted upon by the respondents. The learned counsel for the petitioner submitted at the outset that he is not challenging this condition and that he is willing to execute the bond for the sum of Rs. 70 crores as required by the provisional release order dated 29.01.2013. The actual grievance is with regard to the condition which requires the petitioner to provide security in the form of a bank guarantee for a sum of Rs. 16 crores.