Relief for IndiGo as Supreme Court dismisses Customs’ Appeal in Rs.2.53 Crore Duty row

The Supreme Court has dismissed a challenge by the Customs Department in a Rs.2.53 crore duty dispute involving InterGlobe Aviation Ltd., the operator of IndiGo, effectively upholding a tribunal ruling that classified aircraft engine stands imported by the airline as “containers” under the Customs Tariff. A Bench of Justice JB Pardiwala and Justice Vijay Bishnoi declined to interfere with the decision of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) and rejected the department’s appeal due to delay in filing, leaving the tribunal’s interpretation of the tariff classification intact.

The dispute originated from imports made by IndiGo between April 2018 and March 2019 when the airline brought aircraft engines along with specially designed engine stands into India. The airline classified the stands under a tariff entry meant for containers used for transport across different modes. Customs authorities disagreed, arguing that the stands functioned like trailers used to move aircraft engines and should therefore fall under a different tariff heading attracting higher duty.

Acting on this interpretation, the department issued a demand notice claiming that IndiGo had underpaid customs duty and sought recovery of Rs.2.53 crore along with interest and penalties. The demand was confirmed by the Principal Commissioner of Customs in 2020, prompting the airline to challenge the order before CESTAT.

The tribunal had earlier ruled in favour of the airline, holding that the defining feature of the equipment was the structural cradle designed to hold and protect the engine rather than the small wheels attached to it. According to the tribunal, the stands were meant to secure engines during transportation and maintenance, while the actual movement occurred through trucks, aircraft or ships.

It therefore concluded that the items were specialized transport receptacles falling under the tariff category for containers. The Apex Court refused to disturb this finding and dismissed the Customs Department’s appeal, effectively affirming the tribunal’s view that the stands qualify as containers under the tariff classification.

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