IGST Levy on aircrafts re-imported after repairs; An Attempt to fill gaps

Indian Airline operators import airplanes from abroad for carrying out their operations and when some fault appears in Aircrafts or its parts, the Airline operators send the same abroad for repairs. Once the Aircraft or its parts are repaired, the same are re-imported into India and subject to ‘Duty of Customs’ on the value of repair cost, insurance and freight.

The Hon’ble Delhi Tribunal in case of Interglobe Aviation Ltd. [2020] 121 taxmann.com 70 (New Delhi – CESTAT) after analyzing the applicability of IGST on re-importation of repaired engines/parts, held that the expression ‘Duty of Customs’ would not include ‘IGST’ within its scope and thus, no IGST would be applicable on the said re-importation. The Department has filed an appeal against this order before the Hon’ble Apex Court and the same has been admitted.

Now, in order to clarify that the import of the impugned goods would be subject to levy of IGST and Compensation Cess besides the Basic Customs Duty, the Government has recently issued few Notifications and Circulars. In this article, the authors have analysed relevant provisions of the Customs laws and the impugned Notifications and expressed their views on the overall issue.

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