Delhi HC seeks Customs reply on IndiGo’s plea seeking refund of ₹900 cr duty
InterGlobe, in its plea, contended that the levy of Customs duty on such re-imports was unconstitutional and amounted to double levy on the same transaction
The Delhi high court on Friday sought custom department’s response in IndiGo’s petition seeking a refund of over ₹900 crore in customs duty paid on aircraft engines and parts re-imported into India after being repaired abroad, even as the department termed the petition as premature.
The department’s lawyer, Anuraj Ojha, told a bench comprising Justices V Kameshwar Rao and Vinod Kumar that the airline could not seek a refund unless the bills of entry were reassessed.
“Without there being a reassessment refund cannot be given, so the writ petition in my case is premature in the sense that no reassessment of the bills of entry has been carried out at this stage,” Ojha submitted.
Ojha further argued that the transaction involved two components. One was the service element, which resulted in the goods being exported from India and subsequently brought back, constituting an addition in the service component and thereby attracting IGST. The other was the return of the goods to India, on which the department was entitled to levy additional customs duty.
However, the airline’s lawyer, V Lakshmikumaran, submitted that the airline had paid basic customs duty without dispute when its aircraft engines and parts were re-imported after repairs. Additionally, because the repair activity amounted to a service, it also discharged GST under the reverse charge mechanism. However, the customs authorities allegedly treated the same transaction as an import of goods and sought to levy customs duty once again.
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The lawyer further added that though the customs tribunal by way of its ruling, had previously held that charging customs duty again on such re-imports was unconstitutional, the customs authority allegedly compelled IndiGo to pay the duty amounting to over ₹900 crore to secure clearance of aircraft engines and other critical components.
“I filed the more than 4000 bill of entries under protest because they would not allow the clearances, and payment of duty is also paid under protest from the beginning,” Lakshmikumaran added.
He further added that when his client filed refund claims, customs authorities refused on the grounds that the airline must first seek reassessment of each bill of entry. He added that though it made repeated representations, including to the Principal Commissioner, no reassessment orders had been passed.
Considering the contentions, the court issued notice in the airline’s petition and fixed April 8 as the next date of hearing.
“Issue notice. Let the counter affidavit be filed in 6 weeks and rejoinder in two weeks,” the court said in its order.
The petition comes at a time when the airline had been facing a major disruption in its operations. The unprecedented meltdown had triggered thousands of flight cancellations and chaos across major airports. IndiGo, which commands over 60% of India’s domestic aviation market, has cited a convergence of crises — pilot shortages, cascading delays from an Airbus A320 software advisory, the enforcement of new FTDL fatigue rules and an aggressive winter schedule since October 26.
The new Flight Duty Time Limitations (FDTL) norms, designed to enhance pilot rest and reduce night operations, forced hundreds of pilots into mandatory downtime after cumulative delays from the previous weekend violated midnight cut-offs. The airline’s high-utilisation model collapsed without staffing buffers.
Amid the ongoing crisis, the government had suspended the new pilot rest norms temporarily, imposed airfare caps to prevent price escalation and deployed additional trains to move stranded travellers.