IndiGo moves Delhi HC for ₹900 cr customs refund on repaired engines, parts

IndiGo has asked the Delhi High Court to direct customs authorities to refund over ₹900 crore it paid under protest on aircraft engines and parts re-imported after repairs

InterGlobe Aviation Ltd, the parent company of IndiGo, has approached the Delhi High Court seeking a refund of the customs duty of ₹900 crore it paid on aircraft engines and parts re-imported after overseas repairs, reported Bar and Bench.

 

A Division Bench of Justices Prathiba M Singh and Shail Jain heard the matter on Friday. Justice Jain, however, recused herself from the case, stating that her son is employed as a pilot with IndiGo. The matter will now be listed before a different Bench, the report added.

 

Why is IndiGo seeking a customs duty refund?

IndiGo's argument centres around the fact that re-imports after repairs should be considered a service, and not as import of fresh goods, and taxed accordingly.

 

During the brief hearing, senior advocate V Lakshmikumaran, representing IndiGo, argued that the customs levy was both unconstitutional and amounted to a “double levy” on the same transaction.

 

He said the airline had already paid basic customs duty at the time of re-import and had separately discharged GST under the reverse charge mechanism because repairs count as a service. However, the customs officials proceeded to treat the re-import as a fresh import of goods and demanded duty again, he added. 

 

The airline also said that the customs tribunal had earlier ruled that duty could not be imposed twice on re-imports following repair. However, the tribunal later amended the exemption notification, clarifying that such changes would operate prospectively. IndiGo also told the court that it had, in and earlier ruling, declared such double taxation unconstitutional, the report added.

 

IndiGo further said it was "compelled" by customs officials to make the additional duty payments and, since its aircraft could not be kept grounded indefinitely, it ended up depositing over ₹900 crore under protest through more than 4,000 bills of entry. 

 

However, when it later sought refunds, customs officials reportedly insisted that the airline first obtain a reassessment of each bill of entry. According to the airline, insisting on reassessment even after a judicial declaration of unconstitutionality deprived it of the benefit of that judgment.

 

Delhi High Court's previous order on re-import taxations

Earlier this year, the Delhi High Court, in a separate IndiGo case, had ruled that re-import of aircraft and aircraft parts after repairs amounts to an import of services, not goods.

 

The court declared as unconstitutional a part of the 2021 customs department exemption notification that required payment of Integrated Goods and Services Tax (IGST) and cess on the repair cost of such goods. The ruling, however, is now under challenge before the Supreme Court in a petition filed by the Customs Department.