The Delhi High Court has stepped into a significant financial dispute between one of India's leading airlines and the customs department. In a recent hearing, the court directed the customs authorities to formally respond to a petition filed by InterGlobe Aviation Ltd., the parent company of IndiGo. The airline is seeking a substantial refund of over Rs 900 crore in import duties it claims were erroneously paid.
The Core of the Rs 900 Crore Dispute
At the heart of this massive claim lies the import of aircraft engines and other crucial spare parts. IndiGo's legal plea argues that these imports should have been classified under a specific customs notification that grants a concessional duty rate. The airline contends that the applicable rate should have been a mere 1% of the assessable value, as per the relevant exemption.
However, the customs department assessed the imports differently. According to the petition, the authorities levied a duty calculated at 5% of the assessable value. This four-percentage-point difference, applied to high-value aviation components over a period, snowballed into the staggering claim amount of Rs 900,29,98,568 (over nine hundred crore rupees). IndiGo asserts that this amount represents the excess duty it was compelled to pay.
Legal Proceedings and Court's Directive
The case was brought before a bench of the Delhi High Court. The airline's counsel presented their arguments, highlighting the alleged misclassification and the resultant financial burden. Following the preliminary hearing, the court issued a directive to the concerned customs authorities.
The bench has officially called for a response. It has issued a formal notice to the customs department, represented through the Under Secretary of the Central Board of Indirect Taxes and Customs (CBIC), the Commissioner of Customs at Indira Gandhi International Airport, and other relevant officials. The court has granted the authorities a period of four weeks to file their counter-affidavit, detailing their stance on the matter.
Subsequently, IndiGo will be given a further two weeks to file a rejoinder, if necessary. The court has scheduled the next hearing for September 18, marking the next crucial phase in this high-stakes legal battle.
Broader Implications for Aviation and Trade
This case transcends a simple refund claim. It brings into sharp focus the interpretation of customs notifications and the classification of specialized aviation imports. The outcome could set a precedent for how aircraft engines and spare parts are taxed upon import, impacting not just IndiGo but the entire aviation industry's cost structures.
For IndiGo, a refund of this magnitude would provide a significant financial boost. The aviation sector, still recovering from pandemic-era losses and facing high operational costs, is highly sensitive to such fiscal burdens. A positive outcome would directly improve the airline's liquidity and bottom line.
Conversely, for the customs department and the exchequer, defending against a claim of nearly a thousand crore rupees is a serious matter. The government's response will likely hinge on its interpretation of the law and the specific wording of the concessional duty notification.
The Delhi High Court's intervention ensures that the matter will be judicially scrutinized. The upcoming responses from the customs department and the subsequent hearings will be closely watched by industry stakeholders, legal experts, and financial analysts alike, as they navigate the complex intersection of trade law and aviation economics.
