Indigo moves Delhi High Court for refund of over ₹900 crore customs duty on re-import of aircraft parts

The matter was heard on Friday by a Division Bench of Justices Prathiba M Singh and Shail Jain before whom IndiGo argued that the levy of customs duty on such re-imports was unconstitutional and amounted to double levy on the same transaction.
However, Justice Shail Jain recused from hearing the matter as her son is a pilot with IndiGo. The case will now come up before another Bench subject to the order of the Chief Justice.
Advocate V Lakshmikumaran, appearing for IndiGo, submitted that at the time of re-import of aircraft engines and parts after repairs, it paid basic customs duty without dispute. Separately, since repair constitutes a service, it also discharged Goods and Services Tax (GST) on a reverse charge basis. However, customs authorities insisted on levying customs duty again by treating the same transaction as import of goods.
According to the airline, the issue had earlier been settled by the customs tribunal, which held that customs duty could not be levied again on re-imports following repairs.
Although the relevant exemption notification was later amended, the tribunal ruled that the amendment would apply only prospectively. IndiGo told the High Court that it had subsequently held that charging customs duty again on such re-imports was unconstitutional and struck down the relevant portion of the notification.
Despite this, customs authorities allegedly compelled IndiGo to pay the duty to secure clearance of aircraft engines and other critical components. The airline submitted that unlike GST, which is self-assessed, customs clearance depends on the approval of officers and aircraft could not be grounded indefinitely. As a result, it paid the duty under protest across more than 4,000 bills of entry, amounting to over ₹900 crore.
When IndiGo later filed refund claims, customs authorities refused on the ground that the airline must first seek reassessment of each bill of entry. IndiGo argued that it had paid duty under protest in every case and that speaking orders had already been passed on the protested assessments, against which appeals were filed.
The airline further contended that the department’s reliance on the Supreme Court’s decision in ITC Ltd. was misplaced. It argued that the ruling applied to cases where duty was voluntarily paid and later sought to be refunded, and not to situations where duty was paid under protest and a court had already ruled in favour of the taxpayer.
In March 2024, Delhi High Court had in another case filed by Indigo held that re-import of aircraft and aircraft parts after overseas repairs constitutes an import of services, not goods. It ruled that once the transaction was taxed as a supply of service under the GST regime, the Revenue could not impose an additional levy under the Customs Tariff Act.
The High Court had held that the notification, which sought to levy “tax and cess” over and above IGST, was unconstitutional and ultra vires the IGST Act.
The issue is currently pending before the Supreme Court.