The Delhi High Court has sought a response from the Customs Department on IndiGo Airlines’ plea challenging the levy of double customs duty on aircraft engines and parts re-imported after overseas repairs, involving refund claims exceeding Rs 900 crore.
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NEW DELHI: The Delhi High Court has sought a response from the Customs Department on a petition filed by IndiGo Airlines challenging the levy of customs duty on aircraft engines and parts re-imported into India after overseas repairs, as well as the subsequent denial of refunds exceeding ₹900 crore.
A Division Bench comprising Justice V. Kameswar Rao and Justice Vinod Kumar passed the order on Friday and listed the matter for further hearing in April 2026.
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Background of the Dispute
IndiGo, operated by InterGlobe Aviation Ltd., has challenged the repeated levy of customs duty on aircraft engines and components that were temporarily exported for repair and later re-imported into India.
According to the airline:
- At the time of re-import, basic customs duty was paid without dispute
- Since repair activity constitutes a service, IndiGo also discharged GST on a reverse-charge basis
- Despite this, customs authorities treated the re-import as a fresh import of goods and levied customs duty again
IndiGo contends that this amounted to double taxation on the same transaction.
Tribunal Rulings
The airline informed the Court that the issue had already been settled by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which held that:
- Customs duty cannot be levied again on re-imported goods after repair
- An amendment to the relevant exemption notification would apply prospectively, not retrospectively
Subsequently, the tribunal went further and held that the levy of customs duty on repaired re-imported goods was unconstitutional, striking down the relevant portion of the notification.
Despite these rulings, IndiGo alleged that customs authorities continued to demand duty.
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IndiGo informed the High Court that customs officials effectively compelled it to pay the disputed duty to secure clearance for aircraft engines and other critical components.
The airline argued that:
- Customs clearance depends on officer approval, unlike GST, which is self-assessed
- Aircraft operations could not be disrupted by indefinite grounding
- Consequently, it paid duty under protest across more than 4,000 bills of entry
- The total amount involved exceeded ₹900 crore
When IndiGo later filed refund claims, the Customs Department rejected them, stating that the airline must first seek reassessment of each bill of entry.
IndiGo countered this by submitting that:
- All duties were paid under protest
- Speaking orders had already been passed on the protested assessments
- Appeals against those orders were already pending
The airline argued that insisting on reassessment amounted to an unreasonable procedural barrier.
Customs authorities relied on the Supreme Court’s decision in ITC Ltd. v. Commissioner of Central Excise, which held that reassessment is a prerequisite for claiming refunds.
IndiGo argued that the ruling was misapplied, as:
- ITC Ltd. dealt with cases of voluntary payment of duty
- The present case involves payments made under protest
- Moreover, the levy itself had been declared unconstitutional
IndiGo further submitted that despite repeated representations, including to the Principal Commissioner of Customs, no reassessment orders had been issued.
The airline argued that:
Insisting on reassessment even after a declaration of unconstitutionality effectively denies the benefit of the judicial ruling.
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