2016 (7) TMI 1414 - AT - Customs

Notified CFS - Cost of recovery charges post March, 2010 - Whether the appellant is entitled for exemption from payment of cost recovery charges for March, 2010 or not? - Whether the appellant can be held responsible for non-payment of cost recovery charges when no calculation was made by the Revenue? Held that - the CFS is required to pay the cost recovery charges at rate and manner specified by the Ministry. As, no manner or rate has been prescribed under the regulation or any other way subsequent to the regulation, in that circumstance, we are of the view that cost recovery charges cannot be demanded from the appellant. As the appellant has already achieved the bench mark performance within the initial two years and there is no provision as per Regulation, 2009, therefore, to recover the cost of charges from the appellant the demand cannot be made against the appellant for the cost recovery charges with effect from 1-3-2010. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Entitlement to exemption from payment of cost recovery charges for March 2010.
2. Responsibility for non-payment of cost recovery charges when no calculation was made by the Revenue.

Issue-wise Detailed Analysis:

1. Entitlement to Exemption from Payment of Cost Recovery Charges for March 2010:
The appellant, a notified CFS since December 6, 2007, commenced operations on March 1, 2008. As per C.B.E. & C. instructions and Circular No. 52/97-Cus., a CFS must deposit cost recovery charges in advance. The appellant paid these charges until February 2010. Subsequently, the appellant claimed exemption from further charges, arguing that they had achieved benchmark performance by February 2010. The Revenue, however, demanded ?36 lakhs on September 6, 2010, and later ?1,35,95,874 on May 18, 2011, for the period post-March 2010. The appellant contended that the demand was unsustainable as they had met the benchmark performance criteria, which should entitle them to a waiver of charges as per C.B.E. & C. instructions dated September 12, 2005.

2. Responsibility for Non-Payment of Cost Recovery Charges When No Calculation was Made by the Revenue:
The appellant argued that the responsibility for non-payment of charges could not be attributed to them in the absence of a calculated demand from the Revenue. They highlighted that the Revenue's demand amounts varied over time, indicating a lack of clarity and consistency. The appellant referenced Regulation 6(1)(o) of the Handling of Cargo in Customs Area Regulations, 2009, which mandates that charges be paid at rates and in a manner prescribed by the Ministry. The appellant argued that no such rates or manner had been prescribed, thus nullifying the Revenue's authority to demand charges. The appellant supported their stance with judicial precedents, including the cases of Larsen & Toubro Ltd. and Suresh Kumar Bansal, emphasizing that in the absence of prescribed rates and manner, the Revenue could not demand cost recovery charges.

Judgment:
The Tribunal examined the submissions and found that the appellant had indeed achieved the benchmark performance within the initial two years, entitling them to a waiver of charges as per C.B.E. & C. circular dated September 12, 2005. The Tribunal noted that the cost recovery charges are to be calculated by the Revenue, and without such calculation, the appellant could not be held responsible for non-payment. Furthermore, the Tribunal observed that Regulation 6(1)(o) of the 2009 Regulations required the Ministry to specify the rate and manner of payment, which had not been done. Consequently, the Tribunal concluded that the cost recovery charges could not be demanded from the appellant post-March 2010.

Conclusion:
The Tribunal set aside the impugned order, holding that the appellant was not liable to pay the cost recovery charges from March 2010 onwards due to the lack of prescribed rates and manner of payment by the Ministry. The appeal was allowed with consequential relief.

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