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2018 (9) TMI 1910 - HC - CustomsLevy of cost recovery charges - Regulation 5(2) read with Regulation 6(1)(o) of the HCCAR, 2009 - Jurisdiction to raise demand - demand of cost recovery charges raised by the Ld. Commissioner of Income Tax pursuant to the 6th Pay Commission - alleged non-compliance with the provisions of the Act and the rules, regulation made thereunder - suspension of the approval granted to the Appellant as custodian in respect of ICD-Bhiwadi - principles of natural justice. HELD THAT - Appointment of the appellant in the present cases as custodian of the ICD has been made in terms of Section 45(1) of the Act according to which all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Commissioner of Customs until they are cleared for home consumption or are warehoused or transshipped. Sub-section (2) of Section 45 of the Act provides that the person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the time being in force, (a) shall keep a record of such goods and send a copy thereof to the proper officer; (b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer. HCCAR, 2009 have been framed in terms of Sections 157 and 158 of the Act. The respondent was fully justified in computing such charges @ 1.85 times of the salary of the Customs officers which may also include benefit of revised pay scales consequent upon acceptance of recommendations of VI and VII Pay Commissions, as the case may be. There is, therefore, nothing illegal on the part of the respondent for insisting on recovery of differential charges of the salary upon implementation of revised pay scale rules. Circular of the Board No. 128/95-Cus., dated 14-12-1995 prescribed the procedure for appointment of custodian of ICDs and also stipulated that the custodian was required to pay the cost recovery charges. The Ministry of Finance upon appointment of custodian, specifically created posts of custom staff for manning the ICDs. Letter dated 24-7-1996 has been placed on record, in para 3 of which, the sanction of the President for creation of posts for ICDs was conveyed. Therein it was specifically stipulated that 1.85 times of the monthly average cost of the posts plus DA, CCA, HRA and interim relief may be obtained from the party, who is running the ICD as the posts have been created for ICDs - There is, therefore, nothing illegal in demand of the cost recovery charges together with interest and penalty - In the facts of the present case, it cannot be said that levy of cost recovery charges by the respondent was without due notice and prior adjudication by the Government authority. The respondent was nowhere privy to the agreement between the appellant and M/s. Hasti Petro Chemical and Shipping Limited. Even if the contract between the appellant and M/s. Hasti Petro Chemical and Shipping Limited was not finalized for quite some time, it would not absolve the appellant from its liability to run the ICD in terms of its appointment as custodian under Section 45 of the Act. In fact, the dispute arose between the appellant and M/s. Hasti Petro Chemical and Shipping Limited, who approached this Court by filing writ petition and the process of handling and transportation has to be abandoned by the appellant. But the fact remains that the respondent had specifically created certain posts for posting of staff of customs department and they continued to remain posted there all throughout. The appellant, therefore, cannot escape the liability to pay the cost recovery charges. There are no infirmity in the view taken by the Tribunal in its judgment and the adjudication order - appeal dismissed.
Issues Involved:
1. Jurisdiction of the Commissioner of Customs in raising cost recovery charges. 2. Justification for the demand of cost recovery charges pursuant to the 6th Pay Commission. 3. Imposition of penalty for non-compliance with the provisions of the Act and regulations. 4. Suspension or revocation of the approval granted to the appellant as custodian. 5. Violation of principles of natural justice. Issue-wise Detailed Analysis: 1. Jurisdiction of the Commissioner of Customs in Raising Cost Recovery Charges: The appellant challenged the jurisdiction of the Commissioner of Customs in raising cost recovery charges under Regulation 5(2) read with Regulation 6(1)(o) of the HCCAR, 2009. The court found that the appellant had undertaken to bear the cost of Customs officers posted at the ICDs on a cost recovery basis. The Delhi High Court in Allied ICD Services Ltd. v. Union of India & Others held that the cost recovery charges are in the nature of a fee for services rendered by customs officers and are backed by law. The court also referred to the Bombay High Court's judgment in Mumbai International Airport Private Limited v. The Union of India, which supported the levy of cost recovery charges. Thus, the court concluded that the Commissioner of Customs had the jurisdiction to raise such charges. 2. Justification for the Demand of Cost Recovery Charges Pursuant to the 6th Pay Commission: The appellant contested the demand of cost recovery charges raised pursuant to the 6th Pay Commission. The court referred to the Delhi High Court's judgment in Allied ICD Services Ltd., which stated that cost recovery charges are liable to change with the revision of pay scales, including the implementation of the 6th Pay Commission. The court found that the demand for differential charges due to the revised pay scales was justified and within the jurisdiction of the respondents. 3. Imposition of Penalty for Non-compliance with the Provisions of the Act and Regulations: The appellant argued against the imposition of a penalty for alleged non-compliance with the provisions of the Act and regulations. The court upheld the penalty, noting that the appellant had failed to comply with the conditions stipulated under HCCAR, 2009. The court found no merit in the appellant's argument that being a State Government Undertaking absolved it from willful default. 4. Suspension or Revocation of the Approval Granted to the Appellant as Custodian: The appellant challenged the suspension or revocation of its approval as a custodian. The court found that the appellant had not complied with the conditions of HCCAR, 2009, and the Commissioner of Customs was justified in suspending or revoking the approval. The court referred to the judgments of the Madras High Court in M/s. Hari CFS v. Union of India and the Bombay High Court in Mumbai International Airport Private Limited, which supported the suspension or revocation of approval for non-compliance. 5. Violation of Principles of Natural Justice: The appellant argued that the Commissioner of Customs acted as a judge in its own cause, violating the principles of natural justice. The court rejected this argument, stating that the arithmetical computation of cost recovery charges by the Commissioner of Customs did not attach any disability to him. The court found that the computation was subject to challenge before the Tribunal, which had upheld it. The court concluded that there was no violation of principles of natural justice. Conclusion: The court dismissed the appeals, finding no merit in the appellant's arguments. The court upheld the jurisdiction of the Commissioner of Customs in raising cost recovery charges, justified the demand pursuant to the 6th Pay Commission, supported the imposition of penalties, and validated the suspension or revocation of the appellant's approval as custodian. The court also rejected the argument of violation of principles of natural justice.
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