2019 (7) TMI 1788 - AT - Customs

Recovery of the outstanding cost recovery charges for the posting of the Custom Officers at ICD/CSF/ACC - contention of the Appellants is that they were entitled to waiver of the cost of the Custom Officers posted by the Commissioner in terms of the Notification dated 12 September 2005 issued by the Board - Regulations 5(2) and 6(1)(o) of Handling of Cargo in Customs Areas Regulations 2009 - HELD THAT - The show cause notices dated 9 January 2013 and 11 December 2012 were issued to the Appellants under Regulation 12 of the 2009 Regulations. What was stated was that the Appellant has rendered themselves liable for suspension/ revocation of approval of the Custodianship in terms of the provisions contained in Regulation 11(1) of the 2009 Regulations and also forfeiture of security and imposition of penalty under Regulation 12(8) of the 2009 Regulations. The Commissioner under the impugned order did not either revoke the approval of the Custodianship or was the security forfeited. The Commissioner ordered that the outstanding cost recovery charges should be covered from the Appellant and the Regulations 5(2) and 6(1)(o) of the 2009 Regulations and also imposed penalty. This about the issue as to whether the recovery of outstanding cost recovery charges could have been confirmed was examined by a Division Bench of the Tribunal in Container Corporation of India. The Tribunal after examining the various provisions of the regulation observed that the Adjudicating Authority could not have order for recovery of the outstanding cost recovery charges - The penalty is imposed under Section 12(8) of the 2009 Regulations if a Customs Cargo Service provider contravenes any of the provisions of the Regulation or fails to comply with any provision of the Regulation with which it was its duty to comply. As it was held that cost recovery charges could not have been recovered under the aforesaid provisions of the Regulations the penalty also could not have been imposed as there is no contravention of the Regulations. The impugned orders dated 26 February 2019 and 29 March 2019 passed by the Commissioner to the extent that the demand of outstanding cost recovery charges has been confirmed and penalty has also been imposed are liable to be set aside and are set aside - Appeal allowed.

Issues Involved:
1. Demand and recovery of outstanding cost recovery charges.
2. Imposition of penalty under Regulation 12(8) of the Handling of Cargo in Customs Areas Regulations 2009 (the 2009 Regulations).
3. Applicability of waiver of cost recovery charges as per the Notification dated 12 September 2005.
4. Jurisdiction and authority of the Commissioner under the 2009 Regulations to recover cost recovery charges and impose penalties.

Issue-Wise Detailed Analysis:

1. Demand and Recovery of Outstanding Cost Recovery Charges:
The appeals were filed against the orders confirming the demand of outstanding cost recovery charges. The appellants argued that they were entitled to a waiver of these charges as per the Notification dated 12 September 2005. The Tribunal referenced a previous decision in Container Corporation of India Vs Commissioner of Customs, Jodhpur, which clarified that the 2009 Regulations did not provide a mechanism for the recovery of outstanding cost recovery charges. The Tribunal held that the Commissioner committed an illegality in ordering the recovery of these charges under the 2009 Regulations, as the regulations only required the custodian to bear the costs but did not prescribe a method for recovering unpaid charges.

2. Imposition of Penalty under Regulation 12(8) of the 2009 Regulations:
The Commissioner had imposed a penalty of ?5,000/- on each appellant under Regulation 12(8) for failing to comply with the provisions of the 2009 Regulations. The Tribunal found that since the recovery of cost recovery charges could not be confirmed under the regulations, there was no contravention of the regulations by the appellants. Consequently, the imposition of the penalty was also deemed improper and was set aside.

3. Applicability of Waiver of Cost Recovery Charges as per the Notification dated 12 September 2005:
Both appellants had applied for a waiver of cost recovery charges, claiming they met the criteria outlined in the Notification dated 12 September 2005. Thar Port's application for waiver was pending before the Rajasthan High Court, while Gemstone had also sought a waiver from the Board. The Tribunal noted these pending applications but focused on the legal provisions under the 2009 Regulations, which did not support the recovery of these charges.

4. Jurisdiction and Authority of the Commissioner under the 2009 Regulations:
The Tribunal examined the relevant provisions of the 2009 Regulations, specifically Regulations 5(2), 6(1)(o), 11, and 12. It concluded that these regulations did not authorize the Commissioner to recover outstanding cost recovery charges. Regulation 5(2) required the custodian to undertake to bear the costs, and Regulation 6(1)(o) outlined the responsibilities of the custodian, but neither provided a mechanism for recovery. Regulation 12 dealt with the procedure for suspension or revocation of approval and imposition of penalties but did not include provisions for recovering unpaid charges.

Conclusion:
The Tribunal set aside the impugned orders to the extent that they confirmed the demand of outstanding cost recovery charges and imposed penalties. The appeals were allowed, and the Tribunal reiterated that the 2009 Regulations did not provide a mechanism for the recovery of cost recovery charges or the imposition of penalties in the manner attempted by the Commissioner.

← Previous Next →