2020 (1) TMI 1462 - HC - Customs

Denial of waiver of Cost Recovery Charges to the petitioner - right to sanction a post - rejection on the ground that document (Annexure P-2) was not a decision but merely an information seeking exercise so that posts could be sanctioned but actually Government retained the right to sanction posts as it deemed fit - requirement for fulfilment of trading parameters - HELD THAT - The introduction of this additional classification is arbitrary and has no nexus with any object which may be sought to be achieved. In the circumstances, petition is allowed, the respondents are directed to remove this arbitrary and then consider the case of the petitioner for waiver of cost recovery charges and consequently refund if called for. The necessary exercise be done within a period of 3 months from the date of receipt of the certified copy of this order failing which the petitioner would be entitled to the interest @8% p.a. Application disposed off.

Summary

Issues:
Challenge to Customs Department's order declining waiver of Cost Recovery Charges.

Analysis:
The petitioner filed a petition challenging the Customs Department's decision to deny the waiver of Cost Recovery Charges. The petitioner, approved for establishing a Container Freight Station in Ludhiana, fulfilled the performance benchmarks specified by the department. However, the department rejected the waiver, stating that the letter outlining the benchmarks was not a final decision but an information-seeking exercise for post sanctioning. The petitioner argued that all entities meeting the trading parameters should be entitled to the waiver, and any subsequent classification based on post sanctioning was discriminatory. The court noted that the introduction of such classification was arbitrary and lacked nexus with the intended objective. Consequently, the petition was allowed, directing the respondents to remove the arbitrary classification, reconsider the petitioner's case for waiver, and provide a refund if necessary within three months, failing which interest at 8% p.a. would be applicable.

The court observed that the waiver of Cost Recovery Charges should be based on meeting the trading parameters specified in the letter, not on the subsequent sanctioning of posts. The revenue counsel failed to provide a rational policy for post sanctioning that aligned with trading parameters. The court emphasized that the government's discretion in post sanctioning should not result in denying the waiver to entities fulfilling essential trading benchmarks. The decision highlighted the importance of aligning post sanctioning with trading parameters to prevent arbitrary denial of benefits.

In conclusion, the judgment emphasized the need for a non-arbitrary approach in considering waiver of Cost Recovery Charges based on fulfillment of trading parameters. The court directed the removal of arbitrary classification, ensuring that entities meeting the benchmarks are entitled to the waiver. The judgment underscored the importance of aligning post sanctioning decisions with trading performance to prevent unjust denial of benefits.