2017 (2) TMI 10 - HC - Customs

Recovery of establishment charges - Held that - The petitioner was given a Private Bonded Wareouse Licence, dated 17.10.2002, with a condition that they should pay the establishment charges, i.e., pay and allowances, if any, and other supervision charges of the staff members of the Customs Department. Subject to the said proviso only, the petitioner was given the Private Bonded Warehouse Licence. Therefore, it is not open to the petitioner to repudiate the same or resile from their obligation, and say that they will not make payment - this Court does not find any merit in the claim of the petitioner that they are not liable to make any payment to the Customs Department towards establishment charges - petition dismissed - decided against petitioner.

Summary

Issues:
Challenge to notice demanding payment of cost recovery charges under a Private Bonded Warehouse Licence.

Analysis:
The petitioner, engaged in importing and re-exporting mobile phones, obtained a Private Bonded Warehouse Licence from the Commissioner of Customs. The licence required payment of establishment charges, as per condition No.6 of the bond. The petitioner accepted this condition and conducted business activities under Customs supervision. A demand notice was issued for cost recovery charges, which the petitioner partially paid but refused to pay the balance without a formal demand notice. The petitioner challenged the demand notice in a Writ Petition.

The petitioner relied on a circular by the Central Board of Excise and Customs, stating that merchant overtime charges were no longer warranted due to self-assessment emphasis. The petitioner argued that the Customs Department couldn't claim such charges as they had no establishment at the petitioner's unit. However, the Customs Department contended that the petitioner was liable for cost recovery charges based on the licence conditions and relevant government letters specifying the payment structure.

The Court noted that the licence required payment of establishment charges and that an Officer of Customs supervised the petitioner's activities. The demand for charges was based on government guidelines, and the petitioner had paid a partial amount. The Court found the petitioner's contention, citing a circular by the Central Excise Department, untenable as the rules differed from those of the Customs Department. Consequently, the Court dismissed the Writ Petition, stating that the petitioner was liable to pay the establishment charges to the Customs Department.

In conclusion, the Court upheld the demand for establishment charges under the Private Bonded Warehouse Licence, emphasizing the petitioner's obligation to fulfill the payment requirements specified in the licence conditions. The judgment clarified the distinction between circulars issued by different departments and affirmed the Customs Department's right to seek payment for supervision and establishment charges as per the terms of the licence.