2024 (7) TMI 937 - AT - Customs

Recovery of cost recovery charges under Handling of Cargo in Customs Areas Regulations, 2009 - HELD THAT - Though there is condition for payment of cost recovery charges by the custodian. However, there is no statutory mechanism to recover the cost recovery charges by the Commissioner. Therefore, in absence of any power to recover the cost recovery charges the Ld. Principal Commission in the present impugned order confirming the cost recovery charges is without jurisdiction and without authority of law. It is further observed that Regulation 6 (1) (o) clearly provides that recovery of cost should be at such rate in the manner specified by the Government of India and the Ministry of Finance. However, in the present case there is nothing on record to show that the rates were prescribed and the manner was specified by Government of India in the Ministry of Finance, for this reason also the provision of regulation 6 (1) (o) of HCCAR, 2009 cannot be invoked. Reliance placed in the case of COMMISSIONER OF CUSTOMS, CUSTOM COMMISSIONERATE, LUDHIANA VERSUS M/S KRISHNA CARGO MOVERS PVT. LTD. 2019 (12) TMI 899 - PUNJAB HARYANA HIGH COURT where it was held that ' It was duty of Government of India to specify rate and manner and it is axiomatic in taxation law that in the absence of mechanism, no recovery can be made. Thus, we find substance in the findings recorded by Tribunal that no demand of cost of officers can be made in the absence of specified rates and manner .' In view of the above settled legal position, the order for confirmation of cost recovery charges is not sustainable. A recent judgment of Hon ble Telangana High Court in CENTRAL BOARD OF EXCISE AND CUSTOMS, REP. BY ITS MEMBER CUSTOMS, NORTH BLOCK, GOVERNMENT OF INDIA, NEW DELHI AND OTHERS VERSUS M/S. GMR HYDERABAD INTERNATIONAL AIRPORT LIMITED 2024 (3) TMI 1301 - TELANGANA HIGH COURT , dealing with the same HCCAR, 2009 regulation wherein it was held the provision of cost recovery charges as ultra virus on the ground that under Section 157 of Customs Act, 1962 there is no power to make such rule for recovery of cost recovery charges. Hence in view of this judgment, there is no scope left for the revenue to recover cost recovery charges. As regard the Revenue s appeal, since the recovery itself without jurisdiction, demand of cost recovery charges will not sustain. Moreover the Learned Commissioner drop the demand or not confirmed the cost recovery charges attributed to House Rent Allowance and Transport Allowance on the ground that the assessee have provided the accommodation and transport facility to the officer. In this fact we do not find any error on the part of the Principal Commissioner for not confirming the demand of recovery charges also to this extent. The Assessee s appeal is allowed.

Issues Involved:
1. Jurisdiction and Authority of Adjudicating Authority
2. Validity of Cost Recovery Charges under HCCAR, 2009
3. Mechanism for Recovery of Cost Recovery Charges
4. Rate Specification by the Ministry
5. Revenue's Appeal on Dropped Demand

Detailed Analysis:

1. Jurisdiction and Authority of Adjudicating Authority:
The appellant argued that the impugned order confirming the cost recovery charges was illegal as it was passed without jurisdiction and authority of law. The adjudicating authority confirmed the charges under Regulation 6(1)(o) of the Handling of Cargo in Customs Areas Regulations, 2009 (HCCAR, 2009), which does not provide a mechanism to recover or confirm such demands. The Tribunal found that the adjudicating authority lacked the statutory power to recover the charges, rendering the confirmation of the cost recovery charges without jurisdiction and authority of law.

2. Validity of Cost Recovery Charges under HCCAR, 2009:
The appellant contended that both Regulation 5(2) and Regulation 6(1)(o) of HCCAR, 2009, do not authorize the Commissioner of Customs to order the recovery of cost recovery charges. The Tribunal observed that while there is a condition for payment of cost recovery charges by the custodian, there is no statutory mechanism for the Commissioner to recover these charges. This was supported by previous judgments, including the case of Commissioner of Customs Ludhiana vs. Krishna Cargo Movers Pvt. Ltd., which held that in the absence of specified rates and manner by the Government of India, no recovery can be made.

3. Mechanism for Recovery of Cost Recovery Charges:
The Tribunal noted that the regulations only provide for the suspension or revocation of approval for non-compliance but do not include a provision for the recovery of unpaid cost recovery charges. This was corroborated by the Tribunal's previous decisions in cases such as Goodearth Maritime Limited and The Thar Dry Port vs. CCE & ST, Jaipur, which consistently held that the demand for cost recovery charges is not sustainable without a statutory mechanism for recovery.

4. Rate Specification by the Ministry:
The appellant argued that the Ministry had not prescribed any rate for cost recovery charges under the regulation. The Tribunal agreed, stating that Regulation 6(1)(o) requires the rates and manner of payment to be specified by the Government of India, which was not done in this case. This lack of specification further invalidated the demand for cost recovery charges.

5. Revenue's Appeal on Dropped Demand:
Regarding the Revenue's appeal, the Tribunal upheld the adjudicating authority's decision to drop the demand for cost recovery charges related to transport allowance and house rent allowance, as these amenities were provided by the assessee to the officers. The Tribunal found no error in the Principal Commissioner's decision not to confirm the demand for these charges.

Conclusion:
The Tribunal set aside the order confirming the cost recovery charges due to the lack of jurisdiction and statutory mechanism for recovery. The Revenue's appeal was dismissed, and the assessee's appeal was allowed with consequential relief. The judgment emphasized the necessity of a clear statutory basis for any demand of charges and highlighted the limitations of the regulations under HCCAR, 2009.

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