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2020 (3) TMI 494 - AT - CustomsSuspension of Customs Cargo Service Provider (CCSP) services - Allegation is that the CCSP have not paid the cost recovery charges for the Customs staff posted at their private jetty, during the period 17.03.2009 to 31.03.2015 - contravention of provisions/conditions of the Notification No. 09/2002 dated 23.04.2002 read with Regulation 6(1)(o) of HCCAR, 2009 - levy of penalty in terms of Regulation 12 (8) of HCCAR, 2009. Whether the appellant is required to pay cost recovery charges in terms of HCCAR 2009 or payment of MOT charges made by the appellant is correct? HELD THAT - In the present case, the fact is not in dispute that the appellant was allowed to pay MOT charges as per Customs (Fee for Rendering Services of /Customs officers) Regulations, 1998 till separate posting of customs officials has been made for cost recovery basis by the office of the Assistant Commissioner, Customs Bhuj Division. This clearly shows that there was no posting of separate staff for the appellant s Jetty. This is because of this reason, the department accepting the fact that no separate posting was made, the appellant was allowed to pay MOT charges. From regulation 5 and 6 of HCCAR 2009, it is clearly provided that the cost of Customs Officer shall be borne by CCSP only when Custom Officer is posted for the Jetty of the appellant. In the present case, there is no evidence adduced by the department that any of separate officer was posted by an order of competent authority for supervising the operations at appellant s Jetty. Therefore, it is not under dispute as per the record that no separate officer was posted for the work at appellant s Jetty. Therefore Rule 5(2) and Rule 6(o) is not applicable in case of the appellant. Effect of CCAR, retrospective effect or prospective effect? - HELD THAT - On careful reading of Rule 4 which gives retrospective effect, it is found that the said provision is only to regularize the appointment of Customs Cargo service providers which have been given license prior to issue of this Regulation HCCAR 2009. Therefore, this regulation cannot be applied retrospectively for cost recovery charges, particularly when no separate officer was posted. Moreover, even by any stretch of imagination, HCCAR 2009 in respect of cost recovery charges is made applicable retrospectively, even than cost recovery charges cannot be recovered in terms of rule 5(2) read with Rule 6(o) unless separate officer is posted. Therefore, under any circumstances, in the facts of the present case, the demand of cost recovery charges is not sustainable. In an identical case, in the case of GMR Hyderabad International Airport Limited 2014 (2) TMI 702 - ANDHRA PRADESH HIGH COURT , the Hon ble Andhra Pradesh High Court dealing with Handling of Cargo Customs Areas Regulation, 2009, had not only set-aside the demand of Cost Recovery charges but even held that Regulation 5(2) of Regulation 2009 is illegal. The demand of Cost Recovery charges will not sustain - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Applicability of Handling of Cargo in Customs Areas Regulations, 2009 (HCCAR, 2009) to the appellant. 2. Requirement to pay Cost Recovery Charges (CRC) versus Merchant Over Time (MOT) charges. 3. Retrospective application of HCCAR, 2009. 4. Time-barred demand for CRC. 5. Legal validity of Regulation 5(2) of HCCAR, 2009. Issue-wise Detailed Analysis: 1. Applicability of Handling of Cargo in Customs Areas Regulations, 2009 (HCCAR, 2009) to the appellant: The appellant, M/s. Goodearth Maritime Limited, was appointed as a Custodian under Section 45(1) of the Customs Act, 1962, by Notification No. 09/2002/CC dated 23.04.2002. The Adjudicating Authority concluded that after the introduction of HCCAR, 2009, the appellant fell under its ambit and was required to pay CRC. The appellant argued that HCCAR, 2009, applies only when dedicated staff is posted at the jetty, which was not the case here. 2. Requirement to pay Cost Recovery Charges (CRC) versus Merchant Over Time (MOT) charges: The appellant was allowed to operate the jetty on payment of MOT charges as per the Customs (Fee for Rendering Services of Customs officers) Regulations, 1998, until separate posting of Customs staff on a cost recovery basis. The appellant paid MOT charges regularly, which was not disputed. The appellant contended that CRC is applicable only when additional Customs officials are posted, which did not happen in their case. The department's acceptance of MOT charges indicated no separate posting of Customs staff at the appellant’s jetty. 3. Retrospective application of HCCAR, 2009: The Adjudicating Authority argued that HCCAR, 2009, had retrospective effect, requiring the appellant to pay CRC from 17.03.2009. However, the Tribunal found that Regulation 4 of HCCAR, 2009, which gives retrospective effect, is only to regularize the appointment of Customs Cargo Service Providers (CCSP) and not for CRC. Therefore, CRC cannot be applied retrospectively, especially when no separate officer was posted. 4. Time-barred demand for CRC: The appellant argued that the demand for CRC from 17.03.2009 to 31.03.2015, raised by a show cause notice on 23.03.2018, was time-barred. The Customs Act, 1962, provides a two-year time limit for raising demands. The Tribunal agreed, noting that the department was aware of the appellant paying MOT charges, making the demand beyond the normal period of two years unsustainable. 5. Legal validity of Regulation 5(2) of HCCAR, 2009: The Tribunal referred to several judgments, including the Andhra Pradesh High Court's decision in GMR Hyderabad International Airport Limited, which held that Regulation 5(2) of HCCAR, 2009, is illegal. The High Court ruled that CRC cannot be imposed without providing special services and that such a levy lacks legal substratum. The Tribunal concluded that CRC is not applicable to the appellant as no separate Customs officer was posted at their jetty. Conclusion: The Tribunal set aside the demand for CRC, holding that the appellant was not liable to pay CRC in the absence of dedicated Customs staff and that the demand was time-barred. The appeal was allowed with consequential relief.
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