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2021 (6) TMI 429 - HC - CustomsDemand of arrears of amount payable towards Cost Recovery Charges - Container Freight Licence - implementation of the VI Pay Commission as a result of which the salaries of the Central Government Employees were increased drastically - HELD THAT - There is ample power vested with the Central Government and the Central Board of Excise and Customs as the case may be to make regulations for levying fees in respect of applications, amendment of documents, furnishing of duplicates of documents, issue of certificates, and supply of statistics, and for rendering of any services - there is no difficulty in arriving at a conclusion that both the Central Government and the Central Board of Excise and Customs have power to make a regulation Handling of Cargo in Customs Areas Regulations, 2009 and to levy Cost Recovery Charges from service providers to whom it deputes its officer. The practice of levy and payment of Cost Recovery Charges (CRC) from Custom Cargo Service Providers such as Container Freight Stations (CFS) and Internal Container Depots, (ICDS) is to be viewed from the historical perspective. Private participants were encouraged to develop them near the ports to relieve the congestion at ports for proper storage and Faster clearance of the import and export goods - the concept of a CFS is known as Off Dock Container Yard (CY), which acts as an extended arm of the port to facilitate the clearance of the goods to reduce the congestion and delay in the Ports. There is no question of the Customs Department deploying any person who is not an employee of the Customs Department or was already in the Public Service of the Union. Though, section 158(2) of the Customs Act, 1962 permits the Central Government or the Central Board of Excise and Customs to frame Rules for rendering of any services by officers of the Customs, under the provisions of the Customs Act, 1962, it cannot permit recovery of the entire salary to be paid to the such amounts are payable by the Central Government. Cost Recovery Charges (CRC) can be only in proportion to the excess amount that may be required to be paid to officers on being deployed in such facilities on special occasions - unless there is an appropriate amendment to the provisions and the Customs Act,1962 and the Rules made thereunder which fall within the four corners of Part XIV of the Constitution of India Cost Recovery Charges equivalent to the Salaries packs paid to such officials of the Customs Department cannot be justified. In absence of any direct notification/government order specifying the rates to be levied towards Cost Recovery Charges under the aforesaid Regulation for deploying its officers the collection of Charges on Cost Recovery basis from the petitioner has been made contrary to the above Regulation - Since the petitioner has reportedly paid an amount ₹ 45,01,960/- in the past amounting. Neither the aforesaid amount nor the excess amount that was demanded would have been payable by the petitioner had a proper notification/order been issued. The amount collected also cannot be directed to be refunded back to the petitioner as the petitioner would have passed on incidence of such amount to the customer who had availed of services of the petitioner. Therefore, there can be no order for refunding of the amount. Therefore, only way out is to regularize the amounts already paid collected in the past. While disposing these writ petitions in favour of the petitioner by directing the respondents to regularize the payments already made by the petitioner and by directing the respondents to grant waiver to the petitioner for the period after the petitioner has achieved the required benchmark/criteria as per the CBEC Circular dated 12.09.20-5 bearing Reference F.No.434/17/2004 - it is directed to issue appropriate notifications for the benefit of Trade and Public within a period of 6 months specifying the rates /charges payable by a Customs Cargo Service Providers on Cost Recovery Charges(CRC)basis operating under the Provisions of the Handling of Cargo in Customs Areas Regulations, 2009 in consonance with the provisions of the Customs Act, 1962 and the Constitution of India. Petition disposed off.
Issues Involved:
1. Challenge to the impugned communication dated 11.2.2013 demanding Cost Recovery Charges (CRC). 2. Challenge to paragraph 2.10 of the Customs Manual dated 2.2.2012. 3. Challenge to the instruction of the Central Board Excise and Customs dated 12.9.2005 regarding prospective waiver of CRC with no claim for the past. Detailed Analysis: 1. Challenge to the Impugned Communication Dated 11.2.2013: The petitioner contested the communication from the Assistant Commissioner of Customs demanding ?1,24,23,213/- as arrears for CRC from the date of issue of the Container Freight Licence till 31.3.2013. This demand was net of a gross amount of ?1,64,25,173/- after adjusting ?40,01,960/- already paid by the petitioner. The petitioner argued that the demand was unjustified and that they were entitled to a waiver of these charges based on their compliance with the required benchmarks. 2. Challenge to Paragraph 2.10 of the Customs Manual Dated 2.2.2012: The petitioner challenged paragraph 2.10, which imposed arrears of CRC as a condition precedent for waiver from CRC. The relevant portion of the Customs Manual specified that CRC could be waived if the ICD/CFS fulfilled laid down norms and had been in operation for two consecutive financial years, with the waiver being prospective and no claim for the past period. The petitioner argued that this condition was unfair and sought its removal. 3. Challenge to the Instruction Dated 12.9.2005: The petitioner also contested the instruction from the Central Board of Excise and Customs, which stipulated that the waiver of CRC would only be prospective with no claims for the past. The petitioner argued that they had fulfilled the necessary benchmarks and were entitled to a waiver for the entire period, not just prospectively. Court's Findings: On the Demand for CRC: The court noted that the petitioner had been providing services as a Custom Cargo Service Provider since 11.7.2008, with officers of the Customs Department deployed on a CRC basis. The petitioner had paid ?45,01,960/- towards CRC and argued that they were entitled to a waiver. The court referenced various circulars and regulations, including the Handling of Cargo in Customs Areas Regulations, 2009, which required compliance with new conditions within a specified period. On the Customs Manual and Instruction: The court examined the historical context and legal basis for CRC, citing various circulars and regulations. It noted that the practice of charging CRC had been in place for some time and was intended to compensate the department for additional costs incurred due to the deployment of customs officers. However, the court found that the entire salary of these officers should not be recovered from the service providers, as it was contrary to the statutory scheme of the Customs Act, 1962, and the Constitution of India. On the Petitioner's Entitlement to Waiver: The court acknowledged that the petitioner had met the benchmarks for exemption from CRC during the first two years of operation. It directed the respondents to regularize the payments already made by the petitioner and grant a waiver for the period after achieving the required benchmarks. Directives to the Central Board of Excise and Customs: The court directed the Central Board of Excise and Customs to issue appropriate notifications within six months specifying the rates/charges payable by Customs Cargo Service Providers on a CRC basis and to amend the Handling of Cargo in Customs Areas Regulations, 2009, to include provisions for granting waivers/exemptions from CRC. Conclusion: The court disposed of the writ petitions in favor of the petitioner, directing the jurisdictional Commissioner/Chief Commissioner to regularize the petitioner's case by granting a waiver/exemption from CRC from the date the petitioner achieved the required benchmarks. The petitions were disposed of with no costs, and connected miscellaneous petitions were closed.
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