2022 (11) TMI 1097 - AT - Customs

Exemption from Establishment Charges as per Para 5 (b) and 5(C) of Circular No. 16/2013-Customs dated 10.04.2013 - period from 2010-11 to May 2014 - respondents were appointed as Custodian by the Commissioner of Customs, Ahmedabad - landing places - whether the Respondents are required to pay establishment charges? - HELD THAT - On going through the regulation of HCCAR, 2009, it is found from said regulations that Customs Cargo Service providers, which were hitherto termed and notified as custodians before issuing of Notification No. 26/2009-Cus (N.T.) dated 17.03.2009 for notifying the HCCAR, 2009, were required to pay the cost of the officers posted there by the Commissioner of Customs on cost recovery charges unless specifically exempted by an order of the Ministry of Finance, Government of India. Circular No. 13/2009-CUS dated 23.03.2009 issued by the Central Board of Excise and Customs, Ministry of Finance Government of India, in clear terms clarifies that payment of cost recovery charges in respect of ports and airport has been exempted for three categories of custodians specified in Circular No. 27/2004- Cus. dated 06.04.2004 - thus, government has exempted the Custodians notified before 26.06.2002 from the payment of cost recovery charges .Therefore, the Commissioner (Appeals) is legally correct in extending the benefit of waiver of establishment charges in this matter. There was no requirement of any application for claiming exemption in this matter. In the present matter there is dispute that all the four respondents have been appointed/ notified as Custodians well before the 26.06.2002 and as per circular No. 27/2004- Cus dated 06.04.2004 and 13/2009-Cus. dated 23.03.2009, recovery of establishment charges/ cost recovery charges stands exempted/waived. Appeal of Revenue dismissed.

Summary

Issues:
- Appeal against dropping of demand of establishment charges
- Interpretation of Circular No. 27/2004-Cus dated 06.04.2004
- Applicability of waiver of establishment charges
- Exemption from cost recovery charges for custodians

Analysis:

1. Appeal against dropping of demand of establishment charges:
The case involved four appeals filed by the revenue challenging the dropping of demand of establishment charges upheld in favor of the respondents by the Commissioner (Appeals). The original authority had dropped the proceedings of recovery of Establishment Charges and imposition of penalties on the respondents. The revenue contended that the Commissioner (Appeals) erred in not appreciating the facts of the case and the issue involved. The main question was whether the respondents were required to pay establishment charges.

2. Interpretation of Circular No. 27/2004-Cus dated 06.04.2004:
The Revenue argued that the respondents, appointed as custodians, were obligated to pay establishment charges as per Circular No. 27/2004-Cus. The Circular specified exemptions for certain categories of custodians. However, it was highlighted that the custodians in this case were appointed before 26.06.2002, falling under the exempted category. The Revenue's contention was that the waiver of establishment charges should not apply retrospectively and that the waiver granted was prospective in nature.

3. Applicability of waiver of establishment charges:
The Revenue claimed that the waiver of establishment charges, granted by the Commissioner of Customs, was effective from the date of application by the respondents in May/June 2014. They argued that the waiver should not cover the period from 2010-11 to May 2014 when establishment charges were outstanding. The waiver was deemed prospective by the Revenue.

4. Exemption from cost recovery charges for custodians:
The Tribunal examined Circular No. 13/2009-CUS and Circular No. 27/2004-Cus to determine the applicability of cost recovery charges for custodians. It was established that custodians appointed before 26.06.2002 were exempted from payment of cost recovery charges. As all four respondents were appointed as custodians before the specified date, the Commissioner (Appeals) was deemed correct in extending the benefit of waiver of establishment charges to them.

In conclusion, the Tribunal found that the Revenue's appeals were not sustainable based on the exemption granted to custodians appointed before 26.06.2002. The waiver of establishment charges was upheld, and the appeals were dismissed. The cross-objections were also disposed of accordingly.