Posting of staff at Customs areas and collection of Cost Recovery Charges - CBEC's Customs Manual 2023 - Customs

3. Posting of staff at Customs areas and collection of Cost Recovery Charges 3.1 Applicability 3.1.1 The requirement that the custodian shall bear the cost of Customs staff posted at Customs area shall apply to all Customs areas such as Seaports, Airports, Air Cargo Complexes, Courier Terminals, Diamond Plazas, ICDs, and CFSs, notified after 26.06.2002. 3.1.2. The requirement that the custodian shall bear the cost of Customs staff posted at Customs area shall not apply in the following cases: a. the facility notified under Section 45 of the Customs Act, 1962, before 26.06.2002 with no change in custodianship or area after 26.06.2002; b. the facility notified before 26.06.2002 but part or whole of the same premises transferred (on lease basis or otherwise) to a new custodian, on or after 26.06.2002 (e.g. Airport Authority of India is custodian for the whole Mumbai Air Cargo Complex upto 26.06.2002, and after 26.06.2002 they have transferred the custodianship for the part of Air Cargo Complex to Air India); and c. the facility notified before 26.06.2002, but premises extended after 26.06.2002 under the same custodianship. 3.1.3 The conditions and obligations already being discharged by the earlier custodian for such facilities such as Air Cargo Complexes, Courier Terminals or Ports to be retained and applied to the new custodian. This shall also be applicable in case of transfer of ownerships. 3.2 Staffing Norms 3.2.1 The staffing norms for sanction of posts on cost recovery basis at various Customs facilities are as discussed below as shown in Table 28.2. Table 28.2: staffing norms for sanction of posts on cost recovery basis at various Customs facilities Customs Facility Deputy/Asst. Commissioner Appraiser/ Superintendent Examiner/ Inspector EA Hawaldar Total Sea Port 2 4 12 2 12 31 Air Cargo Complex 2 8 12 4 5 31 Courtier Terminal 4 9 12 4 8 37 Diamond Plaza 1 4 8 2 4 19 ICD (approved for only handling export cargo) 1 1 1 1 2 7 ICD (approved for handling both export and import cargo) 1 2 2 2 2 13 CFS 0 1 1 1 1 4 Class A Airport 2 4 38 78 0 24 144 Class B Airport 3 4 29 48 0 16 97 Class C Airport 4 0 8 16 0 4 28 3.2.2. In the initial stages of operation of a facility due to less volume of work, full strength of the officers may not be required. In such cases, if the facility requests, the Principal Commissioner or Commissioner of Customs may, after his consideration, post less than the sanctioned strength of officers. Gradually, when the business picks up, the full contingent of staff may be posted. 3.3 Creation of posts on the basis of Cost Recovery Charges 3.3.1 Creation of cost recovery posts is essential before issuance of necessary notifications by the jurisdictional Commissioners of Customs to operationalize a facility as a customs area. The jurisdictional Principal Commissioner or Commissioner of Customs shall forward the proposals for the creation or continuation of posts on cost recovery basis to DGHRD (and not to the Board directly). 3.3.2 Initially, the validity of posts on cost recovery basis is one year. The jurisdictional Principal Commissioner or Commissioner of Customs shall send the proposals to DGHRD for continuation of the posts created on cost recovery basis at least two months before the expiry of the validity, so that the Department of Expenditure gets sufficient time for considering the proposals; as the Department of Expenditure takes adverse note of delay in seeking permission in cases where such proposals are sent after the expiry of the validity of the posts created. 3.3.3 The proposals for creation/continuation of posts shall be in terms of the Department of Expenditure s stipulations from time to time in this regard 5 .They shall contain all the relevant information as per Appendix-I. DGHRD shall process these proposals without delay and convey the decision thereon to the field formations concerned with a copy marked to the Board. 3.4 Payment of Cost Recovery Charges 6 3.4.1 The Cost Recovery Charges shall be payable by facilities at the uniform rate of 1.85 times of the monthly average cost 7 of the post plus other allowances (such as Dearness Allowance, House Rent Allowance, etc.) For this purpose, the following factors may also be kept in view for working out the cost regarding all the cost recovery posts: i. additional dearness allowance as and when sanctioned by the government should be considered, and arrears shall be recovered; and ii. if the relevant staff is in possession of government accommodation and do not draw house rent allowance. Even then, the notional house rent allowance as admissible to them should be taken into account on cost recovery basis. 3.4.2 The Cost Recovery Charges would be payable in respect of officers actually deployed at the facility. Where the officers are posted in excess of norms, Cost Recovery Charges for such excess number of officers shall be payable. However, this situation shall not ordinarily arise. If a particular officer is given charge of more than one facility, the Cost Recovery Charges shall be apportioned amongst the facilities concerned. 3.4.3 Cost Recovery Charges shall be payable from the first day of the month in which the facility commences its operation and it shall be paid in advance for every quarter. 3.4.5 If the facility fails to deposit the Cost Recovery Charges in advance, for any particular quarter, and in case such charges remain unpaid either wholly or partly, the deployment of staff at the facility should not be abruptly put on hold. The Principal Commissioner or Commissioner of Customs concerned may consider the facility operator s financial contingencies and on case to case basis may allow a certain period of delay (not more than three months at a time and not on more than two occasions) in payment with interest. The interest in such cases shall be at the rate specified for delayed payment of duty under the Customs Act, 1962. A public display in this regard shall be made so that the trade can clear the containers that have already entered the facility. And for non-payment of advance, the entry of containers would be restricted till pending dues with interest are paid so that the facility does not have any uncleared containers once it is to be shut down. 3.5 Eligibility for Exemption from Cost Recovery Charges 3.5.1 The cost recovery posts should have the Department of Expenditure's specific permission for continuation before seeking/claiming exemption in respect of any given Customs facility. 3.5.2 The facilities are eligible to apply for exemption from payment of Cost Recovery Charges upon fulfilling the performance criteria as given in the table below. The facilities shall claim exemption if they meet both the criteria (Criterion-I and Criterion-II) in preceding two financial years or any one of the criteria (Criterion-I or Criterion-II) in preceding four financial years, which are discussed in Table 28.3. Table 28.3: Eligibility criterion for various facilities to apply for exemption from payment of Cost Recovery Charges Facility Criterion - I (Volume/Value of Cargo/flights handled in a year) Criterion - II (Number of Documents/Passengers handled in a year) Sea Port 6 lakh metric tons 3000 Documents Air Cargo Complex 12,000 metric tons 35,000 Documents Courier Terminal 1.5 lakh packages 20,000 Documents Diamond Plaza Rs. 15,000 Cr 12,000 Documents ICD (both export import) 7200 TEUs 7200 Documents ICD (only export) 3600 3600 Documents CFS 1200 TEUs 1200 Documents Airport 3500 flights 3 lakhs Passengers 3.5.2.1 The exemption from the Cost Recovery Charges shall be available only to common use facilities and not to any facility used exclusively by a private entity, even if they meet any of these benchmarks. 3.5.2.2 As mentioned earlier, the cost recovery posts that were sanctioned or diverted from the regular cadre strength to the various Customs facilities before 18.12.2013 (date of issuance of Cadre Restructuring Notification) were subsumed in the regular cadre strength of CBIC at that time 8 . Accordingly, the Chief Commissioners were authorized to grant exemption from payment of Cost Recovery Charges for the eligible facilities 9 . 3.5.2.3 In respect of all the cases for which exemption from cost recovery charges have not yet been granted though applications for the same are received, and all other cases for which applications would be received hereinafter, the exemption from the payment of Cost Recovery Charges shall be subject to the following conditions: a. the facility should have achieved the benchmark performance as prescribed in para 8.2; b. the application for the exemption from Cost Recovery Charges is complete in all respects (in case any deficiency is noticed, the Commissionerate shall issue a deficiency memo for the applicant to complete the application); c. the exemption will be effective from the beginning of the fourth month from the date of issuance of this Circular or the date of receipt of the complete application, whichever is later; d. the facility shall not have any other dues to be paid under the Customs Act, 1962; e. no investigation under the Customs Act, 1962, shall be pending against the facility; f. the payment of Cost Recovery Charges would be up-to-date; g. the exemption shall be prospective from the fourth month onwards; and h. conditions specified at para 9.1. below. 3.5.2.4 DGHRD shall complete the regularization process and obtain the approval of the competent authority within a period of three months in order to enable the exemption to be available from the beginning of the fourth month, as per para 8.5 above. 3.6 Withdrawal of exemption granted 3.6.1. Facilities shall continue to meet the Criterion-I or the Criterion-II or both, as the case may be, in the years subsequent to grant of exemption. If any facility fails to do so, a grace period of one year will be given within which it should meet the same. The exemption will be withdrawn if a facility does not meet the criteria even after the lapse of one-year grace period. 28.3.6.2. The jurisdictional Principal Commissioner or Commissioner of Customs shall therefore, monitor the performance of the facilities under their charge and take immediate measures, including recourse to para 7.1 to 7.4 above, in cases warranting withdrawal of exemption from Cost Recovery Charges. 3.7 Procedure for claiming/grant of exemption 3.7.1 The eligible facility may apply for exemption from Cost Recovery Charges to the jurisdictional Principal Commissioner or Commissioner of Customs. 3.7.2 The jurisdictional Principal Commissioner or Commissioner of Customs shall forward the proposal for regularization of posts to DGHRD through the respective Principal Chief Commissioner or Chief Commissioner of Customs within 15 days. The proposal shall be sent in the format prescribed under Appendix-II. 3.7.3 DGHRD will process such proposal in a time-bound manner so that the regularization of the post is in place within three months of application for exemption from payment of cost recovery charges. 3.8 De-notification and Cost Recovery Charges 3.8.1. If the facility is required to be de-notified for any reason, the Cost Recovery Charges should be payable until the date of such de-notification. DGHRD may take necessary steps during this period to surrender the sanctioned/regularized posts. 3.8.2. If a facility is de-notified in the middle of a quarter for which the Cost Recovery Charges are deposited in advance, the actual Cost Recovery Charges until the de-notification date shall be calculated on pro-rata basis, and excess deposit if any, shall be refunded to the entity. It may be noted that such refund shall not be treated as the refund of duty under Section 27 of the Customs Act, 1962. Instead, General Financial Rules (GFRs) shall be applied in such cases. [Refer Board s Circular 02/2021-Customs dated 19.01.2021] Refer Board s Circular 02/2021-Customs dated 19.01.2021 for Appendix -I Proposal for creation/continuation of posts on Cost Recovery basis Refer Boards Circular 02/2021-Customs dated 19.01.2021 for Appendix -II Proposal for grant of exemption from Cost Recovery Charges