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TMI Blog2011 (3) TMI 1705X X X X Extracts X X X X X X X X Extracts X X X X ..... tones etc., and prohibits the payment of any dividend to its members, it has been granted licence by the Government of India under section 25 of the Customs Act, 1962 (the Act). 3. In December, 1995, the Government of India decided that the private sector would also be involved in infrastructure development, and accordingly, the private sector was allowed to open Inland Container Depots (ICDs), in addition to public sector agencies. The other intention of the Government was to bring the customs facilities to the doorstep of the exporting and importing communities and therefore many ICDs were allowed to be opened in the interior so as to decongest the ports. 4. Vide Circular No.128/95 dated 14.12.1995, a standard set of guidelines for appointment of Custodian under section 45 of the Act came to be framed and circulated to ensure smooth working of all the facilities. The petitioner was appointed as Custodian in respect of two 'customs areas' as contemplated under the provisions of the Act, viz., Custodian at Surat Hira Bourse (SHB), Surat SHB s premises at Sahar Airport, Bombay vide notification No.2/95 (CCP) dated 20.10.95 and Custodian of ICD, Sachin, Surat Module-II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hy its custodianship should not be cancelled for non-payment, why bond should not be enforced and cost recovery charges amounting to ₹ 41,93,739/- along with interest at the rate of 20% per annum as detailed in the annexure to the notice should not be recovered under section 142 of the Act. According to the petitioner, though the notification appointing the petitioner as Custodian contemplated payment of costs of customs staff to the department, the demand raised by the respondent was 1.85 times the salary paid to the said officers, as stated in the annexures to the show cause notice itself. 7.1 In response to the notice, the petitioner addressed a letter dated 8.3.2001, stating inter alia, that due to the non-availability of an Appraiser right from the beginning, the petitioner was not able to generate enough revenue to meet with its expenses and further that as per the petitioner's calculation, only an amount of ₹ 10,23,631/- was outstanding as on March, 2001. Subsequently, by a letter dated 13.3.2001, the petitioner requested the respondent No.2 that without prejudice to its claim regarding the disputed amount, if the respondent did not agree with the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, which fact has been accepted by the respondent No.2. According to the petitioner, on account of the aforesaid circumstances, it could not make the payment of the cost of the customs staff, as a result of which, a show cause notice came to be issued to the petitioner on 6.12.99 calling upon the petitioner to show cause as to why the custodianship should not be cancelled for non-payment, why bond should not be enforced and cost recovery charges amounting to ₹ 34,61,123/- along with interest at the rate of 20% per annum as detailed in the annexure to the notice should not be recovered under section 142 of the Act. Pursuant to the said notice, the petitioner filed its reply dated 8.3.2001 requesting for payment by installments since the very viability of the project had been shaken on account of it not being notified under the DEPB Scheme. 8.1 Vide the impugned order dated 13.3.2001, the respondent No.2 ordered the petitioner to pay the balance amount of cost recovery expenses of ₹ 26,08,841/- in twelve monthly installments as requested by the petitioner. The respondent No.2 further ordered that statutory interest at the prescribed rate on the principal amount would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present petition. 9. Mr. Abhishek Mehta learned advocate appearing on behalf of the petitioner submitted that the action of respondent No.2 in levying the statutory interest at the prescribed rate on the delayed payment of cost of customs staff is without jurisdiction and authority of law. It was submitted that there is no provision under the Act which authorises the respondents to levy interest on delayed payment by the custodian of cost of customs staff posted at the ICD. Inviting attention to the provisions of Section 28AA of the Act, it was submitted that the said section provides for payment of interest on delayed payment of duty and that reimbursement of cost of customs staff cannot be equated with the levy of duty so as to attract the provisions of section 28AA of the Act. Inviting attention to the provisions of section 45 of the Act as well as to the guidelines issued by the Central Government, it was submitted that apart from the fact that neither the Act nor the guidelines make provision for levy of interest, there is no provision for levy of such interest even under the relevant notifications appointing the petitioner as Custodian under section 45(1) of the Act. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of statutory rate of interest as provided under section 11AA of the Central Excise Act, 1944. It was submitted that once the order has been passed granting installments at the request of the petitioner, the petitioner is now estopped from challenging the order inasmuch it is the petitioner who has invited the said orders by requesting for making payment by way of installments. 10.1. Inviting attention to the impugned orders, it was pointed out that in reply to the show cause notice, the petitioner had never challenged the levy of interest and as such, at this stage, it is not open for the petitioner to raise a new plea challenging the same. As regards the power of the respondent No.2 to levy statutory interest, it was submitted that the said powers are derived from the Circular dated 17.11.1997 (Annexure-III to the petition). 10.2 The learned counsel further submitted that in terms of the Circular/letter issued by the Ministry of Finance, dated 28.12.1994, the cost of the posts of the officers deputed at the ICDs is 1.85 times of the monthly average of the cost of the post, plus DA, CCA, HRA etc. The cost recovery charges are also required to be paid in advance at least f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost recovery charges amounting to ₹ 41,93,739/- along with interest @ 20% per annum till the date of payment should not be recovered from it under section 142 of the Act. Similarly, show cause notice came to be issued in respect of ICD, Sachin, for various periods from 17.4.1996 to 31.3.2000. Evidently, both the aforesaid show cause notices have been issued in exercise of statutory powers under section 45(1) of the Act. Thus, to the extent of the first ground stated in the show cause notices, the respondent No.2 was justified in initiating the proceedings under section 45(1) of the Act which was in the nature of adjudicatory proceedings. However, it appears that the respondent No.2 has mixed up two issues in the said show cause notice, the first being of a quasi judicial nature and the second being administrative in nature. The impugned orders insofar as the same relate to recovery of cost recovery charges, as has rightly been observed by the Tribunal, are in the nature of administrative orders. In the circumstances, had the respondent No.2 cancelled the custodianship of the petitioner in exercise of powers under section 45(1) of the Act, an appeal would lie before the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings, it is not permissible for him to contend that it is not open for the petitioner to challenge the same. In fact, the present anomalous situation has arisen because of the fact that the respondent No.2 has mixed up the proceedings under section 45(1) of the Act for cancellation of custodianship with recovery proceedings under the guidelines by making an order, whereby, action was not taken in respect of cancellation of custodianship but at the same time the petitioner was allowed to make payment of cost recovery charges by way of installments along with statutory interest. 16. A perusal of the reply dated 8th March, 2001 of the petitioner to the show cause shows that the petitioner has merely requested for a monthly instalment of rupees two lakhs per month towards the clearance of arrears. The said reply does not give any indication that the petitioner had agreed to pay interest on the delayed payment of the amounts as is sought to be contended on behalf of the respondents. In the circumstances, it is not possible to state that the impugned order is an invited order so as to bar the petitioner from challenging the same. 17. The petitioner in the present case has ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In V.V.S. Sugars v. Government of Andhra Pradesh and others, (1999) 4 SCC 192, the question before the Supreme Court was whether any interest could be levied on arrears of tax under sub-rule (4) of Rule 45 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961. The Court held that the principal Act is a taxing statute and therefore, must be interpreted as it reads, with no additions and no subtractions, on the ground of legislative intendment or otherwise. The Court placed reliance upon the decision of the Supreme Court in the case of India Carbon Ltd. and others v. State of Assam, (supra) as well as the decision of a Constitution Bench of the Supreme Court in J. K. Synthetics Ltd. v. Commercial Taxes Officer, (1994) 4 SCC 276, for the proposition that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf. There being no substantive provision in the Act for the levy of interest on arrears of tax that applied to purchases of sugarcane made subsequent to the date of commencement of the amending Act, no interest thereon could be so levied, based on the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of adjudication proceedings and as such, at this stage, it is not open for the petitioner to raise a new plea challenging the same, the said contention also does not merit acceptance for the reason that a levy which is without authority of law does not become legal and valid merely because the petitioner did not challenge the same at the show cause notice stage. The challenge to the levy of interest being a jurisdictional issue can be raised at any stage. There being no jurisdiction vested in the Adjudicating Authority to levy statutory interest on the cost recovery charges, there is no bar against challenging the same even at this stage. 25. Another aspect of the matter is that if the provisions of section 28AA of the Act are invoked for the purpose of levy of interest, the other provisions of the Act would also be applicable. In this case, in the light of the proviso to section 28 of the Act, the demand itself would be time barred as having been raised beyond the period specified under the said section. Thus, the respondents cannot resort to a pick and chose policy and apply the provisions which suit them, ignoring other statutory provisions. Insofar as the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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