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TMI Blog2011 (2) TMI 1551X X X X Extracts X X X X X X X X Extracts X X X X ..... s Department of Commerce, Government of India, New Delhi and Commissioner of Customs and Central Excise, Coimbatore. and Assistant Commissioner of Central Excise, Salem I Division and Commissioner of Customs, Custom House, Chennai, Assistant Commissioner of Customs, Custom House, Chennai THE HONOURABLE MR.JUSTICE K.CHANDRU For the Petitioner : Mr.S.Murugappan For the Respondent : Mr.K.Ravi Anantha Padmanaban, Mr.P.Mahadevan, SCGSC COMMON ORDER These writ petitions are covered by a judgment of this court in M/s.Hari CFS represented by its CFS Manager V.John Vasac and others Vs. Union of India, represented by its Secretary, Department of Revenue, Ministry of Finance, Government of India, New Delhi and others in W.P.(MD)Nos.2634 to 2636 of 2009, dated 04.02.2011. In that batch of writ petitions, similar contentions were raised. For the sake of repetition, they may be referred to. 2. The contentions of the petitioners in all the writ petitions were identical. The petitioners had stated that appropriate permissions were obtained from the second respondent for establishing CFS/ICD. By a public notice, the petitioners were appointed as Custodians o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were reworked on the basis of enhanced pay and the petitioners were fixed with additional liability. Challenging the same, the petitioners filed all the three writ petitions. 4. The contention of the petitioners were that the Officers of the Customs department are performing their statutory duties under the Customs Act. Their function is a sovereign function. No fee can be levied for the discharge of statutory or sovereign function. The Government is empowered to levy Customs Duty under Section 12 of the Customs Act. Therefore, further cost recovery is void ab initio and violative of Articles 14 and 265 of the Constitution of India. The cost recovery made by the respondents is nothing but a fee. Charging at the rate of 185% of total salary of the Customs Officers is extravagant and exorbitant. Even in other ports, writ petitions have been filed questioning the recovery of charges for payment to the Customs Officers. Any revision of pay scale by the Central Government will apply to payment of salary by the Union Government to its employees. If any retrospective effect were to give on such revision of scales of pay, that cannot be passed on to the handlers of Export and Import. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cost of the Customs personnel posted for various duties at ICD/CFS/EPZ. Further by a notification No.26/2009, the Government by the exercise of its power under Section 141(2) of the Customs Act had issued new regulations known as Handling of Cargo in Customs Areas Regulations, 2009. Regulation 3 has made its regulations to come into effect with retrospective operations. Under Regulation 5, it is clearly stipulated that the Custodian shall bear the cost of Customs staff posted in the station. The Commissioner of Customs shall decide the number of staff required to be posted in the facility. It is also provided under condition No.(o) that the Customs Cargo provider shall bear the cost of customs officers posted at the Commissioner of Customs on cost recovery basis and in the manner specified by the Government of India, Ministry of Finance unless specifically exempted by an order of the Ministry. 7. It was also further stated in the same regulation that the customs service providers already approved on or before the date of coming into force its regulations shall comply with the conditions of requirement within a period of three months or such period not exceeding the period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Gateway Port and they discharge different functions. When ICD and CFS are running by Custodians for their own commercial gains and located in the hinterland, the cost recovery charges will have to be paid for the posting of customs officials who are additionally sanctioned for these ICDs and CFS over and above the regular posts. Running an ICD or CFS is a commercial proposition. The Government cannot bear the costs of additional manpower sanction. The services of the Customs officials are required throughout year during working hours. The cost recovery charges are in the nature of fees. The recovery at the rate of 185% of total salary is directly relatable to the additional creation of posts. Apart from the normal salaries, additional dearness allowance and notional HRA will have to be paid. Therefore, 1.85 times of the monthly average are collected as per the Government of India's letter, dated 1.4.1991. This 1.85 times was worked out by the Department of Revenue on the basis of principles laid down under the General Financial Rules. In terms of Rules 112 and 113 of the Financial Rules, recoveries of expenditures of the services rendered to both Government and Non Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier undertakings by referring to the judgment of the division bench of Kerala High Court, which did not decide the issue relating to cost recovery charges. On the other hand, the collection is in the nature of fee for the services rendered by the department. The amounts collected will directly go towards the expenditure involved. 185% of recovery charges is highlighted only to make it appear that there was extra income for the department. On the other hand, it takes into account the other components attached to pay and other service conditions of such Customs personnel who are posted in the CFSs/ICDs. 12. In this context, reliance was placed upon a judgment of the Supreme Court in Government of Maharashtra Vs. Deokar's Distillery reported in 2003 (5) SCC 669 in respect of the collection made for deputed excise officials in various Distilleries. Similar objections were made by the Distilleries. The same was repelled by the Supreme Court. The following passages found in paragraphs 26, 27, 29, 30 and 31 of the said judgment, may be usefully reproduced below: 26.In the background of the above decided cases, we shall now consider the case on hand. We have already extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. The Full Bench of the Bombay High Court also ruled accordingly. Further, Rule 17(12) of the Rules of 1966 and Rule 6(12) of the Rules of 1973 providing for recovery of supervision charges in advance, do not direct that differential amounts are not to be recovered, if pay scales are revised. On the other hand, the aforesaid Rules are to be read with other provisions giving residuary powers in both the sets of Rules viz. Rule 17(43) of the Rules of 1966 and Rule 6(36) of the Rules of 1973, which direct that the licensee shall comply with all orders issued under the Prohibition Act and Section 11 of the Prohibition Act clearly provides that the State Government may permit business in liquor subject to the manner and to the extent provided by the provisions of this Act or any rules, regulations or orders made or in accordance with the terms and conditions of the licence, permit, pass or authorization granted thereunder. 29.In the case on hand, the licensees gave an undertaking at the time of obtaining grant or renewal of the licence in the application form itself, both under the Rules of 1966 and the Rules of 1973, that they would abide by all orders made under the Prohibition A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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