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TMI Blog2020 (3) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... rate posting was made, the appellant was allowed to pay MOT charges. From regulation 5 and 6 of HCCAR 2009, it is clearly provided that the cost of Customs Officer shall be borne by CCSP only when Custom Officer is posted for the Jetty of the appellant. In the present case, there is no evidence adduced by the department that any of separate officer was posted by an order of competent authority for supervising the operations at appellant s Jetty. Therefore, it is not under dispute as per the record that no separate officer was posted for the work at appellant s Jetty. Therefore Rule 5(2) and Rule 6(o) is not applicable in case of the appellant. Effect of CCAR, retrospective effect or prospective effect? - HELD THAT:- On careful reading of Rule 4 which gives retrospective effect, it is found that the said provision is only to regularize the appointment of Customs Cargo service providers which have been given license prior to issue of this Regulation HCCAR 2009. Therefore, this regulation cannot be applied retrospectively for cost recovery charges, particularly when no separate officer was posted. Moreover, even by any stretch of imagination, HCCAR 2009 in respect of cost recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services rendered by the Customs officers at their jetty. 3. A show cause notice bearing No. S/20-18/08-Appg (Gen) dated 20.03.2018 and it s corrigendum/addendum dated 26.02.2019 were issued to the appellant M/s. Goodearth Maritime Limited, Jakhau, who are Customs Cargo Service Provider (herein after referred to as the CCSP for the sake of brevity). In the notice, it was contended that as per Regulation 2(b) of the Handling of Cargo in Customs Areas Regulations, 2009 (herein after referred to as HCCAR , 2009) in terms of Notification No. 26/2009-Cus (NT) dated 17.03.2009, as amended, they are responsible for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods. Further, as per Regulation 4 of the HCCAR, 2009, any action taken or anything done in respect of appointment of the CCSP, immediately preceding the coming into force of these Regulations shall be deemed to have been done under the corresponding provisions of these Regulations. The CCSP already approved on or before the date of coming into force of these regulations shall also comply with the conditions of these regulations within a period of three months or such period not ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their Custodianship is found liable to suspension / revocation. Further, the CCSP is also found liable to penalty in terms of Regulation 12 (8) of HCCAR, 2009. The Adjudicating Authority vide impugned order dated 19.03.2019 confirmed charges raised in the show cause notice and passed the following order:- (i) I hereby order for recovery of Cost Recovery Charges of ₹ 1,45,55,246/- (Rupees One Crore Forty Five Lakh Fifty Five Thousand Two Hundred Forty Six) for the period 17.03.2009 to 31.03.2015 from M/s. Goodearth Maritime Limited. As the custodian has paid MOT of ₹ 18,41,005/- (Rupees Eighteen Lakh Forty One Thousand Five only) during the same period, I order to appropriate the said amount against total demand of CR charges. (ii) I impose penalty of ₹ 20,000/- (Rupees Twenty Thousand only) on M/s. Goodearth Maritime Limited under Regulation 12(8) of Handling of Cargo in Customs Areas Regulations, 2009. (iii) If M/s. Goodearth Maritime Limited failed to pay the above confirmed demand along with penalty at Sr. No. (i) (ii) before 30.06.2019, the operations stand suspended on 01.07.2019 till they deposit the above confirmed demand along with penalty in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Act on 23.04.2002, i.e. prior to dated 26.06.2002, therefore guidelines under Regulations, 2009 is not applicable in the light of Board Circular No. 04/2011-Cus dated 10.01.2011. Accordingly, the appellant had correctly paid MOT charges under intimation to the department during the period 17.03.2009 to 31.03.2014. He further submits that even the appellant had requested the department to furnish a list of officers exclusively for Customs House, Jakhau but the department failed to provide the same. In view of this, it is clear that no dedicated posting of officer was made on the appellant s Jetty. He further submits that appellant was regularly paying the MOT charges and the same has been accepted by the department. It is only first time when on 08.05.2015, the Superintendent (Technical) Customs, Bhuj Division vide his letter dated 08.05.2015 directed to pay cost recovery charges with effect from 17.03.2019 in accordance with the Regulations HCCAR 2009. Therefore, demand on account of cost recovery charges before 17.03.2019 is, in any case not sustainable. He further submit that though there is no time-limit provided for cost recovery, however, parent act, which is Customs A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Tri-Mum) - Savita Polymers Limited vs. CCE, Raigad (d) 201A (310) ELT 3 (Bom) - Mumbai International Airport P. Limited vs. Union of India (e) 2011 (267) ELT 319 (Mad) - Hari CFS vs. Union of India 10. We have heard both sides and perused the record. The limited issue to be decided is whether the appellant is required to pay cost recovery charges in terms of HCCAR 2009 or payment of MOT charges made by the appellant is correct. In the present case, the fact is not in dispute that the appellant was allowed to pay MOT charges as per Customs (Fee for Rendering Services of /Customs officers) Regulations, 1998 till separate posting of customs officials has been made for cost recovery basis by the office of the Assistant Commissioner, Customs Bhuj Division. This clearly shows that there was no posting of separate staff for the appellant s Jetty. This is because of this reason, the department accepting the fact that no separate posting was made, the appellant was allowed to pay MOT charges. It is the claim of the appellant that even subsequent to the letter of Customs Division Bhuj dated 05.05.2003, no separate officer was posted to supervise the work at appellant s Jetty. Ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or cost recovery charges, particularly when no separate officer was posted. Moreover, as discussed above, even by any stretch of imagination, HCCAR 2009 in respect of cost recovery charges is made applicable retrospectively, even than cost recovery charges cannot be recovered in terms of rule 5(2) read with Rule 6(o) unless separate officer is posted. Therefore, under any circumstances, in the facts of the present case, the demand of cost recovery charges is not sustainable. 12. In the case of Shree Pipes Limited (supra), the Hon ble Rajasthan High Court has held that fees/cost recovery/cast of establishment payable to department only on hourly basis and not for whole year when no whole time staff is posted by the department. In the said judgment, the Hon ble High Court however, held that no whole time posting by department to supervise the Customs bonded warehouse, charges recovered by the department on hourly basis from some licensee and for full year from others, is violative to Article 14 of Constitution of India. 13. In an identical case, in the case of GMR Hyderabad International Airport Limited (supra), the Hon ble Andhra Pradesh High Court dealing with Handling of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll conveyances and goods in a customs area shall be subject to the control of the officers of the customs for purposes of enforcing the provisions of the Act. Otherwise, it might possibly lead to easy evasion of the levy liable to be applied on them. Sub-section (2) of Section 141 makes it explicitly clear that the imported or export goods may be received, stored, delivered, dispatched or otherwise handled in a customs area in such manner as may be prescribed and the responsibilities of persons engaged in the aforesaid activities shall be such as may be prescribed. The expression prescribed was defined in Section 2(32) as meaning those as prescribed by the regulations made under the Act. Even if Sections 7, 45 and 141 are read together, what emerges is that, all goods imported or meant for export can be brought to the customs airport and thereafter they shall remain in the custody of the custodian until they are cleared for home consumption or are warehoused or are transshipped in accordance with the provisions contained in Chapter VIII of the Act. But however, any such physical custody of the cargo by the custodian is subject to the control of the officers of the customs, till t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to shine on our local corporations and consequently continue to exploit the local conditions and turn them in their favour. More importantly the natural resources of this nation move away across it s borders, for the good and welfare of others and they will scarcely become available for securing the wellbeing of our countrymen. The very foundations upon which this nation won its freedom would have been quickly weakened, otherwise. 11. Regulation 5(2) of Regulations, 2009 undoubtedly prescribed the custodian to bear the costs of the customs officers posted at such customs area on cost recovery basis. Now the question that is to be resolved is whether this falls within the general power of making regulations or not? Payment of one-time fee for appointment as a customs airport or for recognizing a person as a custodian of goods in a customs area is different from obligating such a person to pay regularly for the costs of the customs officers posted at the customs port or customs airport. Both are not the same. 12. The concept of cost recovery is generally associated with the service rendered by a person or a set of persons or a public organization to another, which service i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower while mere administration of such a taxation statute is the responsibility of the executive power of the State. It is a common legislative practice to prescribe for the legislative policy broadly in the statute and then leave the guidelines for working out the details effectively behind the said legislative policy by delegating the power to frame rules or regulations, as the case may be. This practice of empowering the executive to make supporting Legislation strictly within the prescribed sphere has been evolved due to the practical necessities and pragmatic needs of the modern state as the Legislatures, by the very nature of the limitations upon them to conceive all possible circumstances and contingencies at one go and also because of the extremely limited time factor. The Legislatures can hardly work out all the necessary details by themselves. While the Legislature puts in place the life line, the muscular support is supplied through ancillary legislation known as subordinate/delegated legislation, in the form of Rules or Regulations. However, without there being a clear and unambiguous charging provision, by way of ancillary legislation, no taxes can be imposed. In the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is levied essentially for services rendered and as such there is an element of quid pro quo between the person who pays the fee and the public authority which imposes it. If specific services are rendered to a specific area or to a specific class of persons or trade or business in any local area, and as a condition precedent for the said services or in return for them cess is levied against the said area or the said class of persons or trade or business the cess is distinguishable from a tax and is described as a fee. Tax recovered by public authority invariably goes into the Consolidated Fund which ultimately is utilised for all public purposes, whereas a cess levied by way of fee is not intended to be, and does not become, a part of the Consolidated Fund. It is earmarked and set apart for the purpose of services for which it is levied. There is, however, an element of compulsion in the imposition of both tax and fee. When the Legislature decides to render a specific service to any area or to any class of persons, it is not open to the said area or to the said class of persons to plead that they do not want the service and therefore they should be exempted from the payment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eased economic activity and development of human resources. The increase in the quantum of imports and exports therefore has a direct proportionate impact upon the revenue garnering and overall development. As was already noticed supra, appointment of a custodian of the customs space identified under Section 8 of the Act is only for ensuring the integrity of such a place so that no revenue loss and duty evasion occurs there. Beyond that, a custodian has no other role. He is a facilitator by providing for foolproof or tamper proof premises so that goods do not leave the premises before they are cleared by the customs and correspondingly the necessary duty/revenue is collected smoothly by the State. It is purely incidental, that the custodian may in turn earn some revenue for himself by charging the importer or exporter for facilities provided by him for smooth and eventual clearance of goods by the customs. That is of least importance in the matter of collection of customs duty by the State. I am therefore clearly of the view that, no services are being specially provided by the customs officials to the custodians at a customs port or customs airport, to enable them to collect any f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of cost recovery is totally unjust. There is yet another reason while preparing the appropriation estimates of revenue, adequate provision is always made towards the Head of salaries and allowances payable to the Government servants functioning under various Ministries/Departments. Such appropriations are placed for consideration and approval of the Parliament/Legislature of the State as the case may be. Once the salaries and allowances and other benefits such as pensions are thus already provided for, the question of seeking their reimbursement separately would not arise. Out of the overall collection of revenue, a certain percentage is thus set apart towards the concomitant expenditure liable to be incurred for raising such revenue. Salaries and allowances, pensions and other terminal benefits payable to the Government servants are integral part of this element of expenditure. When the State directly pays to its employees, the State in turn expects absolute integrity and loyalty from such employees. In the case of employment between the State and its servants, it is appropriate to bear in mind that it is not regulated purely by contractual terms or by general conditions whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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