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TMI Blog2021 (6) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... e practice of levy and payment of Cost Recovery Charges (CRC) from Custom Cargo Service Providers such as Container Freight Stations (CFS) and Internal Container Depots, (ICDS) is to be viewed from the historical perspective. Private participants were encouraged to develop them near the ports to relieve the congestion at ports for proper storage and Faster clearance of the import and export goods - the concept of a CFS is known as Off Dock Container Yard (CY), which acts as an extended arm of the port to facilitate the clearance of the goods to reduce the congestion and delay in the Ports. There is no question of the Customs Department deploying any person who is not an employee of the Customs Department or was already in the Public Service of the Union. Though, section 158(2) of the Customs Act, 1962 permits the Central Government or the Central Board of Excise and Customs to frame Rules for rendering of any services by officers of the Customs, under the provisions of the Customs Act, 1962, it cannot permit recovery of the entire salary to be paid to the such amounts are payable by the Central Government. Cost Recovery Charges (CRC) can be only in proportion to the excess amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Senior Standing Counsel COMMON ORDER By this common order, all the three writ petitions have beingdisposed. 2.In W.P.No.7937 of 2013 , thepetitioner has challenged the impugned communication dated 11.2.2013 of the Assistant Commissioner of Customs (Appraising Docks-Admin). 3.By the impugned communication dated 11.2.2013 the petitioner has been directed to pay a sum of ₹ 1,24,23,213/- as arrears of amount payable towards Cost Recovery Charges (CRC) from the date of issue of Container Freight Licence issued to the petitioner till 31.3.2013. 4.The aforesaid demand in the impugned communication dated 11.2.2013 is the net of the gross demand of ₹ 1,64,25,173/- after adjusting a sum of ₹ 40,01,960/- paid by the petitioner. 5.In W.P.No.7938 of 2013 , paragraph 2.10 from The Customs Manual dated 2.2.2012 has been challenged in so far as its seeks to impose the payment of arrears of cost recover charges as a condition precedent for waiver from cost recovery charges. Relevant portion from the Customs Manual impugned in the said writ petition reads as under:- 2.10 . Cost Recovery Charges to be paid by ICD/CFS may waived if they fulfil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficerson CRC basis in its CFS as detailed below:- S.No Designation of the Officers deployed in the Petitioners Old Amount per month Area CRS of pursuant to implementation of VI Pay Commission Rate 1. Appraiser 50,345/- 30,239/- 80,583/- 2. Examiner 43,401/- 25,639/- 69,040/- 3. Preventive Officer 43,401/- 25,639/- 69,040/- 4. Tax Asst. 25,390/- 16,222/- 41,612/- 10.According to the petitioner it was entitled to refund the amounts already paid during the period and was entitled for a waiver. 11.Under these circumstances, the petitioner sent several representations to the Office of the Assistant Commissioner of Customs for waiver of Cost Recovery Charges. The petitioner vide re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order dated 1.4.2013, the levy /collection of 50% of CRC from the petitioner was stayed/ injuncted by this Court in W.P No.7937 of 2013. Further, appeal by the petitioner and the respondents before the Division Bench were dismissed by an order dated 28.06.2018 in W.A.Nos.1167 of 2018 and 829 of 2013. 18 . The petitioner has been providing service from its Container Freight Station(CFS) as a Custom Cargo Service Provider with effect from 11.7.2008. At its CFS, officers of the Customs Department were deployed on Cost Recovery Charges (CRC) basis as per the prevailing Circulars/ Notifications. 19.When the petitioner approved as Customs Cargo Service Provider Circular No. 52/97-Cus., dated 17-10-1997 of the Central Board of Excise Customs, New Delhi was also in force. Text of Circular No.52/97- Cus., dated 17.10.1997 reads as under :- CD/CFS - Posting of staff on cost recovery basis Circular No. 52/97-Cus., dated 17-10-1997 [From F. No. 434/66/95-Cus. IV (Pt.)] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Posting of staff in ICD/CFS - Collection of Cost recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry of Finance Department of Revenue Central Board of Excise Customs Room No. 227B, North Block New Delhi, 12th September, 2005 To, All Chief Commissioner of Customs All Chief Commissioner of Customs Central Excise, All Chief Commissioner of Central Excise. Sir, Subject : - Cost Recovery Posts in respect of Customs staff posted in ICDs/CFSs - Regarding. (1)I am directed to bring your kind attention that it has been decided to consider regularization of those cost recovery posts at ICDs/CFSs which have been in operation for two consecutive years with following performance benchmark for past two years:- (i)No. of containers handled by ICD : 7200 TEUs per annum (ii)No. of containers handled by CFS : 1200 TEUs per annum (iii)No. of BE or SB processed by ICDs/CFSs : 7200 per annum for ICDs and 1200 for CFSs. (iv)Benchmark at (i) to (iii) shall be reduced by 50% for those ICDs/CFSs exclusively dealing with exports, as per staffing norms. (2)The waiver of cost recovery charges would be prospective with no claims for past period. Criteria would be applicable on actual performance of ICDs/CFSs. (3)Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry Basis (CRC) that may levied by the Commissioner and shall make such payments at such rate in the manner prescribed, unless specifically exempted by an order of the Government of India in the Ministry of Finance. 28 . As per Regulation 5(3) of the aforesaid Regulation, a Customs Cargo Service Provider is also required to execute a bond equal to the average amount of duty involved on imported goods and 10% of the value of the export goods likely to be stored in the Customs area during the period of 30 days and furnish a bank guarantee or a cash deposit equivalent to 10% of such duty. 29 . Under regulation 6(o) of the Handling of Cargo in Customs Area Regulations, 2009, a Customs Cargo Service Provider is also required to bear the cost of the customs officers posted by the Commissioner of Customs on cost recovery basis and shall make payments at such rates and in such manner as may be specified by the Government of India in the Ministry of Finance, unless specifically exempted by an order of the said Ministry. 30.The Regulation also contemplates, suspension or revocation of the approval granted to a Customs Cargo Service Provider. 31.The concept of deputing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch an application for advance ruling or Appeal shall be made, and the procedure for the Authority, under Chapter VB (h) the manner of clearance or removal of imported or export goods; (i) the documents to be furnished in relation to imported goods; (j) the conditions, restrictions and the manner of making deposits in electronic cash ledger, the utilisation and refund therefrom and the manner of maintaining such ledger; (k) the manner of conducting audit; (l) the goods for controlled delivery and the manner thereof; (m) the measures and separate procedure or documentation for a classification. 36.As per Section 158(1) of the Customs Act, 1962, all rules and regulations made under this Act shall be published in the Official Gazette. 37.As per Section 158(2), Any rule or regulation which the Central Government or the Board is empowered to make under this Act may provide- (i) for the levy of fees in respect of applications, amendment of documents, furnishing of duplicates of documents, issue of certificates, and supply of statistics, and for rendering of any services by officers of customs under this Act; [(ii)that any person who contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned counsel for the petitioner has a reaching consequence. In the said case, the petitioner GMR Hyderabad International Airport Ltd., had not challenged the vires of the Handling of Cargo in Customs Areas Regulations, 2009. 43.There the challenge was confined to condition Nos. 10-13 of Circular No. 34/2002-Cus, dated 26.6.2002 on the ground that similar charges were not collected from operators in New Delhi, Mumbai, Chennai, Trivandrum, Cochin and Ahemadabad. 44.Therefore, the conclusion on the 19 of the said judgement cannot be applied to the facts and circumstances the present case. 45.In particular, there was no challenge to Regulation 5(2) of the Handling of Cargo in Customs Areas Regulations, 2009. Neither the petitioner therein nor the petitioner herein have challenged the vires of the power of the respondents to levy charges under 5(2) of the Handling of Cargo in Customs Areas Regulations, 2009. Therefore, the said decision cannot be applied to the facts and circumstances of the present case. 46.The observation in paragraph18 of the said judgement though appeals to the conscience of the Court, yet it cannot be applied to the facts of the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the import and export goods. 54.Globally, the concept of a CFS is known as Off Dock Container Yard (CY), which acts as an extended arm of the port to facilitate the clearance of the goods to reduce the congestion and delay in the Ports. 55.Container Freight Stations(CFS) or Internal Container Depots(ICD) were allowed to be set up with the view to ease the congestions and the delay at the ports which were traditionally the custom area where the assessments were to be carried out. 56.Earlier, the imported goods had to be first assessed and thereafter cleared from such port of import after their import either into the Domestic Tariff Area or for being warehoused by filing in bond bill of entry. There was no question of CRC being recovered by Department from the AIR Port Authority of India or Port Trust merely because the Customs also had its officers stationed there. 57.The Central Board of Excise and Customs from time to time has been sanctioning officers for being deployed at ICD/ CFS on Cost Recovery Charges (CRC) basis. 58.The Central Board of Excise and Customs framed these Rules in exercise of the powers conferred by section 157 and Section 158 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FS, Tuticorin (v) Chola CFS, Tuticorin 2. In this connection, it is requested to clarify as to whether the posts that were not sanctioned but were diverted to the above cited CFSs on cost recovery basis, have been subsumed in the Department's existing cadre strength (as prescribed vide para - 8(a) of the Office Memorandum F. No. 296/03/20 15- CX.9 dated 26.06.2015) (Annexure). If so, a copy of the order (for subsuming of posts) may be sent to DGHRD. 3.Kindly note that proposal for waiver/ continuation of waiver from the payment of cost recovery charges can be considered only in respect of those facilities for which posts have been sanctioned vide the above cited Order dated 26.06.20 15. 4. In case the posts have not been subsumed, further waiver of Cost Recovery charges may not be permissible. A consolidated position about all the five facilities may kindly be informed by 31.03.2017. End: Annexure Yours faithfully, (Meenu Kumarr) Additional Director (EMW/CRB)'( Z'i1- Phone:-011-29561870,29561522 Email: - dghrdcrbcgmail.com F.N0.296/03/ 2015-CX.9 Government of India Ministry of Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the posts on cost recovery basis is the promotion on ad-hoc basis of the officers from within the sanctioned strength to replace the officers who are deployed on cost recovery basis. The implication of the grant of exemption and regularization of the posts is that the custodian no longer pays the cost recovery charges and the regularized posts get excadred in the permanent strength of the Department. It was informed that when considering cases for grant of exemption from cost recovery charges, IFU/D/o Expenditure observed that in some cases the posts were not sanctioned in the first place. This gave rise to the following issues for decision: i. Whether the sanction of posts could be done ex post facto? ii. Whether the exemption from payment of cost recovery charges could be granted to eligible facilities even if the posts were not initially sanctioned? iii. Whether the grant of exemption from payment of cost recovery chartes is to be restricted to the number of Customs officers indicated in the staffing norms or could it be granted for the total number of Customs officers actually deployed? This issue is in respect of few facilities that were func ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing sanctioned on cost recovery basis. iv. Exemption of cost recovery charges in case the sanctioned posts (for which CR charges were recovered) exceed the staffing norms must be for the total number of such sanctioned posts. This situation has arisen only in a few past cases because the posts were sanctioned prior to the fixing of the staffing norms. It is unlikely arise again as now facilities can operate only after sanction of posts as per the staffing norms. 5.The Board was informed that further, this matter had been discussed with Member (P V) and DG(HRD) in the meeting chaired by Chairman (CBEC) on 06.05.2015. The consensus arrived was as under:- i.1,630 diverted posts that were not sanctioned may be subsumed in existing cadre strength. ii. Denial of exemption from cost recovery charges to eligible facilities would be against Government policy. Moreover, non-sanction of posts is a matter internal to Government and facilities cannot be penalized. Thus, eligible facilities may be exempted from cost recovery charges. As opined by D/o. Expenditure, this may be done by D/o Revenue (CBEC). iii Exemption from cost recovery charges must be for the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subsumed in the Department s existing cadre strength. b.As a one-time measure, Chief Commissioner of Customs concerned may be authorized to exempt as per prescribed norms, cost recovery charges for eligible facilities for which posts were not sanctioned. DG(HRD), CBEC would monitor the action and report to the Board. c.Grand of exemption of cost recovery charges for eligible facilities at which the posts were sanctioned by D/o Expenditure would be dealt by that Department as per established practice. The exemption for eligible facilities shall be for the entire staff sanctioned (for which cost recovery charges were taken) even if it is in excess of the staffing norms fixed subsequently, in 2013. d.Decisions at (b) (c) above are subject to obtaining approval from the Hon ble Finance Minister. e.At eligible facilities having both sanctioned and non-sanctioned posts, the exemption of cost recovery charges for the non-sanctioned posts would be dealt as per decision at (b) above and for sanctioned posts, the exemption would be dealt with as per decision at (c) above. f.The exemption of cost recovery charges for eligible facilities would be f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment Employees from Private Parties. 61.There is no question of the Customs Department deploying any person who is not an employee of the Customs Department or was already in the Public Service of the Union. Though, section 158(2) of the Customs Act, 1962 permits the Central Government or the Central Board of Excise and Customs to frame Rules for rendering of any services by officers of the Customs, under the provisions of the Customs Act, 1962, it cannot permit recovery of the entire salary to be paid to the such amounts are payable by the Central Government. Cost Recovery Charges (CRC) can be only in proportion to the excess amount that may be required to be paid to officers on being deployed in such facilities on special occasions. Where such officers are required to be present all through the period in the facility outside the Custom House or the Port, question of recovering the entire salary from such facilities cannot be permitted except for such travel allowances and extra amounts that are paid. Therefore, unless there is an appropriate amendment to the provisions and the Customs Act,1962 and the Rules made thereunder which fall within the four corners of Part XIV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amounts to be paid and collected on Cost Recovery Charges for the purpose of the aforesaid Rules. 69.In absence of any direct notification/government order specifying the rates to be levied towards Cost Recovery Charges under the aforesaid Regulation for deploying its officers the collection of Charges on Cost Recovery basis from the petitioner has been made contrary to the above Regulation. 70.A Division Bench of this Court in EternetEverest Ltd vs Union of India 1997 (89) ELT Madras 28 has held that demand under section 11D of the Central Excise And Salt Act, 1944 as it stood then was unsustainable in absence of a proper machinery. Same reasoning is applicable to the facts of the present case. 71.Since the petitioner has reportedly paid an amount ₹ 45,01,960/- in the past amounting. Neither the aforesaid amount nor the excess amount that was demanded would have been payable by the petitioner had a proper notification/order been issued. The amount collected also cannot be directed to be refunded back to the petitioner as the petitioner would have passed on incidence of such amount to the customer who had availed of services of the petitioner. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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