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TMI Blog2022 (11) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... EW DELHI ] and it was held that the Commissioner could not have ordered for cost recovery charges under the aforesaid provisions of regulations 5(2) and 6(1)(o) of the 2009 Regulations. The penalty that was imposed under regulation 12(8) was also set aside. It has, therefore, to be held that the Commissioner committed an illegality in ordering recovery the cost recovery charges under the aforesaid provisions of the 2009 Regulations. The penalty that has been imposed is also liable to be set aside - the impugned orders dated 30.10.2018, 17.01.2019 and 29.04.2019 passed by the Commissioner to the extent that the demand of outstanding cost recovery charges have been confirmed and penalty has also been imposed are liable to be set aside and are set aside. Appeal allowed. - CUSTOMS APPEAL NO. 50478 OF 2019 WITH CUSTOMS APPEAL NO. 50891 OF 2019 AND CUSTOMS APPEAL NO. 51724 OF 2019 - FINAL ORDER NO. 51086-51088/2022 - Dated:- 21-11-2022 - MR. DILIP GUPTA, PRESIDENT AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Arun Goyal, Advocate for the Appellant Shri Rakesh Kumar, Authorized Representative for the Department ORDER Customs Appeal No. 50478 of 2019 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter/ importer as handling charges. The appellant is a State Government Undertaking. It was appointed as custodian of Inland Container Depot, Basni-II Phase, Jodhpur [ ICD ], under section 45(1) of the Act. 6. The Circular dated 14.12.1995 set out the guidelines for appointment of custodians of CFS, ACC and ICD. To ensure smooth working of all the facilities, a need was felt to draw up a standard set of undertakings to be given by the custodians before they were appointed under section 45 of the Act. The undertaking to be given was also contained in the Circular dated 14.12.1995. The undertaking, inter alia, provided that the custodian should provide safe, secure and spacious premises for loading/unloading/storing of the cargo; sufficient modern handling equipments in operational condition for handling the containers and the cargo in the area was required to be provided; the custodian had to bear the cost of the customs staff posted at ICD/CFS, but it was the Commissioner who had to decide the number of staff required to be posted considering the work load in the stations; and the custodian was also required to provide free furnished space to the Customs Department. 7. Thus, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .09.2005 by return FAX and by email at [email protected](.) 10. According to the appellant it was operating the ICD by outsourcing certain activities to various operators and when the appellant appointed a new handling and transportation agent permission was sought from the Commissioner but since permission was not granted despite repeated reminders the appellant could not run its business and could not deposit the cost recovery charges of the custom staff. 11. Show cause notices dated 02.01.2018, 26.09.2018 and 22.11.2018 were issued to the appellant, purportedly under regulation 12 of the 2009 Regulations, mentioning therein that the appellant had contravened the provisions of regulations 5(2) and 5(5) and the obligation mentioned in regulation 6(1)(o) of the 2009 Regulations and, therefore, the appellant had rendered itself liable for suspension/revocation of approval of the custodianship in terms of the provisions contained in regulation 11(1) of the 2009 Regulations and also forfeiture of security and imposition of penalty under regulation 12(8). 12. Detailed replies filed by the appellant to the three show cause notices but the Commissioner passed orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate to refer to the relevant provisions of the 2009 Regulations. 18. Regulation 5 deals with the conditions to be fulfilled by an applicant for custody and handling of imported goods or export goods in a customs area. The impugned orders have placed reliance upon regulation 5(2). It is reproduced below: 5. Conditions to be fulfilled by an applicant for custody and handling of imported or export goods in a customs area.- Any person who intends to be approved as a Customs Cargo Service provider for custody of imported goods or export goods and for handling of such goods, in a customs areas, hereinafter referred to as the applicant, shall fulfil the following conditions, namely:- (1) ***** ***** ***** the applicant shall undertake to bear the cost of the Customs officers posted, at such custom area, on cost recovery basis, by the Commissioner and shall make payment at such rates and in the manner prescribed, unless specifically exempted by an order of the Government of India in the Ministry of Finance. 19. Regulation 6 deals with responsibilities of Customs Cargo Service provider. The impugned orders rely upon regulation 6(1)(o). It is reproduced bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition set out in regulation 5(2) that requires the applicant to undertake to bear the cost of the custom officers posted on cost recovery basis and shall make payments at such rates and in such a manner as prescribed, unless specifically exempted by an order of the Government of India in the Ministry of Finance. Regulations 6 deals with the responsibilities of Customs Cargo Service Provider and one of the responsibilities set out in regulation 6(1)(o) is that the Customs Cargo Service Provider shall bear the cost of the custom officers posted by the Commissioner on cost recovery basis and shall make payments at such rates and in the manner specified by the Government of India in the Ministry of Finance unless specifically exempted by an order of the said Ministry. 22. The issue that arises for consideration in these appeals is as to whether the recovery of cost recovery charges could have been confirmed by the Commissioner exercising powers under regulations 5(2) and 6(1)(o) of the 2009 Regulations and whether penalty of Rs.5000/- could have been invoked. 23. As noticed above, the show cause notices dated 02.01.2018, 26.09.2018 and 22.11.2018 were issued to the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to bear the cost of officer deployed at their premises. Similarly, Regulation (12) of the CCAR does not prescribe for the recovery of defaulted cost recovery charge. But only states that the same is procedure for suspension or revocation of approval and imposition of penalty. 14. In view of above, we find that the learned Adjudicating Authority has not appreciated the legal provision as contained in HCR, referred above which do not indicate the machinery for realisation of cost recovery charge on account of being defaulted as is the case before us. In fact, we find that the show cause notice has invoked the provisions of Regulation 12 of HCCAR which does not provide for the realisation of the cost recovery charge but only revocation of the licence granted to CCSP on account of various breaches as contained therein. This regulation has no provisions for recovery of unpaid cost recovery charge on account of non-fulfilment of criteria as laid down in the CBEC circular. Thus, we find that the order passed by the learned Adjudicating Authority is beyond the scope of the provisions of HCCAR, 2009 more so when he has decided not to cancel the licence of the Appellant and only imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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