1. Introduction:
1.1 The Public Accounts Committee (PAC) in its 27th Report (2005-06) recommended formulating appropriate legal provisions and guidelines to control the activities of custodians. In pursuance of these recommendations, the Government inserted a new Section 141(2) to the Customs Act, 1962 and thereafter under its authority framed the Handling of Cargo in Customs Areas Regulations, 2009 (HCCR, 2009).
1.2 The HCCAR, 2009 provide for the manner in which the imported goods/ export goods shall be received, stored, delivered or otherwise handled in a Customs area. The regulations also prescribe the responsibilities of persons engaged in the aforesaid activities.
2. Salient features of the HCCAR, 2009:
2.1 The HCCAR, 2009 apply to all “Customs Cargo Service Providers” (CCSPs), who are persons operating in a Customs area and engaged in the handling of import/export goods. These include the custodians of imported/export goods and those handling such goods and all persons working on their behalf such as fork lift or material handling equipment operators, etc. Consolidators/ break bulk agents and other persons handling imported/export goods in any capacity in a Customs area are also covered.
2.2 The HCCAR, 2009 indicate various responsibilities and conditions for different kinds of CCSPs.
The conditions prescribed under its Regulation 5 apply to the CCSPs who desire to be approved as custodians of imported/export cargo and thus handle goods in Customs areas. These conditions shall not apply to persons who only provide certain services on their own or on behalf of the custodians.
2.3 Responsibilities prescribed in Regulation 6 of the HCCAR, 2009 apply to both custodians and persons who provide various services, though certain responsibilities specifically apply to one or the other category. For example, the responsibility for safety and security, pilferage of goods under their custody, disposal of uncleared, unclaimed or abandoned goods within the prescribed time limit, payment of cost recovery charges of the Customs officers posted in the facility are applicable to an approved custodian who handled imported or export goods. On the other hand, responsibilities for publishing or display of the schedule of charges for the activities undertaken in respect of imported/ export goods shall apply to both categories of persons. These responsibilities are aimed at expeditious clearance of goods, reduction of dwell time, transaction cost and safeguarding revenue.
2.4 As specified in Regulation 3 of the HCCAR, 2009, these regulations shall apply to handling of imported goods and export goods in Customs area specified under Section 8 of the Customs Act, 1962. This would cover all Customs facilities such as ports, airports, ICDs/CFSs and LCSs. Also, imported goods would cover goods under transshipment and all goods held under the custody of CCSP. However, these regulations do not apply to Customs bonded warehouse or to the warehoused goods covered by Chapter IX of the Customs Act, 1962.
2.5 Major ports notified under the Major Port Trusts Act, 1963 and airports notified under the Airports Authority of India Act, 1994 will continue to be authorized to function as custodians under their respective Acts and these regulations shall not impact their approval as a custodian. Thus, in terms of Section 45 of the Customs Act, 1962, the Port Trusts of the notified major ports and the Airports Authority of India shall not be required to make an application under Regulation 4 or 9 of the HCCR, 2009 for approval or renewal under these regulations. However, they would be required to discharge the responsibilities cast upon them as specified in its Regulation 6.
2.6 Regulation 5 of the HCCAR, 2009 provides the conditions to be fulfilled by an applicant who wishes to be appointed as a custodian of the imported/ export goods in a Customs area. This contains an exhaustive list of infrastructure and operational requirements for efficient handling of imported or export goods, though sufficient discretion is provided for the Commissioner of Customs to decide on the nature of infrastructure and equipment required. The requirement may vary between Customs areas at different places in the country. The Commissioner of Customs can also specify general standards or requirements such as height of boundary wall, quantum and specifications of material handling and other equipment etc., to ensure the facilities are adequate for effective and efficient handling of cargo.
2.7 Under Regulation 5(1) of the HCCAR, 2009, the infrastructure required to be provided by the custodian shall include the civil and electrical infrastructure including properly airconditioned office space, cabins with proper furniture, power backup facilities, hardware, networking and secure connectivity to Customs data centres for Customs officers and service centres specified by Customs. Facilities required for secure exchange of electronic information between the custodian and Customs shall also be provided. In addition, the custodian would undertake site preparation including civil works, electrical works, electrical fittings, air-conditioning, etc. and provide DG Set for power back up and link to the Customs EDI server. The networking, communication equipment, UPS, computers/personal computers/thin clients, servers, printers and other computer peripherals as may be specified by the Directorate General of Systems shall also be provided by the custodian.
2.8 Board has clarified that custodians already exempted from payment of cost recovery charges under Circular No. 27/2004-Cus., dated 6-4-2004 and Para 5.3 of Circular No.13/2009-Cus., dated 23-3-2009 would continue to avail the exemption even after issue of Circular No.4/2011-Cus., dated 10-1-2011.
2.9 Commissioner of Customs, subject to his satisfaction, should not insist for residential accommodation for staff from CCSP in cases where concerned facility of CCSP is located in the city area. The underlying idea is to provide for residential facilities for staff deployment at Customs facilities located in far flung and remote areas where it is difficult to have appropriate residential facility and which can not be easily commuted by the officers. Therefore, requirement of residential accommodation should not be insisted upon in cases where the location is commutable from the base town/city. Commissioner of Customs concerned should exercise due diligence before enforcing provisions of 5(1)(i)(b) of Notification No.96/2010-Cus (NT)., dated 12-11-2010. The type of residential accommodation to be provided to Customs staff would be determined as per entitlement of the officer of Central Government.
[Refer Circular No.29/2011-Cus., dated 18-7-2011, Notification No. 29/2019-Cus dated 01.04.2019]
CCSPs are required to have weigh bridges installed at their facilities preferably near the entry/exit gate and all containers must be weighed.
[Refer Instruction F.No.450/81/2011-Cus.IV, dated 18-8-2011]
2.10 In a large number of cases, containers detained by Directorate of Revenue Intelligence (DRI), Special Intelligence & Investigation Branch (SIIB) or Preventive formations are not being released for considerable time and this has caused undue hardship to shipping companies by paying exorbitant demurrage charges. One reason for longer detention can be lack of adequate space for storing such goods in a Customs area. In this regard, Board desires that sufficient space for custody / storage of detained imported / export goods should be provided by Customs Cargo Service Provider (CCSP) as per regulations 5 (1) (o) of the HCCAR, 2009 so that detained goods may be stored after de-stuffing from the containers and empty containers be returned to the concerned Shipping Line. Further, in terms of regulation 6 (1) (l) of the HCCAR, 2009 CCSP shall subject to any other law for the time being in force not charge any rent or demurrage on detained goods. In case containers are detained / seized under the Customs Act, 1962, the same may be considered for provisional release subject to furnishing of Bond and Bank Guarantee under the Customs Act, 1962.
[Refer Instructions F. No.450/24/2012-Cus.IV, dated 14-3-2012]
2.11 Regulation 5(2) of the HCCAR, 2009 requires the custodian to pay cost recovery charges in respect of the Customs officers deployed at the ICD/CFS/port/airport etc., unless exempted by a specific order or a circular or instructions issued by the Ministry of Finance. Presently, payment of cost recovery charges in respect of ports and airports has been exempted for three categories of custodians, as follows:
(i) Custodians notified under Section 45 of the Customs Act, 1962 prior to 26-6- 2002 and there is no change in custodianship or area after 26-6-2002;
(ii) Custodians notified prior to 26-6-2002 but part or whole of the same premises is transferred (on lease or otherwise) to new custodian on or after 26-6-2002 (e.g. AAI, custodian of Mumbai Air Cargo Complex prior to 26-6-2002 later transferred part custodianship to Air India); and
(iii) Custodians notified prior to 26-6-2002 but premises extended after 26-6-2002 under the same custodianship.
[Refer Circular No.27/2004-Cus., dated 6-4-2004]
2.12 The Greenfield Airports Policy framed by the Government and notified by the Ministry of Civil Aviation specifies that the applicant for setting up of a greenfield airport will obtain clearance from the Department of Revenue for provision of Custom services and the cost of providing these services will be borne by the Airport Company.
2.13 Regulation 6(1)(m) of the HCCaR, 2009 deals with disposal of imported or export goods lying unclaimed, uncleared or abandoned in ICDs/CFSs/Customs areas by the CCSP who is holding custody of such goods. Proper and timely disposal of unclaimed, uncleared or abandoned goods is to be ensured.
[Refer Circular No.50/2005-Cus., dated 1-12-2005]
2.14 In order to ensure security of premises and to prohibit unauthorized access of person in the Customs area all CCSP/ Custodians should provide CCTV/ Video Camera and give video footage of the same to the Customs Officer who shall monitor it regularly.
[Refer Circular No 3/2013-Cus., dated 1-1-2013]
2.15 Cases of lease, gift, sale or subletting or transfer of the premises in any other manner, in a Customs area by major ports may be firstly examined to see whether required permission from the Central Government / Ministry / Cabinet Committee has already been obtained or not. In cases where appropriate authority has already given this permission, then necessary written permission may also be given by the Commissioner for such lease or transfer. On the contrary, if no approval of the Government has been obtained, then appropriate action may be initiated against the erring Custodian under the said Regulations and the Customs Act, 1962. Thus, further permission from the Commissioner of Customs would not be required in respect of PPP projects approved by the Government / PPA Appraisal Committee or Cabinet Committee on Infrastructure.
[Refer Circular No.54/2011-Cus., dated 29-12-2011]
2.16 The power to exempt the conditions required to be fulfilled by CCSPs is provided under Regulation 7 of the HCCAR, 2009 to the Commissioner of Customs. For example, the requirement of sufficient facilities for installation of scanning equipment may not be an immediate requirement in respect of ICD/CFS who have established their operations as new custodian. However, when this requirement becomes a necessity, then these conditions may have to be fulfilled by such custodian at that point of time. Hence, the Commissioner of Customs needs to examine individual cases where exemptions are sought to be given to the custodian and record the reasons in writing before providing exemptions. However, no exemption shall be granted in respect of any of the conditions in Regulation 5 where the overall safety and security of the premises are likely to be affected thereby.
2.17 In order to overcome situations where clearances of imported/ export goods are getting affected by congestion at a particular Customs facility (e.g. CFS), it has been provided that the Commissioner of Customs may consider regulating the entry of goods in that particular CFS for a temporary period, say, 15 days, in terms of Regulation 7(2) of the HCCAR, 2009. In such cases, the Commissioner of Customs may not allow any import/ export cargo to be received and handled in the facility or may allow such reduced quantity as considered sufficient for being handled efficiently for such temporary period till the congestion is cleared and the delay in clearance of goods is sorted out.
2.18 In terms of Regulation 9 of the HCCAR, 2009, at the time of submission of applications for acquiring custody and handling of imported/export goods, the applicant shall provide complete details of the facility such as extent of the area, equipment, infrastructure etc. for receiving, unloading/loading, stacking, storage, delivery of imported/ export goods including the map. Further, the projected capacity of the cargo or container proposed to be handled at the premises, would form the basis for determining the adequacy of the infrastructural facilities and bond or bank guarantee, wherever applicable. For example, in respect of containers, the volume in terms of Twenty feet Equivalent Units (TEUs) may be ascertained. As regards X-Ray scanning equipment, the custodians are expected to provide for suitable land and other site requirements, but the actual scanning equipment would be installed by the Customs department subject to conditions as may be prescribed.
2.19 Only such CCSPs who wish to be appointed as custodian of imported/ export goods need to take approval as specified in Regulation 10 of the HCCAR, 2009. CCSPs who either operate on behalf of the custodian or with his permission, do not require any approval. However, custodian will be responsible for fulfilment of the conditions of these regulations by such CCSPs.
2.20 The procedure for approval of appointment, renewal, suspension or revocation of CCSP as per Regulations 10 to 13 of the HCCAR, 2009 is based upon transparency and objectivity. Cases involving outright transfer of custodianship, leasing of premises without informing Customs, subletting, sub-contracting, outsourcing, gift or lease of any of the services of CFS/ICD have to be dealt by the jurisdictional Commissioner of Customs. In case of violations of the conditions or obligations prescribed under the regulations, necessary action may be taken against the erring CCSP including imposition of penalty. Further, action would need be initiated against the CCSP, wherever lack of infrastructure facilities is noticed leading to deterioration in services or damage of imported or export goods, loss of value and loss of revenue etc. In case of CCSP authorized under the Authorised Economic Operator (AEO) Programme, the approval granted may be extended for a period of ten years at a time.
[Refer Instructions F.No.450/105/2008-Cus.IV, dated 25-7-2008]
2.21 All the CCSPs are required to publish a schedule of charges associated with various services in relation to imported or export goods in the Customs area and its display at prominent places including webpage or website of the CCSP. It has also been clarified that no exemption is available to existing custodians / CCSPs in so far as the provisions of facilities and fulfilment of prescribed conditions in Regulation 5 & 6, as applicable, within the specified limits are concerned.
2.22 Custodians under the Major Port Trusts Act, 1963, and Airports Authority of India Act, 1994 shall not be required to make an application under Regulation 4 or 9 for approval or renewal under these regulations, but they are required to necessarily discharge the responsibilities cast upon them in terms of Regulation 5 and 6.
2.23 The CCSP will also undertake to indemnify the Commissioner of Customs from any liability arising on account of damages caused or loss suffered on imported or export goods, due to accident, damage, deterioration, destruction or any other unnatural cause during their receipt, storage, delivery, dispatch or otherwise handling by furnishing an indemnity bond.
2.24 No relaxation or exemption from requirements on safety and security of premises shall be allowed by the Commissioner of Customs to the custodians or CCSPs in terms of provisions of Regulation 7 of HCCAR, 2009. also keeping in view the paramount importance of overall safety and security of imported / export goods, detailed guidelines are prescribed to ensure that all concerned persons ensure that suitable arrangements are put in place for safety and security of premises relating to imported or export goods.
2.25 The HCCAR, 2009 provide for levy of penalty in case the CCSP contravenes any of the provisions of the regulations or fails to comply with the regulations. However, these provisions do not impact the past proceedings against the custodian, if any, where necessary action has been initiated against erring custodians.
2.26 For the purposes of Regulation 6 (1) of HCCAR, the following officers are notified as Proper Officers as discussed in Table 28.1.
Table 28.1: Notified Proper Officer for purposed of Regulation 6 (1) of HCCAR
| S. No. | Clause under Regulations 6(1) | Designation of the Proper Officer |
| 1 | A | Inspector of Customs or Preventive Officer or Examining Officer |
| 2 | F | Superintendent of Customs or Appraisers |
| 3 | g, h, k | Deputy Commissioner or Assistant Commissioner of Customs |
| 4 | L | Superintendent of Customs or Appraiser or Inspector of Customs or Preventive Officer or Examining officer |
2.27 Regulation 5(1)(iii) of HCCAR, 2009 provides that CCSPs shall provide to the satisfaction of Commissioner of Customs, insurance for an amount equal to the average value of goods likely to be stored in the customs area based on projected capacity and for an amount as Commissioner of Customs may specify having regard to the goods which are already been insured by the importers or exporters. Board has clarified that the amount of insurance to be provided by CCSPs should be equal to the average value of goods likely to be stored in the Customs area for a period of 30 days (based on projected capacity), and for an amount the Commissioner of Customs may specify having regard to the goods already insured by the importers or exporters.
2.28 Regulation 5(3) of HCCAR, 2009 mandates CCSPs shall execute a bond equal to the average amount of duty involved on imported goods and 10% of the value of export goods that is likely to be stored in the customs area during a period of 30 days and furnish a bank guarantee or cash deposit equivalent to ten percent of such duty. Board has appreciated that there is justification in increasing the validity period of the bond, which would remove procedural hassles. Therefore, noting that under Regulation 10 of HCCAR, 2009, the new CCSPs are approved initially for 2 years, which is renewed for 5 years at a time, while existing CCSPs are straightaway approved for 5 years, it is clarified that the carrier bond executed by CCSPs i.e. ICDs/CFSs shall have a validity period of 2 years (in case of new CCSP which can be renewed for 5 years) or 5 years (in case of existing CCSP).
2.29 Ministry of Agriculture has raised the issue of temporary ban on Import of Rice and Peanuts from India due to detection of quarantine pest in an import consignment and highlighted that CFSs conducting phytosanitary measures have no designated area for fumigation and separate storage for keeping fumigated/ treated cargo which leads to cross contamination from untreated goods/commodities. Ministry of Agriculture has desired that facilities provided by CFSs should be improved to ensure that treated cargo is adequately sanitized in a separate storage enclosure. Board has therefore decided that all CCSP/Custodians shall provide separate and dedicated storage space for fumigation and post fumigated storage sites to enable Plant Quarantine Authorities to carry out necessary checks for both imported / export goods under the Handling of Cargo in Customs Area Regulations, 2009.
2.30 In order to obviate the situation of compromising cargo integrity on account of subcontracting operations relating to handling of import / export cargo, under no circumstances, CCSPs shall lease, gift, sell or sublet or in any other manner transfer any of the premises in a Customs area; or sub contract or outsource functions permitted or required to be carried out by him in terms of these regulations without written approval of the jurisdictional Commissioner of Customs. Jurisdictional Commissioners of Customs are required to review the conditions and obligations to be fulfilled by CCSP under HCCAR, 2009 and promptly initiate remedial action in case noncompliance is noticed. Cases of violation of regulation 6(2) shall be dealt with sternly according to law.
2.33 CBEC has prescribed comprehensive guidelines on safety and security of premises where imported or export goods are loaded, unloaded, handled or stored. Pursuant to the decision of the High Court in the Writ Petition No. 3651/2011, a joint Technical Committee comprising of Members from MoEF, Ministry of Shipping, CBEC, Port Trust, etc., was constituted to give recommendations on the distance(s) to be maintained between the hazardous cargo and the general cargo in the customs area on one hand and between the hazardous cargo and the administrative building on the other. Based on the recommendations, Board has accordingly prescribed the distance to be maintained between hazardous cargo including explosives and general cargo or administrative building in a Customs area.
[Refer Circulars No. 52/97-Cus., dated 17-10-1997, No.80/98-Cus., dated 26-10-1998, No.27/2004-Cus., dated 6-4-2004, No.13/2009-Cus., dated 23-3-2009, No.18/2009-Cus., dated 8-6-2009, No.21/2009-Cus., dated 4-8-2009, No.4/2011-Cus., dated 10-1-2011, No. 16/2013- Cus IV, dated 10-4-2013, No.32/2013 Cus., dated 16-8-2013 and No.45/2013Cus., dated 31-12-2013 and Instruction F.No.450/19/2005-CusIV., dated 23-7-2013, Circular 42/2016-Customs dated 31.08.2016, Circular 40/2016-Customs dated 26.08.2016]
2.34 As part of Government’s initiatives for improving “Ease of Doing Business”, it has emerged that introduction of electronic messaging for issue of Delivery Order instead of a paper based Delivery Order will result in considerable simplification in the Customs Clearance process, and can demonstrably reduce transaction costs and time taken in the clearance of Cargo. To implement the electronic Delivery Order System, as a prerequisite, the Custodian should have the technical capability to implement an electronic messaging system for the receipt of electronic Delivery Order. Apart from the above prerequisites, it will facilitate trade if Shipping Lines, Airlines and Consol Agents can adopt a system of electronic invoicing of all charges along with the facility to conclude the payment process using e-Payment facilities. In respect of some categories of imports, namely – unaccompanied baggage, Direct Delivery, and one-time individual importers, the Shipping Line/ Airline may retain manual (i.e. paper copy) of the Delivery Order, if desired. Further, if for technical reasons, in case of any failure of the system of electronic transfer of Delivery Order, the concerned Shipping Line/ Airline or Consol Agent may issue manual Delivery Order, as a purely temporary measure, in order to avoid any difficulty or delay in clearance of imported goods.
[Refer Circular No.24/2015-Customs dated 14.10.2015]
2.35 Board has decided to extend 24×7 customs clearance to all bills of entry and not just facilitated bills of entry. It has amended the Customs (Fees for Rendering Services by the Customs Officers) Regulations, 1998 to provide that at 24×7 customs ports, CFSs attached to it and airports, no fee i.e. merchant overtime fee (MOT) shall be collected in lieu of the services rendered by the customs officers. Thus, as on date no MOT charges are required to be collected in respect of the services provided by the customs officers at 24×7 customs ports and airports.
[Refer Circular No.04/2017-Customs dated 16.02.2017]
3. Posting of staff at Customs areas and collection of Cost Recovery Charges
3.1 Applicability
3.1.1 The requirement that the custodian shall bear the cost of Customs staff posted at Customs area shall apply to all Customs areas such as Seaports, Airports, Air Cargo Complexes, Courier Terminals, Diamond Plazas, ICDs, and CFSs, notified after 26.06.2002.
3.1.2. The requirement that the custodian shall bear the cost of Customs staff posted at Customs area shall not apply in the following cases:
a. the facility notified under Section 45 of the Customs Act, 1962, before 26.06.2002 with no change in custodianship or area after 26.06.2002;
b. the facility notified before 26.06.2002 but part or whole of the same premises transferred
(on lease basis or otherwise) to a new custodian, on or after 26.06.2002 (e.g. Airport Authority of India is custodian for the whole Mumbai Air Cargo Complex upto 26.06.2002, and after 26.06.2002 they have transferred the custodianship for the part of Air Cargo Complex to Air India); and
c. the facility notified before 26.06.2002, but premises extended after 26.06.2002 under the same custodianship.
3.1.3 The conditions and obligations already being discharged by the earlier custodian for such facilities such as Air Cargo Complexes, Courier Terminals or Ports to be retained and applied to the new custodian. This shall also be applicable in case of transfer of ownerships.
3.2 Staffing Norms
3.2.1 The staffing norms for sanction of posts on cost recovery basis at various Customs facilities are as discussed below as shown in Table 28.2.
Table 28.2: staffing norms for sanction of posts on cost recovery basis at various Customs
|
Customs Facility |
Deputy/Asst. Commissioner | Appraiser/ Superintendent | Examiner/ Inspector | EA | Hawaldar | Total |
| Sea Port | 2 | 4 | 12 | 2 | 12 | 31 |
| Air Cargo Complex | 2 | 8 | 12 | 4 | 5 | 31 |
| Courtier Terminal | 4 | 9 | 12 | 4 | 8 | 37 |
| Diamond Plaza | 1 | 4 | 8 | 2 | 4 | 19 |
| ICD (approved for only handling export cargo) | 1 | 1 | 1 | 1 | 2 | 7 |
| ICD (approved for handling both export and import cargo) | 1 | 2 | 2 | 2 | 2 | 13 |
| CFS | 0 | 1 | 1 | 1 | 1 | 4 |
| Class A Airport1F2 |
4 | 38 | 78 | 0 | 24 | 144 |
| Class B Airport2F3 |
4 | 29 | 48 | 0 | 16 | 97 |
| Class C Airport3F4 |
0 | 8 | 16 | 0 | 4 | 28 |
3.2.2. In the initial stages of operation of a facility due to less volume of work, full strength of the officers may not be required. In such cases, if the facility requests, the Principal Commissioner or Commissioner of Customs may, after his consideration, post less than the sanctioned strength of officers. Gradually, when the business picks up, the full contingent of staff may be posted.
3.3 Creation of posts on the basis of Cost Recovery Charges
3.3.1 Creation of cost recovery posts is essential before issuance of necessary notifications by the jurisdictional Commissioners of Customs to operationalize a facility as a customs area. The jurisdictional Principal Commissioner or Commissioner of Customs shall forward the proposals for the creation or continuation of posts on cost recovery basis to DGHRD (and not to the Board directly).
3.3.2 Initially, the validity of posts on cost recovery basis is one year. The jurisdictional Principal Commissioner or Commissioner of Customs shall send the proposals to DGHRD for continuation of the posts created on cost recovery basis at least two months before the expiry of the validity, so that the Department of Expenditure gets sufficient time for considering the proposals; as the Department of Expenditure takes adverse note of delay in seeking permission in cases where such proposals are sent after the expiry of the validity of the posts created.
3.3.3 The proposals for creation/continuation of posts shall be in terms of the Department of Expenditure’s stipulations from time to time in this regard4F5.They shall contain all the relevant information as per Appendix-I. DGHRD shall process these proposals without delay and convey the decision thereon to the field formations concerned with a copy marked to the Board.
3.4 Payment of Cost Recovery Charges5F6
3.4.1 The Cost Recovery Charges shall be payable by facilities at the uniform rate of 1.85 times of the monthly average cost6F 7 of the post plus other allowances (such as Dearness Allowance, House Rent Allowance, etc.) For this purpose, the following factors may also be kept in view for working out the cost regarding all the cost recovery posts:
i. additional dearness allowance as and when sanctioned by the government should be considered, and arrears shall be recovered; and
ii. if the relevant staff is in possession of government accommodation and do not draw house rent allowance. Even then, the notional house rent allowance as admissible to them should be taken into account on cost recovery basis.
3.4.2 The Cost Recovery Charges would be payable in respect of officers actually deployed at the facility. Where the officers are posted in excess of norms, Cost Recovery Charges for such excess number of officers shall be payable. However, this situation shall not ordinarily arise. If a particular officer is given charge of more than one facility, the Cost Recovery Charges shall be apportioned amongst the facilities concerned.
3.4.3 Cost Recovery Charges shall be payable from the first day of the month in which the facility commences its operation and it shall be paid in advance for every quarter.
3.4.5 If the facility fails to deposit the Cost Recovery Charges in advance, for any particular quarter, and in case such charges remain unpaid either wholly or partly, the deployment of staff at the facility should not be abruptly put on hold. The Principal Commissioner or Commissioner of Customs concerned may consider the facility operator’s financial contingencies and on case to case basis may allow a certain period of delay (not more than three months at a time and not on more than two occasions) in payment with interest. The interest in such cases shall be at the rate specified for delayed payment of duty under the Customs Act, 1962. A public display in this regard shall be made so that the trade can clear the containers that have already entered the facility. And for non-payment of advance, the entry of containers would be restricted till pending dues with interest are paid so that the facility does not have any uncleared containers once it is to be shut down.
3.5 Eligibility for Exemption from Cost Recovery Charges
3.5.1 The cost recovery posts should have the Department of Expenditure’s specific permission for continuation before seeking/claiming exemption in respect of any given Customs facility.
3.5.2 The facilities are eligible to apply for exemption from payment of Cost Recovery Charges upon fulfilling the performance criteria as given in the table below. The facilities shall claim exemption if they meet both the criteria (Criterion-I and Criterion-II) in preceding two financial years or any one of the criteria (Criterion-I or Criterion-II) in preceding four financial years, which are discussed in Table 28.3.
Table 28.3: Eligibility criterion for various facilities to apply for exemption from payment of Cost Recovery Charges
| Facility | Criterion – I (Volume/Value of Cargo/flights handled in a year) | Criterion – II (Number of Documents/Passengers handled in a year) |
| Sea Port | 6 lakh metric tons | 3000 Documents |
| Air Cargo Complex | 12,000 metric tons | 35,000 Documents |
| Courier Terminal | 1.5 lakh packages | 20,000 Documents |
| Diamond Plaza | Rs. 15,000 Cr | 12,000 Documents |
| ICD (both export & import) | 7200 TEUs | 7200 Documents |
| ICD (only export) | 3600 | 3600 Documents |
| CFS | 1200 TEUs | 1200 Documents |
| Airport | 3500 flights | 3 lakhs Passengers |
3.5.2.1 The exemption from the Cost Recovery Charges shall be available only to common use facilities and not to any facility used exclusively by a private entity, even if they meet any of these benchmarks.
3.5.2.2 As mentioned earlier, the cost recovery posts that were sanctioned or diverted from the regular cadre strength to the various Customs facilities before 18.12.2013 (date of issuance of Cadre Restructuring Notification) were subsumed in the regular cadre strength of CBIC at that time7F 8 . Accordingly, the Chief Commissioners were authorized to grant exemption from payment of Cost Recovery Charges for the eligible facilities8F9.
3.5.2.3 In respect of all the cases for which exemption from cost recovery charges have not yet been granted though applications for the same are received, and all other cases for which applications would be received hereinafter, the exemption from the payment of Cost Recovery Charges shall be subject to the following conditions:
a. the facility should have achieved the benchmark performance as prescribed in para 8.2;
b. the application for the exemption from Cost Recovery Charges is complete in all respects (in case any deficiency is noticed, the Commissionerate shall issue a deficiency memo for the applicant to complete the application);
c. the exemption will be effective from the beginning of the fourth month from the date of issuance of this Circular or the date of receipt of the complete application, whichever is later;
d. the facility shall not have any other dues to be paid under the Customs Act, 1962;
e. no investigation under the Customs Act, 1962, shall be pending against the facility;
f. the payment of Cost Recovery Charges would be up-to-date;
g. the exemption shall be prospective from the fourth month onwards; and
h. conditions specified at para 9.1. below.
3.5.2.4 DGHRD shall complete the regularization process and obtain the approval of the competent authority within a period of three months in order to enable the exemption to be available from the beginning of the fourth month, as per para 8.5 above.
3.6 Withdrawal of exemption granted
3.6.1. Facilities shall continue to meet the Criterion-I or the Criterion-II or both, as the case may be, in the years subsequent to grant of exemption. If any facility fails to do so, a grace period of one year will be given within which it should meet the same. The exemption will be withdrawn if a facility does not meet the criteria even after the lapse of one-year grace period. 28.3.6.2. The jurisdictional Principal Commissioner or Commissioner of Customs shall therefore, monitor the performance of the facilities under their charge and take immediate measures, including recourse to para 7.1 to 7.4 above, in cases warranting withdrawal of exemption from Cost Recovery Charges.
3.7 Procedure for claiming/grant of exemption
3.7.1 The eligible facility may apply for exemption from Cost Recovery Charges to the jurisdictional Principal Commissioner or Commissioner of Customs.
3.7.2 The jurisdictional Principal Commissioner or Commissioner of Customs shall forward the proposal for regularization of posts to DGHRD through the respective Principal Chief Commissioner or Chief Commissioner of Customs within 15 days. The proposal shall be sent in the format prescribed under Appendix-II.
3.7.3 DGHRD will process such proposal in a time-bound manner so that the regularization of the post is in place within three months of application for exemption from payment of cost recovery charges.
3.8 De-notification and Cost Recovery Charges
3.8.1. If the facility is required to be de-notified for any reason, the Cost Recovery Charges should be payable until the date of such de-notification. DGHRD may take necessary steps during this period to surrender the sanctioned/regularized posts.
3.8.2. If a facility is de-notified in the middle of a quarter for which the Cost Recovery Charges are deposited in advance, the actual Cost Recovery Charges until the de-notification date shall be calculated on pro-rata basis, and excess deposit if any, shall be refunded to the entity. It may be noted that such refund shall not be treated as the refund of duty under Section 27 of the Customs Act, 1962. Instead, General Financial Rules (GFRs) shall be applied in such cases.
[Refer Board’s Circular 02/2021-Customs dated 19.01.2021]
Refer Board’sCircular 02/2021-Customs dated 19.01.2021 for Appendix -I Proposal for creation/continuation of posts on Cost Recovery basis
Refer Boards Circular 02/2021-Customs dated 19.01.2021 for Appendix -II Proposal for grant of exemption from Cost Recovery Charges
4. Eligibility norms for exemption from cost recovery charges:
4.1 Cost recovery charges may be waived if the facility fulfils the laid down norms for a consecutive period of two financial years. Specific orders in individual cases for grant of exemption from the payment of cost recovery charges are issued by Ad.IV Section of the Board. The cost recovery posts are also considered for regularization. In each and every case the waiver of cost recovery charges would be prospective with no claim for past period.
4.2 ICD/CFS: The eligibility performance norms for the grant of exemption from cost recovery charges in respect of Customs staff posted at ICDs/CFSs are as discussed in Table 28.4.
Table 28.4: Eligibility performance norms for the grant of exemption from cost recovery charges in respect of Customs staff posted at ICDs/CFSs
| (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 B/E processed by ICDs / CFSs | 7200 per annum for ICDs and 1200 for CFSs |
| Note: Benchmark at (i) to (iii) shall be reduced by 50% for these ICDs / CFSs exclusively dealing with exports as per staffing norms. | |
[Refer Instruction F.No.434/17/2004-Cus-IV, dated 12-9-2005
Note: Benchmark at (i) to (iii) shall be reduced by 50% for these ICDs / CFSs exclusively dealing with exports as per staffing norms.
[Refer Instruction F.No.434/17/2004-Cus-IV, dated 12-9-2005]
4.3 Sea Ports, Air Cargo Complexes, Courier Terminals and Diamond Plaza: The eligibility performance norms for the grant of exemption from cost recovery charges in respect of Customs staff posted at Sea Ports, Air Cargo Complexes, Courier Terminals and Diamond Plaza are discussed in Table 28.5.
Table 28.5: The eligibility performance norms for the grant of exemption from cost recovery charges in respect of Customs staff posted at Sea Ports, Air Cargo Complexes, Courier Terminals and Diamond Plaza
| FacilityFacility | Minimum Annual Volume/Value of Import Minimum Annual Volume/Value of Import & Export Cargo& Export Cargo |
Minimum Annual Number of DocumentsBills Entry/Shipping Bills |
| Sea Port | 6 Lakhs MTs | 3,000 |
| Air Cargo Complex |
12,000 MTs | 35,000 |
| Courier Terminals | 1.5 Lakh Packages | 20,000 |
| Diamond Plaza | Rs.15,000 Crores | 12,000 |
Note: Both performance norms (cargo and documents) would be reduced by 50% for facilities that handle only import or export cargo.
4.4 Airports: Minimum number of international flights is 3500 (both incoming and outgoing) and the minimum number of passengers is 3 lakhs (both incoming and outgoing) in each of the preceding two financial years.
4.5 The conditions for grant of exemption from payment of cost recovery charges for all facilities viz. Sea Ports, Air Cargo Complexes, Courier Terminals, Diamond Plazas and Airports shall be as follows:
(a) Both performance norms i.e. volume/value and number of documents in case of Sea Ports, Air Cargo Complexes, Courier Terminals, Diamond Plazas and number of international flights and number of passengers in case of Airports must be met in each of the preceding two financial years.
(b) Exemption from cost recovery charges shall be prospective; and
(c) No cost recovery charges should be outstanding.
Based upon the aforementioned norms, jurisdictional Commissioners would review the existing facilities and send proposals for waiver of cost recovery charges to DG, HRD, CBEC.
[Refer Circular No. 02/2021 dated 19.01.2021]
Notes:
2 Class A Airport is the one which handles more than 12000 international flights / 10 lakhs passengers per annum.
3 Class B Airport is the one which handles 6000 to 12000 international flights/5 to 10 lakhs passengers per annum.
4 Class C Airport is the one which handles less than 6000 international flights/5 lakhs passenger per annum.
5 O.M. No. 7(1)/E.Coord.I./2017 dated 12.4.2017
6 Board’s F.No. A-11018/9/91-Ad.IV dated 1.4.1991
7 The average cost shall be calculated based on the pay matrix for the particular post.
8 G R ’s Instruction .No. 8/B/28/ R (E )/ RB/2014 t. dated 03.11.2015
9 Board’s letter . No. 450/41/2010 us. ( t). dated 28.10.2015
Source – Custom Duty Manual 2023
