Goodearth Maritime Limited Vs Commissioner of Customs (CESTAT Ahmedabad)
Conclusion: Since no services were being specially provided by the customs officials to the custodians at a customs port or customs airport, to enable them to collect any fee, from such a custodian thus, High Court not only set-aside the demand of Cost Recovery charges but even held that Regulation 5(2) of Regulation 2009 was illegal.
Held: Appellant M/s. Goodearth Maritime Limited was appointed as Custodian of the goods meant for loading of salt for export/import and costal movement under Section 45(1) of the Customs Act, 1962 vide Notification No. 09/2002/CC dated 23.04.2002, subject to fulfilment of various conditions mentioned therein. A letter was issued by the Assistant Commissioner of Customs to appellant allowing them to operate / continue their jetty on payment of Merchant Over Time (MOT) charges as per Customs (Fee for Rendering Services of /Customs officers) Regulations, 1998 whenever they required services of /Customs officers of their jetty till separate posting of Customs staff had been made on Cost Recovery Basis. On the basis of the aforesaid letter, M/s. Goodearth Maritime Limited, Jakhau, was paying MOT charges for the services rendered by the Customs officers at their jetty. A show-cause notice was issued to the appellant in terms of Regulations 5(2) of the HCCAR, 2009 the Customs Cargo Service Provider (CCSP) had undertaken to bear the cost of the Customs officers posted, at their jetty, on cost recovery basis by the Commissioner of Customs and to make payments at such rates and in the manner prescribed, unless specifically exempted by an order of the Government of India in the Ministry of Finance. Further, as per Regulation 6(1)(o) of the HCCAR, 2009, it was the responsibility of the CCSP 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 the manner as specified by the Government of India in the Ministry of Finance, unless specifically exempted by an order of the said Ministry. CCSP started to pay establishment charges on Cost Recovery basis from April, 2015 onwards and have paid the Cost Recovery charges upto December, 2017. However, till date they had not paid Cost Recovery Charges for the work handled by the Customs officers/staffs posted, during the period 17.03.2009 to 31.03.2015 amounting to Rs. 1,42,81,265/- as per the provisions of the HCCAR, 2009. However, the CCSP had paid charges on MOT basis during the period 17.03.2009 to 31.03.2015. 7. In view of the above contention, it was alleged that the CCSP had not paid the cost recovery charges for the Customs staff posted at their private jetty, during the period 17.03.2009 to 31.03.2015, and hence, the CCSP being Custodian had contravened the provisions/conditions of the Notification No. 09/2002 dated 23.04.2002 read with Regulation 6(1)(o) of HCCAR, 2009, by not paying the Cost Recovery charges for the Customs Staff posted at the said jetty and thus their Custodianship was found liable to suspension / revocation. Further, the CCSP was also found liable to penalty in terms of Regulation 12 (8) of HCCAR, 2009. It was held that no services were being specially provided by the customs officials to the custodians at a customs port or customs airport, to enable them to collect any fee, from such a custodian. “Cost Recovery” of the salaries and allowances paid to the customs officials was only a dignified form of collection of a fee. Since, no services were specially or generally provided to the custodian, no such fees was liable to be charged. Regulation 5(2) of Regulations, 2009 had no legal substratum to survive and accordingly the consequential levy made on the appellant by the respondents towards cost recovery charges was wholly unsustainable. High Court not only set-aside the demand of Cost Recovery charges but even held that Regulation 5(2) of Regulation 2009 was illegal.
FULL TEXT OF THE CESTAT JUDGEMENT
The Private Jetty of M/s. Goodearth Maritime Limited a Sub-Licensee of M/s. Well Brines Chemicals Limited (now M/s. Jakhau Salt Company Pvt. Limited), the original Licensee, situated at Salt Pield, Jakahu Taluka Abdasa, Kutch, was declared as a Landing Place under Section 8(a) of Customs Act, 1962, by the Commissioner of Customs, Ahmedabad, vide Notification No. 08/2002/CC dated 23.04.2002 and M/s. Goodearth Maritime Limited was appointed as Custodian of the goods meant for loading of salt for export/import and costal movement under Section 45(1) of the Customs Act, 1962 vide Notification No. 09/2002/CC dated 23.04.2002, subject to fulfilment of various conditions mentioned therein.
2. A letter bearing F. No. VIII/48-06/CUST(T)/2001-02 dated 05.05.2003 was issued by the Assistant Commissioner of Customs, Bhuj Division, Kandla, to M/s. Goodearth Maritime Limited, Jakhau, allowing them to operate / continue their jetty on payment of Merchant Over Time (MOT) charges as per Customs (Fee for Rendering Services of /Customs officers) Regulations, 1998 whenever they require services of /Customs officers of their jetty till separate posting of Customs staff has been made on Cost Recovery Basis. On the basis of the aforesaid letter, M/s. Goodearth Maritime Limited, Jakhau, was paying MOT charges for the services rendered by the Customs officers at their jetty.
3. A show cause notice bearing 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 exceeding a period of one year as the Commissioner of Customs may allow from the date of coming into force of these Regulations.
4. In terms of Regulations 5(2) of the HCCAR, 2009 the CCSP has undertaken to bear the cost of the Customs officers posted, at their jetty, on cost recovery basis by the Commissioner of Customs and to make payments at such rates and in the manner prescribed, unless specifically exempted by an order of the Government of India in the Ministry of Finance. This condition was already in existence as per S. No, 13 of Notification No, 09/2002/CC dated 23.04.2002 issued under Section 45 of the Customs Act, 1962. Further, as per Regulation 6(1)(o) of the HCCAR, 2009, it is the responsibility of the CCSP 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 the manner as specified by the Government of India in the Ministry of Finance, unless specifically exempted by an order of the said Ministry.
5. Further, in pursuance of the above facts as also narrated in the letter F. No. VIII/20-20/Amend/Cus(T)/2014-15 dated 08.05.2015, addressed to the CCSP, the Superintendent (Tech.) Customs Division, Bhuj, requested them to pay Cost Recovery Charges with effect from 17.03.2009 i.e. after introduction of HCCAR, 2009 vide Notification No. 26/2009-Cus (NT) dated 17.03.2009.
6. The CCSP started to pay establishment charges on Cost Recovery basis from April, 2015 onwards and have paid the Cost Recovery charges upto December, 2017. However, till date they have not paid Cost Recovery Charges for the work handled by the Customs officers/staffs posted, during the period 17.03.2009 to 31.03.2015 amounting to Rs. 1,42,81,265/- as per the provisions of the HCCAR, 2009. However, the CCSP has paid charges amounting to Rs. 18,41,005/- on MOT basis during the period 17.03.2009 to 31.03.2015.
7. In view of the above contention, it was alleged that the CCSP have not paid the cost recovery charges for the Customs staff posted at their private jetty, during the period 17.03.2009 to 31.03.2015, and hence, the CCSP being Custodian has contravened the provisions/conditions of the Notification No. 09/2002 dated 23.04.2002 read with Regulation 6(1)(o) of HCCAR, 2009, by not paying the Cost Recovery charges for the Customs Staff posted at the said jetty and thus 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 Rs. 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 Rs. 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 Rs. 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 terms of Regulation (11(i) of HCCAR, 2009.
Therefore, the present appeal filed by the appellant.
8. Shri Naresh Satwani, learned Consultant appearing on behalf of the appellant submits that the Adjudicating Authority’s conclusion that after introduction of HCCAR, 2009, the appellant fall under the ambit of HCCAR, 2009 in terms of Regulation 4 and required to pay Cost Recovery Charges, is erroneous. As the appellant was appointed as Custodian and the goods meant for loading of salt for export/import and costal movement under Section 45(1) of the Customs Act, 1962 vide Notification No. 9/2002/CC dated 23.04.2002 issued by Commissioner of Customs, Gujarat Ahmedabad subject to fulfillment of various conditions as mentioned therein. Apart from other condition, the condition No. 13 states that ―The custodian shall bear the establishment charges for the Custom Staff posted for the said Jetty. The Deputy Commissioner Customs, Bhuj shall decide the staff to be posted at jetty considering the workload at Jetty.” He submits that instead of posting separate staff for our Jetty, Assistant Commissioner of Customs, Bhuj Division vide letter F.No. VIII/48-06/CUS (T)/2001-02 dated 05.05.2003 allowed the appellant to operate/ continue appellant’s jetty on payment of MOT charges as per Customs (Fees for Rendering Services of Customs officers) Regulations, 1998 till separate posting has been made on cost recovery basis by the office of Assistant Commissioner of Customs, Bhuj Division. It is his submission that HCCAR, 2009 is applicable only when dedicated staff is posted at Jetty. In the present case, it is admitted fact that no dedicated staff was posted. Therefore, the order issued by Assistant Commissioner Customs dated 05.05.2003 was in force and according to which the appellant was liable to pay only MOT charges and not Cost Recovery charges. The appellant have regularly paid the MOT charges which is not disputed. He submits that cost recovery charges at a specified rate are levied for the postings of customs officials additionally sanctioned over and above regular posts. In the present case, no posting of Customs official additionally sanctioned over and above regular posts were made. Therefore, on this ground, the appellant is not required to pay cost recovery charges. He further submits that since the appellant was notified as custodian under Section 45 of the 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 Act, 1962 which provide time-limit of two years under Section 28 of Customs Act, for the reason that demand of duty in case whether any duty has not been levied or short levied or short paid or erroneously refunded or any interest payable has not been paid, part paid or erroneously refunded, for any reason other than the reasons of collusion or any willful mis-statement or suppression of facts. In the present case, payment of MOT charges is well within the knowledge of the department. Therefore, any demand could be raised only for the normal period of two years. However, in the present case, the demand of cost recovery charges is for the period 17.03.2009 to 31.03.2015 and the show cause notice was issued to the appellant on 23.03.2018. Therefore, entire demand is time barred. In support of his submission, he placed reliance on the following judgments:-
(a) Shree Pipes Limited vs. UOI – 1995 (79) ELT 405 (Raj)
(b) GMR Hyderabad International Airport Limited vs. CBE&C, New Delhi – 2014 (299) ELT 320 (A.P.)
(c) CCE vs. Chemphar Drugs & Liniments – 1998 (40) ELT 276 (SC) and Padmini Products vs. CCE – 1989 (43) ELT 195 (SC)
(d) Continental Foundation JT Venture vs. CCE, Chandigarh – 2007 (216) ELT 177 (SC)
(e) Jaiprakash Industries Limited vs. CCE, Chandigarh – 2002 (146) ELT 481 (SC)
9. Shri S.N. Gohil, learned Superintendent (Authorised Representative) appearing on behalf of the Revenue reiterated the findings of the impugned order. He submits that by introduction of Handling of Cargo in Customs Area Regulations, 2009, the appellant is required to pay cost recovery charges and there is no option for the appellant for deviating from payment of cost recovery charges except by virtue of Regulation 4 of HCCAR, 2009 which has given retrospective effect of this regulation. Therefore, for the past period also, in terms of Regulation 5(2) read with Regulation 6(o), the appellant is required to pay cost recovery charges. He submits that due to retrospective effect of HCCAR, 2009 all the reliance made by the appellant on the earlier circulars and clarifications will be of no help to the appellant. He placed reliance on the following judgments:-
(a) 2018 (364) ELT 59 (Del) — Allied lCD Services Limited vs. Union of India
(b) 2017 (357) ELT 236 (Tri-Del) — Rajasthan Small Industries Corpn Limited vs. CCE, Jaipur-I
(c) 2017 (358) ELT 1131 (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. Even if the Regulation of HCCAR 2009 is applicable, the same could be operative for the appellant only if separate officer is posted. In this regard, we would like to refer to relevant regulation of HCCAR 2009 as under:-
