Apeejay Infra-Logistics Private Ltd. Union of India (Delhi High Court )
We would like to refer to the verdict given by the Supreme Court relating to tax exemptions in the case of Commissioner of Customs (Import), Mumbai vs. Dilip Kumar and Company & Ors., (2018) 9 SCC 1, wherein, the Supreme Court examined several precedents cited therein and held that the charging, computation or exemption clause in matters of every tax statute involving dispute as to interpretation, at the threshold stage, have to be interpreted strictly. The dispute in the said case concerned the classification of goods under the Customs Tariff Act, 1975. The respondent therein contended that they were eligible for concessional rate of duty on the basis of wider interpretation given to the description of goods specified therein. The revenue however controverted the claim and contended that the concession claim was incorrect and imported product was not covered under the notification. The Supreme Court also had the occasion to examine its earlier decision in the case of Sun Exports Corporation vs. The Collector of Customs Bombay (1997) 6 SCC 564. It was observed that the afore-noted decision rendered in the 1997 case was in conflict with the position of law and was therefore, overruled. The Court then held that:
“exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption Clause or exemption notification”. The Court further observed that in the case of ambiguity in taxing liability statute, the benefit should go to the subject/assessee, but the situation would be different while interpreting tax exemptions, in the following words: “thus we may emphatically reiterate that if in the event of ambiguity in a taxation liability statute, the benefit should go to the subject/ assessee. But, in a situation where the tax exemption has to be interpreted, the benefit of doubt should go in favour of the revenue.” The case law cited by the Petitioner is distinguishable on facts and also has no relevance to the present case. Keeping the aforesaid principles in mind, we have no hesitation to hold that the petitioner had failed to satisfy all the conditions for becoming eligible for the exemptions.
In view of the above, there is no merit in the present petition in respect of the surviving prayers made in the petition, noted hereinabove. Dismissed. The interim order dated 3rd June, 2016, as confirmed vide order dated 21st January 2019, stands vacated.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. The Petitioner, a private Container Freight Station [hereinafter referred to as ‘CFS’] at Haldia, West Bengal, challenges Regulation 5(2) of the Handling of Cargo in Customs Areas Regulations, 2009 and also impugns Revenue’s demand for Cost Recovery Charges [hereinafter referred to as ‘CRC’] towards cost of the Customs staff posted at the station. Insofar as the challenge to the Regulations is concerned, the same does not survive, in view of authoritative decision of this court in Allied ICD Services Ltd. Vs. Union of India and Ors., 2018 SCC OnLine Del 10816:(2018) 364 ELT 59, wherein the impugned provision has been upheld. The said judgment is now pending challenge by way of a Special Leave Petition before the Supreme Court, however there is no stay against the same. The only remaining prayer in the present petition that merits consideration is the one that has been made in the alternative, impugning the demand raised by the respondents for recovery of CRC of customs employees posted at the Petitioner’s station.
Brief facts:
2. The factual background giving rise to the present petition is that pursuant to a policy decision taken vide Circular No.128/95-Cus dated 14.12.1995, the appointment of custodians of ICDs/CFSs/ACCs/EPZs was opened to the private sector and standard guidelines were issued in this regard, with the aim to de-congest ports and establish custom clearance facility in the interior parts of the country. The ICDs/CFSs/ACCs/EPZs so established were to function akin any other port and their operators were appointed as custodians under Section 45 of the Customs Act, 1962.The above-referred 1995 Circular provided, inter alia, that custodians of the ICDs/CFSs/ACCs/EPZs premises (such as the Petitioner herein) were responsible to pay for the Customs personnel posted at such premises, and had to furnish an undertaking to this effect, agreeing to bear the costs of such staff. The relevant stipulation is extracted as follows:
“(10). Custodian shall bear the cost of the Customs staff, posted for the ICD/CFS/EPZ. The Commissioner of Customs shall decide the number of staff which is required to be posted in the facility considering the workload in the station. “
3. Thereafter, on 17.10.1997, Respondent No.1 issued a Circular No.52/97-Cus, wherein the number of customs staff sanctioned to be posted at ICD/CFS was given. It was also provided therein that Customs staff for all new ICDs/CFSs was being sanctioned on a cost recovery basis.
4. Later, on 12.09.2005, a Circular No.F.No.434/17/2004– IV [hereinafter referred to as ‘Exemption Circular’] was issued for regularization of costs recovery posts at ICDs/CFSs that had completed two years of operation and achieved the performance benchmark. The said Circular reads as under:
“F.No.434/17/2004-Cus.IV
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Room No.227B, North Block,
New Delhi, 12th September, 2005
To,
All Chief Commissioners of Customs
All Chief Commissioners of Customs & Central Excise
All Chief Commissioners of Central Excise
Sir,
Subject: Cost recovery posts in respect of Customs staff posted in ICDs/CFs regarding.
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 purchased by ICUs / CFSs : 7200 per annum for ICDs and 1200 for CFSs.
(iv) Bench mark at (1) to (3) 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 claim for post period Criteria would be applicable on actual performance of ICDs/CFSs.
3. Based on the performance of ICDs/CFSs in the Financial Year2003-04 and 2004-05, you are requested to provide the information as per enclosure in respect ICDs/CFSs falling under your. It may also be ensured that in respect of ICD/CFS for which regularization of posts are suggested, no cost recovery charges are under dispute or pending payment as on 31st August, 2005.
Yours sincerely,
4. xxxx
Enclosure: as above.
Sd/-
(Anupam Prakash)
Under Secretary to the Government of India”
5. On 17.03.2009, the Department of Revenue notified the Handling of Cargo in Customs Areas Regulations, 2009. Regulation 5(2) of the same reads as under:
“5.Conditions to be fulfilled by an applicant for custody and handling of imported or export goods in a customs area. –
(1) X X X X
(2) The applicant shall undertake to bear the cost of the Customs officers posted, at such customs area, on cost recovery basis, by the Commissioner and shall 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;”
6. This was followed by a Circular dated 23.03.2009 through which the Handling of Cargo in Customs Areas Regulations, 2009were brought into effect. The said Circular, inter alia, stated that the charges in respect of Customs employees deployed at customs clearance facility would be exempted if the laid down norms are satisfied. The relevant portion of the said circular read as under:
“5. 3. The charges in respect of the Customs officers deployed at the customs clearance facility (ICD/CFS/port/airport etc.)are required to be paid by the Custodian, unless these have been exempted for an individual custodian by an order issued by the Ministry of Finance or by a circular or instructions issued by the Ministry of Finance [Regulation 5(2)].Payment of cost recovery charges in respect of ports and airports has been exempted for three categories of custodians specified in Circular No.27/2004-Customs dated 6. 4. 2004.It is clarified that these specified categories of custodians at ports / airports would continue to be exempt from the payment of charges for the customs officers deployed therein.
5.4. X X X X
5.5. As regards ICDs / CFSs, Government had taken a decision to waive the requirement of cost recovery charges to be paid by ICD / CFS, if they fulfil the laid down norms and are in existence for a consecutive period of two financial years. These norms include parameters such as the total number of import or export containers handled, the customs declarations filed for import or export, etc. Board’s instructions vide D. O. letter F.No.A.11018/12/2008-Ad. IV dated 2. 7. 2008 refer in this regard. Accordingly, the eligible ICDs / CFSs which fulfil the laid down criteria are being considered for exemption from payment of cost recovery charges and specific orders in individual cases are issued by Ad. IV Section. These orders are being referred to as the orders issued by the Ministry of Finance under the Regulation 5(2).”
(emphasis supplied)
7. On 13.08.2012, the Petitioner was granted approval to operate as a CFS at Haldia, West Bengal for two years vide Public Notice No.34/2012. During the period of 14.11.2012 to 31.12.2014, petitioner paid a sum of INR 1,83,82,420/- as CRC to the Revenue. Subsequently, the approval granted to the petitioner was renewed for five years vide Public Notice No.24/2014 dated 04.09.2014.
8. On 21.09.2015, the petitioner issued a letter to the Chief Commissioner of Customs, claiming eligibility for waiver from payment of CRC from 01.04.2015 onwards. On 03.11.2015, a communication was issued by the DGHRD whereby, as a one-time measure, waiver of CRC was granted to eligible facilities under certain circumstances as specified therein, and the Directorate General of Human Resource Development [hereinafter referred to as ‘DGHRD’] was authorized to deal with the request for waiver of CRC. It also provided that the conditions for grant of waiver shall be the same as provided in the Exemption Circular. The said communication dated 03.11.2015 read as under:
“Directorate General of Human Resource Development
Customs & Central Excise
Expenditure Management Wing
C-4, Ircon Building, District Centre, Saket, New Delhi 110017
F.No.8/B/28/HRD(EMC)/CRB/2014 pt. Date: 03. 11. 2015 To
To.
The Chief Commissioner of Central Excise (All)
The Chief Commissioner of Customs (All), and
The Chief Commissioner of Customs (Preventive) (All)
Sub:- Waiver from the payment of cost recovery charge in respect of ICDs/CFSs, Seaports, Air Cargo Complexes, Courier Terminals, Diamond Plazas, etc.- reg.
Madam/Sir,
Issue of waiver from payment of cost recovery charge in respect of ICDs/ CFSs, Seaports, Air Cargo Complexes, Courier Terminals, Diamond Plazas, etc. was under consideration of the Board for some time. The matter was examined by the Board and with the approval of the competent authority, it has been decided that as a onetime measure, the Chief Commissioner of Customs/Central Excise concerned are authorized:-
(i) To exempt cost recovery charges for eligible facilities for
posts that were not sanctioned. The exemption shall be for staff deployed. Excess staff, if any, deployed over and above the staffing norms, shall be withdrawn but without causing dislocation in work;
(ii) exemption from cost recovery charges for eligible facilities for which posts were sanctioned would 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, in2013; and
(iii) at eligible facilities having both sanctioned and non-sanctioned posts, the exemption of cost recovery charges for non-sanctioned posts would be dealt with as per decision at (i)above and for sanctioned posts, it would be as per decision at(ii) above.
2. The performance benchmark and conditions for grant of waiver from the payment of cost recovery charges shall be same as provided in Board’s letter F.No.434 /17/2004-Cus. IV dated 12.09.2005 (for ICDs/CFSs) and Board’s Circular No. 16/2013-Cus dated 10.04.2013 (for Seaports, Air Cargo Complexes, Courier Terminals, Diamond Plazas, etc).
3. It is reiterated that the above categories at para -1 is only a onetime measure. Regular requests for waiver of cost recovery charges would be processed by this Directorate as per extant provisions.
4. Information on grant of waiver of cost recovery charges in respect of above three categories (as stated in para-I) may also be sent in the following proforma, to this Directorate latest by 31.12.2015. It is also requested to send soft copy of aforesaid information (in MS Excel format) by email [xxxxxxxx].
