Custom
TRT-2025-
Cestat New Delhi
Date:-21-11-22
In:-
Issue Favourable to Tax Payer ?:-
Order date – 21 November 2022
Facts –
- The Appellant, M/s Rajasthan Small Industries Corporation Ltd., is a State Government Undertaking. It was appointed as custodian of Inland Container Depot, under section 45(1) of the Act by public notice dated 19.07.1995.
- The Ministry of Finance issued via letter dated 23.05.1995 creating 12 post in ICD Jodhpur. These posts should be filled up only when the appellant deposits the entire cost of the said posts which was 1.85 times of the monthly average cost of the post in advanced.
- Accordingly, the Managing Director of the appellant submitted an undertaking to the Customs Department that the custodian shall bear the cost of the staff. 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.
- Three Show cause notices 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).
- Aggrieved appellant had filed an appeal.
Issue –
- Whether there is a procedure set out for recovery of the outstanding cost recovery charges for the posting of the custom officers at ICD/CSF/ACC under the 2009 Regulations?
Order –
- The Tribunal finds that Regulation 5(2) 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.
- The Tribunal relied on the decision of the Division Bench of the Tribunal in Container Corporation of India that Regulation (6) is not meant for recovery of default payment but only it says that the CCSP will have 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.
- This issue was also examined at length by the Division Bench of the Tribunal in M/s. The Thar Dry Port vs. C.C.E. & S.T., Jaipur I 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, been 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.
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