Legal principle

In the absence of a statutory recovery mechanism and rates and manner specified by the Government of India, cost recovery charges cannot be recovered from a CFS/custodian even under Regulations 5(2) and 6(1)(o) of the Handling of Cargo in Customs Areas Regulations, 2009.

Court decision

The Tribunal set aside the impugned order and allowed the appellant's (assessee's) appeal, holding the demand of cost recovery charges unsustainable; it also endorsed the Commissioner's dropping of the HRA and Transport Allowance component, and (as per the reproduced Diamond and Gem order) dismissed the Revenue's appeal on that point.

Facts

Central Warehousing Corporation, operator of a Container Freight Station (custodian) at Ahmedabad, was called upon by the Commissioner of Customs, Ahmedabad (Order-in-Original dated 21.02.2020) to pay cost recovery charges for Customs officers posted at its customs area under Regulation 5(2) of the Handling of Cargo in Customs Areas Regulations, 2009. The Revenue sought recovery of the cost of officers deputed at the CFS from the custodian, while the adjudicating Commissioner had declined to confirm the demand to the extent of House Rent Allowance and Transport Allowance since the assessee provided accommodation and transport to the officers. CWC appealed to the CESTAT, Ahmedabad against the confirmed cost recovery demand. The dispute concerned monetary recovery from the custodian rather than any confiscated or assessed goods.

Key provisions

• Section 157, Customs Act, 1962 — General power to make regulations
• Section 141, Customs Act, 1962 — Conveyances and goods in a customs area subject to control of officers of customs
• Regulation 5(2), Handling of Cargo in Customs Areas Regulations, 2009 — Conditions to be fulfilled by Customs Cargo Service provider
• Regulation 6(1)(o), Handling of Cargo in Customs Areas Regulations, 2009 — Responsibilities of Customs Cargo Service provider
• Regulation 12, Handling of Cargo in Customs Areas Regulations, 2009 — Procedure for suspension or revocation of approval and imposition of penalty
• Section 158, Customs Act, 1962 — Provisions with respect to rules and regulations