Appellant exempt from cost recovery charges due to meeting performance criteria. Impugned order set aside.

The Tribunal held that the appellant was entitled to exemption from payment of cost recovery charges from March 2010 onwards as they had met benchmark performance criteria. The Tribunal emphasized that without a calculated demand from the Revenue and prescribed rates for payment, the appellant could not be held responsible for non-payment. The impugned order was set aside, and the appellant was not liable for the charges, with the appeal allowed and consequential relief granted.

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Issues Involved:
1. Entitlement to exemption from payment of cost recovery charges for March 2010.
2. Responsibility for non-payment of cost recovery charges when no calculation was made by the Revenue.

Issue-wise Detailed Analysis:

1. Entitlement to Exemption from Payment of Cost Recovery Charges for March 2010:
The appellant, a notified CFS since December 6, 2007, commenced operations on March 1, 2008. As per C.B.E. & C. instructions and Circular No. 52/97-Cus., a CFS must deposit cost recovery charges in advance. The appellant paid these charges until February 2010. Subsequently, the appellant claimed exemption from further charges, arguing that they had achieved benchmark performance by February 2010. The Revenue, however, demanded Rs. 36 lakhs on September 6, 2010, and later Rs. 1,35,95,874 on May 18, 2011, for the period post-March 2010. The appellant contended that the demand was unsustainable as they had met the benchmark performance criteria, which should entitle them to a waiver of charges as per C.B.E. & C. instructions dated September 12, 2005.

2. Responsibility for Non-Payment of Cost Recovery Charges When No Calculation was Made by the Revenue:
The appellant argued that the responsibility for non-payment of charges could not be attributed to them in the absence of a calculated demand from the Revenue. They highlighted that the Revenue's demand amounts varied over time, indicating a lack of clarity and consistency. The appellant referenced Regulation 6(1)(o) of the Handling of Cargo in Customs Area Regulations, 2009, which mandates that charges be paid at rates and in a manner prescribed by the Ministry. The appellant argued that no such rates or manner had been prescribed, thus nullifying the Revenue's authority to demand charges. The appellant supported their stance with judicial precedents, including the cases of Larsen & Toubro Ltd. and Suresh Kumar Bansal, emphasizing that in the absence of prescribed rates and manner, the Revenue could not demand cost recovery charges.

Judgment:
The Tribunal examined the submissions and found that the appellant had indeed achieved the benchmark performance within the initial two years, entitling them to a waiver of charges as per C.B.E. & C. circular dated September 12, 2005. The Tribunal noted that the cost recovery charges are to be calculated by the Revenue, and without such calculation, the appellant could not be held responsible for non-payment. Furthermore, the Tribunal observed that Regulation 6(1)(o) of the 2009 Regulations required the Ministry to specify the rate and manner of payment, which had not been done. Consequently, the Tribunal concluded that the cost recovery charges could not be demanded from the appellant post-March 2010.

Conclusion:
The Tribunal set aside the impugned order, holding that the appellant was not liable to pay the cost recovery charges from March 2010 onwards due to the lack of prescribed rates and manner of payment by the Ministry. The appeal was allowed with consequential relief.

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