Cost recovery for Customs staff at CFS and ICD facilities includes retrospective pay revision, under the governing custodianship regime.

Custodians of CFS/ICD facilities were required under the Customs regulatory regime to bear the full cost of Customs officers posted for supervision, and that obligation extended to enhanced cost recovery charges arising from retrospective pay revision. The circulars and 2009 regulations contemplated recovery of actual expenditure from the custodian, so the revised salary liability caused by the 6th Pay Commission remained recoverable as part of the department's actual cost. The regime treated the charge as cost recovery for services rendered, not as an impermissible levy, and a custodian could not avoid the additional burden created by retrospective fixation of pay.

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Issues: Whether the petitioners, as custodians of CFS/ICD facilities, were liable to pay enhanced cost recovery charges for Customs officers posted at the facilities, including the additional burden arising from retrospective revision of pay scales.

Analysis: The charges for posting Customs staff at CFS/ICD facilities were not treated as an impermissible levy but as cost recovery for services rendered under the Customs framework. The petitioners had accepted the regulatory regime governing custodianship, including the obligation to bear the cost of Customs personnel. The relevant circulars and the 2009 regulations specifically contemplated recovery of such expenditure from the custodian, and the revised salary liability caused by the 6th Pay Commission was recoverable as part of the actual cost incurred by the department. The reasoning also followed the principle that where the undertaking and governing regime require the entire cost of supervisory staff to be borne by the operator, the operator cannot avoid the additional burden created by retrospective pay revision.

Conclusion: The enhanced cost recovery demand was valid and the challenge failed.

Ratio Decidendi: Where the governing customs regime requires a custodian to bear the full cost of Customs staff posted for supervision, the department may recover later increases in that cost, including revisions arising from retrospective pay fixation.

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