2022 (11) TMI 1013 - AT - Customs

Tribunal rules in favor of appellant, Rajasthan Small Industries Corp., overturning recovery charges and penalties.

The Tribunal ruled in favor of the appellant, M/s. Rajasthan Small Industries Corporation Ltd., in a case involving the recovery of outstanding cost ... Custodian of ICD - cost recovery charges of the custom staff - 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? - Handling of Cargo in Customs Area Regulations 2009 HELD THAT:- The show cause notices were issued to the appellant under regulation 12 of the 2009 Regulations. What was stated was that the appellant has 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 for forfeiture of security and imposition of penalty under regulation 12(8) of the 2009 Regulations. The Commissioner, under the impugned orders, did not revoke the approval of the custodianship nor was the security forfeited. This issue was also examined at length by the Division Bench of the Tribunal in M/S. THE THAR DRY PORT AND M/S. JAIPUR GEMSTONE EXCHANGE VERSUS C.C.E. & S.T., JAIPUR I [2019 (7) TMI 1788 - CESTAT NEW DELHI] 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, to be 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 - the impugned orders dated 30.10.2018, 17.01.2019 and 29.04.2019 passed by the Commissioner to the extent that the demand of outstanding cost recovery charges have been confirmed and penalty has also been imposed are liable to be set aside and are set aside. Appeal allowed. Issues Involved:1. Recovery of outstanding cost recovery charges.2. Imposition of penalty under the 2009 Regulations.Detailed Analysis:Issue 1: Recovery of Outstanding Cost Recovery ChargesThe appellant, M/s. Rajasthan Small Industries Corporation Ltd., challenged orders confirming the demand for outstanding cost recovery charges for various periods. The appellant argued that regulations 5(2) and 6(1)(o) of the Handling of Cargo in Customs Area Regulations, 2009 (the 2009 Regulations) do not provide for recovery of such charges. The Tribunal referred to a previous decision in Container Corporation of India vs. Commissioner of Customs, Jodhpur, which held that the adjudicating authority could not order recovery of outstanding cost recovery charges under these regulations. Regulation 5(2) requires the applicant to undertake to bear the cost of customs officers posted on a cost recovery basis, and regulation 6(1)(o) outlines the responsibilities of the Customs Cargo Service Provider, including bearing these costs. However, neither regulation provides a mechanism for recovering unpaid charges.The Tribunal concluded that the Commissioner committed an illegality by ordering the recovery of cost recovery charges under these provisions. The decision was supported by the Tribunal's previous ruling in M/s. The Thar Dry Port vs. C.C.E. & S.T., Jaipur I, which also held that the Commissioner could not order cost recovery charges under the cited regulations.Issue 2: Imposition of PenaltyThe appellant also contested the imposition of a penalty of Rs. 5,000/- under regulation 12(8) of the 2009 Regulations. The show cause notices issued to the appellant cited contraventions of regulations 5(2) and 6(1)(o) and mentioned the appellant's liability for suspension/revocation of approval and forfeiture of security under regulation 11(1). However, the Commissioner did not revoke the custodianship approval or forfeit the security but confirmed the demand for cost recovery charges and imposed the penalty.The Tribunal noted that regulation 12(8) allows for a penalty if the Customs Cargo Service Provider contravenes any provisions of the regulations. However, the Tribunal found that the imposition of the penalty was not justified, as the Commissioner had no authority to order the recovery of cost recovery charges under the cited regulations. Consequently, the penalty imposed under regulation 12(8) was also set aside.Conclusion:The Tribunal set aside the impugned orders dated 30.10.2018, 17.01.2019, and 29.04.2019 to the extent that they confirmed the demand for outstanding cost recovery charges and imposed penalties. The appeals were allowed, and the orders were annulled to the extent indicated.