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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the supervision charges for the appellant's special bonded warehouse were recoverable on Cost Recovery Charges basis or only on Merchant Over Time basis under the applicable warehousing regime and Board circular.
Analysis: Regulation 3(e) of the Special Warehouse Licensing Regulations, 2016 and paragraph 11 of Circular No. 32/2016-Cus dated 13.07.2016 require the licensing authority to determine the mode of recovery having regard to the frequency, duration and nature of the warehouse operations. Cost Recovery Charges apply where the customs officer's deployment is for the whole day, better part of the day, or comparable continuous supervision. On the record, there was no corroborative evidence that the customs officers were utilised for the entire day or for the better part thereof; the material indicated only limited-hour supervision. The appellant's own working out of charges on Merchant Over Time basis matched the actual usage pattern, and the demand based on Cost Recovery Charges could not be sustained.
Conclusion: The demand for Cost Recovery Charges was unsustainable, and the appellant was liable only for Merchant Over Time charges.
Final Conclusion: The impugned demand was set aside and the appellant obtained complete relief against the CRC-based recovery.
Ratio Decidendi: Where the customs supervision of a special warehouse is limited to part-day or other restricted use, and there is no evidence of full-day or better-part-of-day deployment, recovery must be made on Merchant Over Time basis and not on Cost Recovery Charges basis.
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