TaxTMI 
TaxTMI 
2020 (9) TMI 1006
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....n view of authoritative decision of this court in Allied ICD Services Ltd. Vs. Union of India and Ors., 2018 SCC OnLine Del 10816:(2018) 364 ELT 59, wherein the impugned provision has been upheld. The said judgment is now pending challenge by way of a Special Leave Petition before the Supreme Court, however there is no stay against the same. The only remaining prayer in the present petition that merits consideration is the one that has been made in the alternative, impugning the demand raised by the respondents for recovery of CRC of customs employees posted at the Petitioner's station. Brief facts: 2. The factual background giving rise to the present petition is that pursuant to a policy decision taken vide Circular No.128/95-Cus dated 14.12.1995, the appointment of custodians of ICDs/CFSs/ACCs/EPZs was opened to the private sector and standard guidelines were issued in this regard, with the aim to de-congest ports and establish custom clearance facility in the interior parts of the country. The ICDs/CFSs/ACCs/EPZs so established were to function akin any other port and their operators were appointed as custodians under Section 45 of the Customs Act, 1962.The above-referred ....
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....ld be applicable on actual performance of ICDs/CFSs. 3. Based on the performance of ICDs/CFSs in the Financial Year2003-04 and 2004-05, you are requested to provide the information as per enclosure in respect ICDs/CFSs falling under your. It may also be ensured that in respect of ICD/CFS for which regularization of posts are suggested, no cost recovery charges are under dispute or pending payment as on 31st August, 2005. 4. xxxx Yours sincerely, Sd/- (Anupam Prakash) Under Secretary to the Government of India" Enclosure: as above. 5. On 17.03.2009, the Department of Revenue notified the Handling of Cargo in Customs Areas Regulations, 2009. Regulation 5(2) of the same reads as under: "5. Conditions to be fulfilled by an applicant for custody and handling of imported or export goods in a customs area. - (1) X X X X (2) The applicant shall undertake to bear the cost of the Customs officers posted, at such customs area, on cost recovery basis, by the Commissioner and shall make payments at such rates and in the manner prescribed, unless specifically exempted by an order of the Government of....
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....e Public Notice No.24/2014 dated 04.09.2014. 8. On 21.09.2015, the petitioner issued a letter to the Chief Commissioner of Customs, claiming eligibility for waiver from payment of CRC from 01.04.2015 onwards. On 03.11.2015, a communication was issued by the DGHRD whereby, as a one-time measure, waiver of CRC was granted to eligible facilities under certain circumstances as specified therein, and the Directorate General of Human Resource Development [hereinafter referred to as 'DGHRD'] was authorized to deal with the request for waiver of CRC. It also provided that the conditions for grant of waiver shall be the same as provided in the Exemption Circular. The said communication dated 03.11.2015 read as under: "Directorate General of Human Resource Development Customs & Central Excise Expenditure Management Wing C-4, Ircon Building, District Centre, Saket, New Delhi 110017 F.No.8/B/28/HRD(EMC)/CRB/2014 pt. Date: 03.11.2015 To The Chief Commissioner of Central Excise (All) The Chief Commissioner of Customs (All), and The Chief Commissioner of Customs (Preventive) (All) Sub:- Waiver from the payment of cost recovery ....
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....ities granted waiver of cost recovery charges in category (iii) Name of facility Date of grant of waiver Name of facility Date of grant of waiver Name of facility Date of grant of waiver 5. This issues with the approval of DG, HRD. Yours faithfully, Sd/- (Rakesh K. Mathur) Assistant Director" 9. Vide letter dated 18.02.2016 [hereinafter referred to as 'the impugned letter'], the Additional Commissioner of Customs rejected petitioner's request for waiver, on the ground that the petitioner did not meet the eligibility criteria, in terms of the Exemption Circular. The letter dated 18.02.2016 is quoted below: "Government of India Office of the Chief Commissioner of Customs, Kolkata Zone 15/1, Strand Road, Customs House, Kolkata-700001 Telephone No. (033) 2242-1173, Fax No.(033) 2231-3289, E-mail: xxxxxxxx F. No. I(16)-05/CCC/KOL/2016/3322 Date:18/02/2016 To, M/s. Apeejay Infralogistics Pvt. Ltd., Xxxx Xxxx Sir, Subject: Waiver from the payment of cost recovery charge in respect of IC....
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....the petitioner, and in turn, the petitioner sought complete waiver of CRC for its CFS at Haldia. This has also prompted the petitioner to file further writ petitions challenging the demands raised for the period subsequent to 31.03.2016. 14. In the interregnum, this Court delivered the judgment dated 27.08.2018 in Allied ICD Services Ltd. Vs. Union of India and Ors. (supra) upholding Regulation 5(2) and the legality of levy and collection of CRC for customs officers. 15. Relying upon the aforesaid decision, Mr. Bansal, learned Senior Standing Counsel for respondents No.3 and 4 submitted before the court that now, only the Prayer 'D' : "In the alternative and without prejudice, issue writ in the nature of certiorari or any other form as considered proper by this Hon'ble Court, quashing the letter dated 18.02.2016, whereby the Respondent has refused to waive cost recovery of custom staff posted at CFS Haldia, West Bengal contrary to letter dated 03.11.2015 issued by Director General of Human Resource Development read with circular dated letter dated 12.09.2005 issued Respondent No. 1 " (sic) required consideration. This contention was recorded in the proceedings dated 21.01.201....
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....of the Parties: 18. Mr. Dayan Krishnan, learned Senior Advocate appearing on behalf of the petitioner, argued that the petitioner is entitled to exemption, having achieved the performance benchmark of handing 1200 TEUs in the given Financial Year as required in clause 1(ii) of the Exemption Circular. He argued that the petitioner's request for waiver has been rejected on a totally misconceived interpretation of the benchmark specifications prescribed in the Exemption Circular. He contended that Respondent's insistence on simultaneous satisfaction of both the preconditions as mentioned in clause 1(ii) and (iii) is contrary to the object of the exemption circular. The Exemption Circular was issued to ensure that after the initial period of two years, the petitioner would get a waiver of CRC (incurred on account of the customs staff) on the basis of the performance benchmark prescribed in Clause 1(ii). The petitioner had accomplished the said requirement, and handled TEUs > 1200, consistently for all the years from 2013 to 2020. To validate this claim, Mr. Krishnan relied upon the figures tabulated below: Financial Year Criteria in terms of Regulation Actual TEUs handled b....
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....annot be construed to be a mandatory condition. He submitted that endeavour should be made to construe provisions harmoniously and the interpretation given by the respondents ought not to be accepted. 21. Per contra, Mr. Amit Bansal, Learned Senior Standing Counsel appearing on behalf of the respondent argued that the petitioner's request for waiver of payment of CRC has been rightly rejected in light of the benchmark stipulated in Clause 1(iii) of the Exemption Circular issued by the Central Board of Excise and Customs. He submitted that it is clear from the reading of the two conditions in Clause 1 that not just one, but both the conditions have to be satisfied concurrently, in order to be eligible to claim waiver. He claimed that the petitioner was well aware of these conditions before they applied for setting up of the CFS. Since the workload data exhibits that petitioner had fulfilled only one of the criterion i. e. the required number of TEUs, it is not eligible for grant of exemption. Mr. Bansal also referred to a certain file noting of the Ministry of Finance [hereinafter referred to as 'MoF'] submitted before this Court vide affidavit dated 22.07.2019 which records the ....
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....The concept of cost recovery is generally associated with the service rendered by a person or a set of persons or a public organization to another, which service is not otherwise liable to be provided." 24. The levy or quantum of CRC is not in question here. The controversy in the present case surrounds the interpretation of the Exemption Circular. This is to be read alongwith letter of the DGHRD dated 03.11.2015 whereby waiver is offered upon satisfaction of the benchmark performance criteria laid out in the Exemption Circular. There is also a Circular dated 23.03.2009 where again the issue of exemption from recovery of CRC has been dealt with in clauses 5.3 and 5.5 (extracted supra). These three documents form the core of the issue in the present case. 25. A bare reading of the Exemption Circular makes it amply clear that in order to avail the benefit of exemption/waiver from payment of CRC, the CFS has to fulfil certain conditions laid down therein, which are based on achievement of prescribed performance benchmark. These conditions along with benchmarks are enumerated as under: (i) No. of containers handled by ICD : 7200 TEUs per annum. (ii) ....
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....t would automatically stand fulfilled. 29. This, in our view, is an incorrect and distorted way to look at and interpret the exemption criteria laid down in the said Circular. The purpose behind the exemption clauses is that those ICD/CFS which achieve the necessary performance benchmark are not burdened with CRC. In the absence of the conjunction 'or' between the conditions, it cannot be suggested that the aforesaid criteria have to be applied in the alternative, as sought to be presented by the petitioner. Further, the benchmark at Clause 1 (iv) makes it clear without any ambiguity that the benchmark at Clauses 1(ii) and (iii) have to be taken into consideration cumulatively in order to be eligible to claim exemption or waiver of CRC. In our view, the benchmarking is evaluated both on the basis of number of containers handled by ICD/CFS, as well as the number of BoE/SB processed, and both these conditions need to be satisfied simultaneously and not just one of them in order to be eligible to claim waiver from the payment of CRC. 30. Both criteria envisage different parameters of performance by an ICD/CFS operator. Clause 1 (ii) envisaged number of and volume of goods handle....
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....e instructions contained in Circulars No.128/95-Cus dated 14.12.1995, Circular No.52/95-Cus dated 17.10.1997. The sub-group observed that quantum of revenue would not have much impact on the workload of ICDs/CFS and thus the requirement of staff should be worked out based on the workload i.e. the container traffic and the documents processed. Considering all factors, the sub-group recommended the following criteria of workload for regularization of cost recovery posts in ICDs/CFS: (v) No. of containers handled by ICD : 7200 TEUs per annum. (vi) No. of containers handled by CFS : 1200 TEUs per annum. (vii) No. of BE or SB purchased by : 7200 per annum for ICUs / CFSs ICDs and 1200 for CFSs. viii) Bench mark at (1) to (3) shall be reduced by 50% for those ICDs/CFSs exclusively dealing with exports, as per staffing norms. 5. The sub-group expressed that number of containers handled by ICSs/CFS and the documents processed should be simultaneously satisfied to justify the regularization of posts." 32. According to the petitioner's written rejoinder submissions, the rationale behind such incentivization was to promote the import/export of g....
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....ption Circular to indicate that the petitioner was required to simultaneously satisfy more than one benchmark prescribed. On the basis of the above discussion, we are unable to agree with this interpretation of the petitioner. Furthermore, in our opinion, this viewpoint is flawed because we cannot read something that does not emerge from a plain reading of the exemption circular. The bare reading of the provision leads to a conclusion that the conditions or the performance benchmarks are required to be fulfilled simultaneously. We cannot read any requirement to the contrary. On first principles, the court would interpret the provision as it manifests on a plain reading. Only if there is some ambiguity, vagueness or absurdity, would the occasion arise for interpretation for the court. In the present case, we find that the threshold requirement for venturing into the arena of interpretation by applying the suggested principle of harmonious construction is not met. 34. We also find the emphasis on the comma punctuation mark (,) used in Clause 5.5 of the Circular dated 23.03.2009 to be misdirected. The stress given to this separator is entirely out of context. The surrounding words ....
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.... like to refer to the verdict given by the Supreme Court relating to tax exemptions in the case of Commissioner of Customs (Import), Mumbai vs. Dilip Kumar and Company & Ors., (2018) 9 SCC 1, wherein, the Supreme Court examined several precedents cited therein and held that the charging, computation or exemption clause in matters of every tax statute involving dispute as to interpretation, at the threshold stage, have to be interpreted strictly. The dispute in the said case concerned the classification of goods under the Customs Tariff Act, 1975. The respondent therein contended that they were eligible for concessional rate of duty on the basis of wider interpretation given to the description of goods specified therein. The revenue however controverted the claim and contended that the concession claim was incorrect and imported product was not covered under the notification. The Supreme Court also had the occasion to examine its earlier decision in the case of Sun Exports Corporation vs. The Collector of Customs Bombay (1997) 6 SCC 564. It was observed that the afore-noted decision rendered in the 1997 case was in conflict with the position of law and was therefore, overruled. The ....