TaxTMI 
TaxTMI 
2026 (8) TMI 530
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....present appeal is whether the demand of differential amount for the services of supervision of the appellant's special warehouse by officers of Customs on recovery of cost on 'Cost of Recovery' basis and 'Merchant Over Time' basis for the period from January, 2019 to October, 2019 and for the period from November, 2019 to March, 2020 is sustainable. 3. The brief facts are the appellant engaged in the provision of flight catering to various airlines is holding a Special Warehouse Licence No. 01/2016 dated 26.08.2016 issued under section 58A of the Customs Act, 1962 read with Special Warehouse Licensing Regulations, 2016. 4. The Appellant vide letter dated 10.08.2016 had requested the Department for Customs supervisi....
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....ated 14.05.2016, as per which a licensee of Special Warehouse shall undertake to bear costs of customs supervision. As per the impugned order dated 04.03.2021, the adjudication authority confirmed the demand of the differential amounts of Rs. 36,24,710/- and Rs. 18,10,110/- for the respective periods in terms of the undertaking furnished by the appellant as per General Bond No. 01/2017-18 dated 17.10.2017. Aggrieved by the said order, present appeal is filed. 6. When the appeal came up for hearing, learned Counsel for the appellant submits that it is an admitted fact that appellant was permitted to continue paying the MOT charges which is itself established that no separate officers were posted to supervise the work at the appellant's wa....
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....LORE. 7. Learned Authorised Representative (AR) reiterated the finding in the impugned order. 8. Heard both sides and perused the records. 9. The learned counsel for the appellant during the hearing has relied on the case laws pertaining to 'Handling of Cargo in Customs Area (Regulations), 2009'. We find that they are not relevant to the issue in this case. We find that the confirmation of the demand of differential amounts has been made as per Regulation 3(e) of the Special Warehousing Licensing Regulations, 2016 which reads as follows: "Regulation 3(e)- undertakes to pay for the services of supervision of warehouse by officers of Customs on recovery of cost." 9.1 Further as per Para 11 of Circular No. 32/2016-....
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....covery basis. Further, in cases where the licensee requires services of a customs officer for more than once in a day, he shall have to undertake supervision on cost recovery basis. Similarly, in case where round the clock services are requested, the licensee will have to bear charges on cost recovery basis for a suitable number of officers. Basically, this issue has to be examined on the above lines for deciding the recovery of costs from the licensee. 10. We find that as per the guidelines prescribed at Para 11 of Circular No. 32/2016-Cus dated 13.07.2016, the Principal Commissioner /Commissioner shall evaluate the projected requirement and the distance of the warehouse from the customs office to determine which of the modes of recover....
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....r Regulation 3(e) the appellant has to submit an undertaking to pay for the services of the supervision of the warehouse by officers of the Customs on recovery of cost and it is not mentioned either on MOT basis or on cost recovery basis. We find that the demand has been confirmed computing the customs supervision charges on the basis of difference between charges on 'cost recovery basis' and Merchant Over Time (MOT) charges paid. Further, the cost recovery charges were computed based on the posting of one inspector during the impugned periods and the differential amount has been worked out being the difference between cost recovery charges and MOT charges paid. We find that no officer has been posted as per the records and payments....