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TMI Blog2011 (2) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... an ICD at Thoothukudi challenged the demand notice, dated 19-12-2008 for a sum of Rs. 9,95,975/- towards establishment charges of Customs Offices posted at Inland Container Depot (ICD). 3. When these matters came up on 2-4-2009, notices were directed to be served on the respondents. An interim stay of the demand notices in respect of all the three writ petitions was initially granted for two weeks. Subsequently, the interim orders came to be extended until further orders by a common order, dated 16-4-2009. Aggrieved by the interim order, the Union of India has filed M.P.(MD) No. 1 of 2010 in all the three writ petitions seeking to vacate the interim order together with a supporting affidavit, dated 22-6-2010. A regular counter affidavit, dated Nil (June, 2009) was filed by the third respondent. They have also filed an additional counter affidavit, dated Nil (May, 2010). 4. Heard the arguments of Mr. S. Murugappan, learned counsel for the petitioners, Mr. B. Vijay Karthikeyan, learned counsel appearing for respondents 3 and 4 and Mr. P. Krishnasamy, learned counsel for the second respondent. 5. The contentions of the petitioners in all the three writ petitions wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appraisers, Inspectors, Tax Assistants and Sepoys. The 6th Pay Commission scale of pay was adopted by the Central Government with effect from 1-1-2006. Therefore, the cost recovery charges were reworked on the basis of enhanced pay and the petitioners were fixed with additional liability. Challenging the same, the petitioners filed all the three writ petitions. 7. The contention of the petitioners were that the Officers of the Customs department are performing their statutory duties under the Customs Act. Their function is a sovereign function. No fee can be levied for the discharge of statutory or sovereign function. The Government is empowered to levy Customs Duty under Section 12 of the Customs Act. Therefore, further cost recovery is void ab initio and violative of Articles 14 and 265 of the Constitution of India. The cost recovery made by the respondents is nothing but a fee. Charging at the rate of 185% of total salary of the Customs Officers is extravagant and exorbitant. Even in other ports, writ petitions have been filed questioning the recovery of charges for payment to the Customs Officers. Any revision of pay scale by the Central Government will apply to payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f total salary of the officers actually posted at the CFS. Normally one CFS will have 13 officers of various ranks. As per the guideline, dated 14-12-1995, more particularly guideline No. 10, it is the Custodian who shall bear the cost of the Customs personnel posted for various duties at ICD/CFS/EPZ. Further by a notification No. 26/2009, the Government by the exercise of its power under Section 141(2) of the Customs Act had issued new regulations known as Handling of Cargo in Customs Areas Regulations, 2009. Regulation 3 has made its regulations to come into effect with retrospective operations. Under Regulation 5, it is clearly stipulated that the Custodian shall bear the cost of Customs staff posted in the station. The Commissioner of Customs shall decide the number of staff required to be posted in the facility. It is also provided under condition No. (o) that the Customs Cargo provider shall bear the cost of customs officers posted at the Commissioner of Customs on cost recovery basis and in the manner specified by the Government of India, Ministry of Finance unless specifically exempted by an order of the Ministry. 10. It was also further stated in the same regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents, it was further contended that the demand for cost recovery charges have the statutory force of law. In normal circumstances, the officers of the Customs department perform their duty only in the Customs House located in the Gateway Port and they discharge different functions. When ICD and CFS are running by Custodians for their own commercial gains and located in the hinterland, the cost recovery charges will have to be paid for the posting of customs officials who are additionally sanctioned for these ICDs and CFS over and above the regular posts. Running an ICD or CFS is a commercial proposition. The Government cannot bear the costs of additional manpower sanction. The services of the Customs officials are required throughout year during working hours. The cost recovery charges are in the nature of fees. The recovery at the rate of 185% of total salary is directly relatable to the additional creation of posts. Apart from the normal salaries, additional dearness allowance and notional HRA will have to be paid. Therefore, 1.85 times of the monthly average are collected as per the Government of India's letter, dated 1-4-1991. This 1.85 times was worked out by the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the deposit of advance cost recovery charges for three months for the number of staff which will be actually posted in an ICD/CFS." 14. The petitioners were also paying the recovery charges all these years. They cannot turn back and resile, from their earlier undertakings by referring to the judgment of the division bench of Kerala High Court, which did not decide the issue relating to cost recovery charges. On the other hand, the collection is in the nature of fee for the services rendered by the department. The amounts collected will directly go towards the expenditure involved. 185% of recovery charges is highlighted only to make it appear that there was extra income for the department. On the other hand, it takes into account the other components attached to pay and other service conditions of such Customs personnel who are posted in the CFSs/ICDs. 15. In this context, reliance was placed upon a judgment of the Supreme Court in Government of Maharashtra v. Deokar's Distillery reported in 2003 (5) SCC 669 in respect of the collection made for deputed excise officials in various Distilleries. Similar objections were made by the Distilleries. The same was repelled by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Prohibition Act is clearly to the effect that the licensee has to bear the entire cost of the supervisory staff and, therefore, the question of application of the principle of promissory estoppel, as argued by the learned counsel for the respondents, would not arise. The Full Bench of the Bombay High Court also ruled accordingly. Further, Rule 17(12) of the Rules of 1966 and Rule 6(12) of the Rules of 1973 providing for recovery of supervision charges in advance, do not direct that differential amounts are not to be recovered, if pay scales are revised. On the other hand, the aforesaid Rules are to be read with other provisions giving residuary powers in both the sets of Rules viz. Rule 17(43) of the Rules of 1966 and Rule 6(36) of the Rules of 1973, which direct that the licensee shall comply with all orders issued under the Prohibition Act and Section 11 of the Prohibition Act clearly provides that the State Government may permit business in liquor subject to the manner and to the extent provided by the provisions of this Act or any rules, regulations or orders made or in accordance with the terms and conditions of the licence, permit, pass or authorization granted thereunder. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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