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TMI Blog2014 (2) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... ous officials belonging to the respective Departments of the Government of India. Clearing international passengers at the Passenger Terminal is performed by the Customs Officials. Similarly, the international cargo imported or meant for export through the air cargo complexes created by the airport operator, is cleared by the Customs for purposes of levy of the Duty. For retaining the custody of such cargo, till it is cleared, Custodians are appointed under Section 45 of the Customs Act, 1962. Accordingly, the writ petitioner has submitted the necessary application on 7-12-2006 for appointment as a Custodian. Before any such application is considered, one is required to comply with the conditions stipulated in Circular No. 34/2002-Cus., dated 26-6-2002, which were subsequently modified by Circular No. 27/2007-Cus., dated 6-4-2004, issued by the Central Board of Excise and Customs. One of the stipulations contained in these circulars is that the salary and allowances payable to the officers posted from the Customs Department will be borne by the Custodian. Hence a representation has been submitted by the petitioner to the Central Board of Excise and Customs-first respondent herein f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and guidelines to control the activities of the custodians. In paragraphs 5.3 and 5.4 of the said circular, the following guidelines have been indicated : "5.3 The charges in respect of the Customs officers deployed at the customs clearance facility (ICD/CFS/port/airport, etc.) are required to be paid by the Custodian, unless these have been exempted for an individual custodian by an order issued by the Ministry of Finance or by a circular or instructions issued by the Ministry of Finance [Regulation 5(2)]. Payment of cost recovery charges in respect of ports and airports has been exempted for three categories of custodians specified in Circular No. 27/2004-Customs, dated 6-4-2004. It is clarified that these specified categories of custodian at ports/airports would continue to be exempt from the payment of charges for the customs officers deployed therein. 5.4 In terms of the Greenfield Airports Policy framed by the Government and notified by the Ministry of Civil Aviation for setting up of private Greenfield airports, it has been specified that in case of an international airport, the applicant for setting up of a Greenfield airport will obtain clearance from the Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made under this Act; Section 2(35) "regulations" means the regulations made by the Board under any provision of this Act; Similarly, the other important provisions of the Act, also need to be given a closer look and they are : Section 7. Appointment of customs ports, airports, etc. - (1) The Board may, by notification in the Official Gazette, appoint - (a) the ports and airports which alone shall be customs ports or customs airports for the unloading of imported goods and the loading of export goods or any class of such goods; (aa) the places which alone shall be inland container depots for the unloading of imported goods and the loading of export goods or any class of such goods; (b) the places which alone shall be land customs stations for the clearance of goods imported or to be exported by land or inland water or any class of such goods; (c) the routes by which alone goods or any class of goods specified in the notification may pass by land or inland water into or out of India, or to or from any land customs station from or to any land frontier; (d) the ports which alone shall be coastal ports for the carrying on of trade in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transhipped in accordance with the provisions of Chapter VIII. (2) The person having custody of any imported goods in a customs area, whether under the provisions of sub-section (1) or under any law for the time being in force, - (a) shall keep a record of such goods and send a copy thereof to the proper officer; (b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer. (3) Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilfered after unloading thereof in a customs area while in the custody of a person referred to in sub-section (1), that person shall be liable to pay duty on such goods at the rate prevailing on the date of delivery of an import manifest or, as the case may be, an import report to the proper officer under section 30 for the arrival of the conveyance in which the said goods were carried. Section 141. Conveyances and goods in a customs area subject to control of officers of customs. - (1) All conveyances and goods in a customs area shall, for the purpose of en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd shall render the surplus, if any, to such person : Provided that where the person (hereinafter referred to as predecessor), by whom any sum payable under this Act including the amount required to be paid to the credit of the Central Government under section 28B is not paid, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by the proper officer, after obtaining written approval from the Commissioner of Customs, for the purposes of recovering the amount so payable by such predecessor at the time of such transfer or otherwise disposal or change. (2) Where the terms of any bond or other instrument executed under this Act or any rules or regulations made thereunder provide that any amount due under such instrument may be recovered in the manner laid down in sub-section (1), the amount may, without prejudice to any other mode of reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any detention of any goods made on his information and of any proceedings consequent on such detention; (f) the information required in respect of any goods mentioned in a shipping bill or bill of export which are not exported or which are exported and are afterwards re-landed; (g) the publication, subject to such conditions as may be specified therein, of names and other particulars of persons who have been found guilty of contravention of any of the provisions of this Act or the rules; (h) the amount to be paid for compounding and the manner of compounding under sub-section (3) of Section 137. Section 157. General power to make regulations. - (1) Without prejudice to any power to make regulations contained elsewhere in this Act, the Board may make regulations consistent with this Act and the rules, generally to carry out the purposes of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely :- (a) the form of a bill of entry, shipping bill, bill of export, import manifest, import report, export manifest, export report, bill of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner and hence there is every justification for the "Costs Recovery" insisted upon by the respondents. It is also pointed out that the guidelines which have been framed for purposes of appointing the custodians have stipulated unconditional acceptance for cost recovery of the customs staff and hence the petitioner cannot seek to resile from such an agreement now. It was further contended that, Regulation 5(2) of Regulations 2009 mandated the custodian to bear the cost of the customs officers posted at such customs area on cost recovery basis and hence the demand raised by the respondents is perfectly legitimate. 7. Heard Sri S.R. Ashok, learned Senior Counsel appearing for the writ petitioner and Sri A. Rajasekhar Reddy, learned Standing Counsel for the Customs and Central Excise. 8. Section 7 of the Act conferred power on the Board to appoint and notify such ports and airports which alone shall be customs ports or customs airports for purpose of unloading of imported goods and the loading of export meant goods. It is therefore clear that, not all ports or airports in India are customs ports or airports. It is only at the notified customs ports, customs clearanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed and the responsibilities of persons engaged in the aforesaid activities shall be such as may be prescribed. The expression "prescribed" was defined in Section 2(32) as meaning those as prescribed by the regulations made under the Act. Even if Sections 7, 45 and 141 are read together, what emerges is that, all goods imported or meant for export can be brought to the customs airport and thereafter they shall remain in the custody of the custodian until they are cleared for home consumption or are warehoused or are transshipped in accordance with the provisions contained in Chapter VIII of the Act. But however, any such physical custody of the cargo by the custodian is subject to the control of the officers of the customs, till they are properly cleared. Therefore, to my mind, Section 141(2) can only give scope for framing the regulations prescribing the responsibilities of the customs airport operators and more importantly of the persons engaged in storing, delivering, dispatching or otherwise handling the imported or export meant goods in a customs area (In a given case, the customs airport operator need not necessarily be the custodian appointed under Section 45 of the Act). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation 5(2) of Regulations, 2009 undoubtedly prescribed the custodian to bear the costs of the customs officers posted at such customs area on cost recovery basis. Now the question that is to be resolved is whether this falls within the general power of making regulations or not? Payment of one-time fee for appointment as a customs airport or for recognizing a person as a custodian of goods in a customs area is different from obligating such a person to pay regularly for the costs of the customs officers posted at the customs port or customs airport. Both are not the same. 12. 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. 13. A modern welfare state is obliged to provide for various services and beneficial measures to its citizens. Hence, a welfare state is entitled to make a levy even against the will of the people who are sought to be benefited in the process. In the matter of imposition of such levies, there is no role for the consent of the targeted group or the consent of the beneficiary. It is, hence, implicit t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supporting Legislation strictly within the prescribed sphere has been evolved due to the practical necessities and pragmatic needs of the modern state as the Legislatures, by the very nature of the limitations upon them to conceive all possible circumstances and contingencies at one go and also because of the extremely limited time factor. The Legislatures can hardly work out all the necessary details by themselves. While the Legislature puts in place the life line, the muscular support is supplied through ancillary legislation known as subordinate/delegated legislation, in the form of Rules or Regulations. However, without there being a clear and unambiguous charging provision, by way of ancillary legislation, no taxes can be imposed. In the instant case, the survey of the provisions of the Act have not contemplated for taxing either the appointee or the custodian. Therefore, by making a Regulation, a tax could not have been levied on such appointees of customs airports or the custodians of the uncleared cargo. 15. Assuming that what is levied is not a tax but a fee, it would be imperative to notice that a fee is a charge for special services rendered to individuals or org ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of persons or trade or business the cess is distinguishable from a tax and is described as a fee. Tax recovered by public authority invariably goes into the Consolidated Fund which ultimately is utilised for all public purposes, whereas a cess levied by way of fee is not intended to be, and does not become, a part of the Consolidated Fund. It is earmarked and set apart for the purpose of services for which it is levied. There is, however, an element of compulsion in the imposition of both tax and fee. When the Legislature decides to render a specific service to any area or to any class of persons, it is not open to the said area or to the said class of persons to plead that they do not want the service and therefore they should be exempted from the payment of the cess. Though there is an element of quid pro quo between the tax-payer and the public authority there is no option to the tax-payer in the matter of receiving the service determined by public authority. In regard to fees there is, and must always be, co-relation between the fee collected and the service intended to be rendered. Cases may arise where under the guise of levying a fee Legislature may attempt to impose a tax: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that, a custodian has no other role. He is a facilitator by providing for foolproof or tamper proof premises so that goods do not leave the premises before they are cleared by the customs and correspondingly the necessary duty/revenue is collected smoothly by the State. It is purely incidental, that the custodian may in turn earn some revenue for himself by charging the importer or exporter for facilities provided by him for smooth and eventual clearance of goods by the customs. That is of least importance in the matter of collection of customs duty by the State. I am therefore clearly of the view that, no services are being specially provided by the customs officials to the custodians at a customs port or customs airport, to enable them to collect any fee, from such a custodian. "Cost Recovery" of the salaries and allowances paid to the customs officials is only a dignified form of collection of a fee. Since, no services are specially or generally provided to the custodian, no such fees is liable to be charged. 17. There is no mistaking the respondents; they clearly hinted in their counter affidavit that what is demanded from the petitioner is a fee, by making the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries and allowances and other benefits such as pensions are thus already provided for, the question of seeking their reimbursement separately would not arise. Out of the overall collection of revenue, a certain percentage is thus set apart towards the concomitant expenditure liable to be incurred for raising such revenue. Salaries and allowances, pensions and other terminal benefits payable to the Government servants are integral part of this element of expenditure. When the State directly pays to its employees, the State in turn expects absolute integrity and loyalty from such employees. In the case of employment between the State and its servants, it is appropriate to bear in mind that it is not regulated purely by contractual terms or by general conditions which are otherwise part of any master and servant relationship. There is a status conferred by the State upon its employees. By virtue of this status, it undertakes to protect them from undeserved and undesirable wants. Therefore, a provision is made in the budgetary proposals annually towards the head of their salaries and pensions. 19. Therefore, I am of the opinion that, Regulation 5(2) of Regulations, 2009 has no le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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