TMI Blog2020 (9) TMI 1006X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-15, while the petitioner had processed 5218 TEUs, in contrast, it had only processed 602 BoE/SBs. Upon analysis of the data given, the petitioner has computed that for one BoE/SB, there were 9 TEUs i.e. to say, a ratio of 1:9. On this basis, it is implied by the petitioner that one BoE/SB pertains to more than one TEU. To buttress this contention, the petitioner also relied upon data from Kolkata Port Trust which indicates a ratio of 1:4 i.e. for one BoE/SB there are minimum of 4 TEUs. On the strength of the aforesaid workload data, it was argued before us that, even if the lower ratio of 1:4 was applied to the present factual matrix, a minimum requirement of 1200 BoE/SB would translate into 4800 TEUs. By this analysis, it was argued by the petitioner that if the requirement of 1200 BoE/SB is fulfilled by a custodian, then requirement of 1200 TEUs as prescribed in Clause 1(ii) would be rendered meaningless as it would automatically stand fulfilled - 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 performanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual business of importing/exporting of TEUs, and not the quantum of paper-work required for the same. Firstly, we must point out that this is an inference of the Petitioner which lacks material foundation. Secondly, this argument is wholly misconceived and self-contradictory. We cannot interpret business efficacy in the manner that the Petitioner contends. We also cannot agree with the Petitioner s rationale that actual business is only TEUs, and not the documents i.e. BoE/SB, or that efficacy will always be achieved when more TEUs are imported/exported in one BoE/SB, and not when the same TEU is imported/exported through multiple BoEs/SBs. If we accept this contention, it would mean that those CFS which have higher volume of paper-work should be deemed as inefficient and be denied the exemption, which cannot be correct. Clause 1 (iii) of the Exemption Circularis not to be rendered dead letter or meaningless. In our opinion, the quantum of documentation vis-avis TEUs would be driven by the requirements of each business, and it is not for the court to construe a provision merely on the perceived understanding of some data analysis. Both conditions foresee different parameters of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ster, minuted in the noting as (1) Will the cost recovery be prospective, i.e. after date of issue or orders? (ii) Is it ensured that no claim for past period (i.e. from date of establishment of ICD/CFS) will be made or entertained? (iii) Is It correct to infer that the benchmark will apply to actuals and not on the basis of projections made at the time of establishment of ICD/CFS? . The noting reiterates the rationale behind the concept of exemption. Therefore, in our opinion, the noting, though subsequent to the Exemption Circular, is still relevant in order to gauge the intent of the Exemption Circular. The petitioner had failed to satisfy all the conditions for becoming eligible for the exemptions - Petition dismissed. - W. P.(C.) 5581/2016 - - - Dated:- 24-9-2020 - HON BLE MR. JUSTICE MANMOHAN HON BLE MR. JUSTICE SANJEEV NARULA Petitioner Through: Mr. Dayan Krishnan, Senior Advocate with Mr. Ashish Verma, Mr. Manish Srivastava and Mr. Hardik Vashisht, Advocates. Respondents Through: Mr. Rakesh Kumar, CGSC with Mr. Ruchir Mishra, Mr. Ramneek Mishra, Advocates for Respondents No.1 2. Mr. Amit Bansal, Senior Standing Counsel with Mr. Aman Rewaria and Ms. Vipas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein the number of customs staff sanctioned to be posted at ICD/CFS was given. It was also provided therein that Customs staff for all new ICDs/CFSs was being sanctioned on a cost recovery basis. 4. Later, on 12.09.2005, a Circular No.F.No.434/17/2004 Cus. IV [hereinafter referred to as Exemption Circular ] was issued for regularization of costs recovery posts at ICDs/CFSs that had completed two years of operation and achieved the performance benchmark. The said Circular reads as under: F.No.434/17/2004-Cus.IV Government of India Ministry of Finance Department of Revenue Central Board of Excise Customs Room No.227B, North Block, New Delhi, 12th September, 2005 To, All Chief Commissioners of Customs All Chief Commissioners of Customs Central Excise All Chief Commissioners of Central Excise Sir, Subject: Cost recovery posts in respect of Customs staff posted in ICDs/CFs regarding. I am directed to bring your kind attention that it has been decided to consider regularization of those cost recovery posts at ICDs/CFSs which have been in operation for two consecutive years with following performance benchmark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued 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 custodians at ports / airports would continue to be exempt from the payment of charges for the customs officers deployed therein. 5. 4. X X X X 5. 5. As regards ICDs / CFSs, Government had taken a decision to waive the requirement of cost recovery charges to be paid by ICD / CFS, if they fulfil the laid down norms and are in existence for a consecutive period of two financial years. These norms include parameters such as the total number of import or export containers handled, the customs declarations filed for import or export, etc. Board s instructions vide D. O. letter F.No.A.11018/12/2008-Ad. IV dated 2. 7. 2008 refer in this regard. Accordingly, the eligible ICDs / CFSs which fulfil the laid down criteria are being considered for exemption from payment of cost recovery charges and specific orders in individual cases are issued by Ad. IV Section. These orders are being referred to as the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... causing dislocation in work; (ii) exemption from cost recovery charges for eligible facilities for which posts were sanctioned would be for the entire staff sanctioned (for which cost recovery charges were taken) even if it is in excess of the staffing norms fixed subsequently, in2013; and (iii) at eligible facilities having both sanctioned and non-sanctioned posts, the exemption of cost recovery charges for non-sanctioned posts would be dealt with as per decision at (i)above and for sanctioned posts, it would be as per decision at(ii) above. 2. The performance benchmark and conditions for grant of waiver from the payment of cost recovery charges shall be same as provided in Board s letter F.No.434 / 17 /2004-Cus. IV dated 12.09.2005 (for ICDs/CFSs) and Board s Circular No. 16/2013Cus dated 10.04.2013 (for Seaports, Air Cargo Complexes, Courier Terminals, Diamond Plazas, etc). 3. It is reiterated that the above categories at para -1 is only a onetime measure. Regular requests for waiver of cost recovery charges would be processed by this Directorate as per extant provisions. 4. Information on grant of waiver of cost recovery charges in respect of above t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It appears that, you have not fulfilled the performance benchmark in terms of CBEC s letter F.No. 434/17/2001-Cus. IV dated 12.09.2005 and liable for rejection for waiver from the payment of cost recovery charges. Your views, if any, may please be intimated to the undersigned in writing within 3 (three) days to enable this office for further necessary action. Yours faithfully, Sd/- Additional Commissioner of Customs (CCO CCA) 10. In response to the above, the petitioner sent a communication dated 22.02.2016 to the respondentsNo.3 and 4 seeking details with respect to the provision under which petitioner s claim for exemption had been rejected. Shortly thereafter, on 04.04.2016, the Deputy Commissioner of Customs raised a demand of CRC upon the petitioner for the period 01.01.2015 to 31.03.2016 amounting to INR 1,18,24,175/-. Aggrieved with the aforesaid demand, the petitioner filed the instant petition challenging the decisions dated 18.02.2016 and 04.04.2016 of the respondents No.3 and 4. Proceedings in the present petition: 11. On 03.06.2016, when the present petition came up for hearing, this Court directed that no co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and the letter dated 03.11.2015, issued by the DGHRD for grant of waiver from payment of CRC, continue to apply, subject to fulfilment of performance benchmark, to seek waiver on a year-to-year basis. This was recorded in the proceedings dated 28.08.2020. The Controversy: 17. In view of the above-noted stand of the parties, the controversy in the present petition is now substantially narrowed down. The challenge on the vires of the Regulations, as noted above, is no longer subsisting. We have to now only examine the merits of the remaining prayer in the petition, challenging the revenue s demand of CRC. On this issue, respondents contend that the petitioner has not met the performance benchmark stipulated in the exemption Circular. From the record, it emerges that concededly the petitioner has fulfilled only one of the criteria stipulated i.e. handing the number of TEUs, and has patently not fulfilled the other criterion in respect of the number of Bill of Entry /Shipping Bill [hereinafter referred to as BoE/SB ] processed for the years 2013-14 and 2014-15, as per the Impugned Letter dated 18.02.2016. The petitioner however contends that notwithstanding the above statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017-2018 1200 TEUs 2368 TEUs 2018-2019 1200 TEUs 2355 TEUs 2019-2020 1200 TEUs 3497 TEUs 2020-2021 (April May 2020) 1200 TEUs 1892 TEUs 19. Mr. Krishnan contended that since the regulatory criterion of handling of 1200 TEUs for each Financial Year, as prescribed in the Exemption Circular, had been duly met, the Petitioner should get the waiver of CRC, irrespective of its failure to attain the benchmark figure prescribed in Clause 1(iii) for processing of BoE/SB. Mr. Krishnan submitted that a plain and ordinary meaning of the benchmarks should be adopted. There was nothing in the Exemption Circular to indicate that the petitioner was required to satisfy more than one of the benchmarks prescribed in it. He relied upon Clause 5.5 of the Circular dated 23.03.2009 and placed emphasis on the punctuation mark (,) appearing in the second sentence of the said Clause, to state that the comma between the norms indicated that same was disjunctive and not conjuncti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords the discussion on the said Circular. He submitted that the said file noting clearly suggests that the conditions regarding number of containers and number of documents have to be satisfied simultaneously. Besides, he also submitted that the exemption circulars have to be strictly construed in order to claim benefit thereunder. Petitioner s proposition is contrary to the settled position in law relating to interpretation of exemption notifications. 22. In rejoinder thereto, Mr. Krishnan rebutted the contentions of Mr. Bansal and submitted that the Exemption Circular does not state that all conditions / benchmarks have to be simultaneously satisfied, in the absence whereof, endeavour should be made to construe the provisions of exemption circular harmoniously so that the intent is not frustrated. With respect to the file noting relied upon by respondent No.3, Mr. Krishnan submitted that the said file noting was of a date subsequent to the Exemption Circular, and despite specific orders of the Court, the Respondents have been unable to produce any file noting of a date prior to the Exemption Circular, which would contain deliberations or reasons for the incorporation of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of containers handled by CFS : 1200 TEUs per annum. (iii) No. of BE or SB purchased by ICUs / CFSs : 7200 per annum for ICDs and 1200 for CFSs. (iv) Bench mark at (1) to (3) shall be reduced by 50% for those ICDs/CFSs exclusively dealing with exports, as per staffing norms. 26. The evaluation of the performance of the Petitioner is based primarily upon two criteria: firstly, on the number of containers/TEUs handled by CFS as given in Clause 1 (ii), and secondly, on the number of BoE/SB processed by CFS as given in Clause 1 (iii).The simple question that hinges before us is whether these criteria at Clauses 1 (ii) and 1 (iii) were to be satisfied simultaneously, or whether the satisfaction of any one of the Clauses would suffice, in order to make the Petitioner eligible for waiver of CRC. 27. As stated previously, the petitioner contends that the conditions enumerated above should be read disjunctively, and that a contrary interpretation would be irrational and render Clause 1(ii) meaningless. To support this argument, the petitioner had relied upon work load data available with the respondents, qua the petitioner, as indicated in the Impugned Letter dated 18.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a envisage different parameters of performance by an ICD/CFS operator. Clause 1 (ii) envisaged number of and volume of goods handled (container/TEUs), whereas, Clause 1 (iii) envisaged the number of documents and volume of business handled. As pointed out by Mr. Bansal, there can be a situation where a document (BoE/SB) may contain goods that require more than one container, but conversely, there can also be an eventuality where a container may contain goods that are subject matter of more than one document. This would largely depend on the nature of goods. Thus, there can be a situation when there would be no correlation between the two. Mr. Bansal has further explained that a container is provided by the shipping line and it is for them to determine how to extract them. He submits that for less bulky goods, there might be more than one BoE/SB container. This situation, as portrayed by Mr. Bansal, cannot be ignored. There can be circumstances where there may be more than one BoE/SB per container. It is for this reason that the benchmarking criteria has been prescribed in such a manner that the performance can be evaluated on dual parameters for deciding the eligibility for exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n rejoinder submissions, the rationale behind such incentivization was to promote the import/export of goods, to encourage business efficacy by targeting increase in actual business of importing/exporting of TEUs, and not the quantum of paper-work required for the same. Firstly, we must point out that this is an inference of the Petitioner which lacks material foundation. Secondly, this argument is wholly misconceived and self-contradictory. We cannot interpret business efficacy in the manner that the Petitioner contends. We also cannot agree with the Petitioner s rationale that actual business is only TEUs, and not the documents i.e. BoE/SB, or that efficacy will always be achieved when more TEUs are imported/exported in one BoE/SB, and not when the same TEU is imported/exported through multiple BoEs/SBs. If we accept this contention, it would mean that those CFS which have higher volume of paper-work should be deemed as inefficient and be denied the exemption, which cannot be correct. Clause 1 (iii) of the Exemption Circularis not to be rendered dead letter or meaningless. In our opinion, the quantum of documentation vis-avis TEUs would be driven by the requirements of each busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be misdirected. The stress given to this separator is entirely out of context. The surrounding words both preceding and succeeding the comma have to be read together to give a complete meaning. The complete sentence reads as- These norms include parameters such as the total number of import or export containers handled, the customs declarations filed for import or export, etc The sentence expressly uses the expression such as , and then mentions some of the parameters by way of illustration or example, separated with the use of a comma, and followed by the word etc . This makes it clear that the comma has been merely used to separate the descriptive parameters, which are being mentioned inclusively. It is also obvious that these are a few of the parameters, which have been illustrated, and there may be more. All of the above makes it abundantly clear that the sentence cannot be construed to mean that the parameters, as separated by the comma, are to be read disjunctively to imply satisfaction of individual parameter separate from the rest. 35. We would also like to note that on a query by this Court, Mr. Bansal has confirmed that these parameters have been consistently app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d decision rendered in the 1997 case was in conflict with the position of law and was therefore, overruled. The Court then held that: exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption Clause or exemption notification . The Court further observed that in the case of ambiguity in taxing liability statute, the benefit should go to the subject/assessee, but the situation would be different while interpreting tax exemptions, in the following words: thus we may emphatically reiterate that if in the event of ambiguity in a taxation liability statute, the benefit should go to the subject/ assessee. But, in a situation where the tax exemption has to be interpreted, the benefit of doubt should go in favour of the revenue. The case law cited by the Petitioner is distinguishable on facts and also has no relevance to the present case. Keeping the aforesaid principles in mind, we have no hesitation to hold that the petitioner had failed to satisfy all the conditions for becoming eligible for the exemptions. 38. In view of the above, there is no merit in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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