Bombay High Court
M/S. Mumbai International Airport ... vs The Union Of India, Through Secretary, ... on 13 October, 2014
Author: S. C. Dharmadhikari
Bench: S.C. Dharmadhikari
*1* wp.584 & 697.13
sbw
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.584 OF 2013
WITH
WRIT PETITION NO.697 OF 2013
M/s. Mumbai International Airport
Private Ltd.
having its registered office at
Chhatrapati Shivaji International Airport
1st floor, Terminal B,
Santacruz (E), Mumbai-400 099. ..Petitioner
-Versus-
1. The Union of India
Through the Secretary,
Ministry of Finance, Department
of Revenue, North Block,
New Delhi - 110 001.
2. Central Board of Excise & Customs,
North Block,
New Delhi - 110 001.
3. The Commissioner of Customs (Export)
Air Cargo Complex, Sahar,
Andheri (E), Mumbai-400 099.
4. The Commissioner of Customs (Import)
Air Cargo Complex, Sahar,
Andheri (E), Mumbai-400 099.
5. The Additional Commissioner of Customs
(Admn.)
Air Cargo Complex, Sahar,
Andheri (E), Mumbai-400 099.
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6. The Deputy Commissioner of Customs
(Admn.)
Air Cargo Complex, Sahar,
Andheri (E), Mumbai-400 099.
7. Assistant Commissioner of Customs
(Admn.)
Air Cargo Complex, Sahar,
Andheri (E), Mumbai-400 099. ..Respondents
...........
Mr. V. Sridharan, Senior Counsel, with Mr. Prakash Shah, Mr. Jas Sanghavi
& Mr. Rahul Thakar i/b. PDS Legal for the Petitioners.
Mr. Pradeep S. Jetly for the Respondents.
ig ...........
CORAM: S.C. DHARMADHIKARI
AND
B.P. COLABAWALLA, JJ.
RESERVED ON : 28th JULY, 2014
PRONOUNCED ON :13th OCTOBER,2014
JUDGMENT (PER S. C. DHARMADHIKARI, J.)
1] These two Petitions have been placed before us and both sides requested that they be disposed of finally. We have acceded to this request of the parties and their counsel and accordingly heard them extensively.
Hence, Rule. Respondents waive service. By consent, Rule made returnable forthwith.
2] The four essential reliefs that are prayed in this Writ Petition are as
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under:-
"(a) That this Court be pleased to issue a writ of Mandamus or an appropriate writ, order or direction under Article 226 of the Constitution of India declaring that the Regulation 5(2) of the Handling of Cargo in Customs Areas, 2009 is inapplicable to the Petitioner.
(b) That this Court be pleased to issue a writ of Mandamus or an appropriate writ, order or direction under Article 226 of the Constitution of India declaring that the Regulation 5(2) of the Handling of Cargo in Customs Areas, 2009 is ultravires section 157 and 158 or any other provision of the Customs Act, 1962.
(c) That this Court be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ or order or direction under Article 226 of the Constitution of India declaring that the Regulation 5(2) of the Handling of Cargo in Customs Areas Regulations, 2009 is ultravires Article 14 and Article 19(1)(g) of the Constitution of India.
(d) That this Court be pleased to issue a writ or Mandamus or a writ in the nature of Mandamus or any other appropriate writ or order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner's case and after going into the validity and legality thereof to quash the demand notices dated 8 th June, 2011, 18th July, 2011, 29th March, 2012, 16th April, 2012 and 13 th 3/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *4* wp.584 & 697.13 June, 2012.
3] The Petitioners in these two Petitions are Private Limited Companies registered under the provisions of Indian Companies Act, 1956. They are, inter alia, engaged in the operation, management and development of Chhatrapati Shivaji International Airport, Mumbai, (for short "C.S.I.A.") and the Air Cargo Complex, Sahar, Mumbai. The Respondents are the officers and authorities exercising powers under the Customs Act, 1962 and the regulations framed thereunder.
4] The Petitioners submit that as a part of the policy to encourage private sector participation in the development of Airport infrastructure, the Government of India granted an in-principle approval for developing the C.S.I.A. and the adjoining Air Cargo Complex. The Petitioner company was selected as a successful bidder through the bidding process for the purposes of implementation of this policy. In terms of this decision, the necessary legislations, namely, the Airport Authority of India Act, 1994 were amended. The Petitioner herein entered into an Operation, Development and Maintenance Agreement dated 4 th April, 2006 with the Airports Authority of India (hereinafter referred to as 'OMDA') and a State Support Agreement dated 26 th April, 2006 4/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *5* wp.584 & 697.13 (hereinafter referred to as 'SSA') with the Hon'ble President of India acting through the Secretary, Ministry of Civil Aviation of Government of India.
In terms of these agreements, in particular, the OMDA, the Petitioner was given the exclusive right to operate, develop, manage and maintain CSIA including the Air Cargo Complex (a part thereof) but excluding certain activities such as customs, immigration, security etc. (known and defined as Reserved Activities under OMDA) for a period of 30 years, renewable for a further period of 30 years.
5] The Petitioners further submit that pursuant to the OMDA and in view of section 12A of the Airports Authority of India Act, 1994, the Airports Authority of India entered into a Lease Deed dated 26 th April, 2006 with the Petitioner by means of which all the lands (along with any buildings, constructions or immovable assets, if any thereon) of CSIA, as stated therein, were leased to the Petitioner for a period of 30 years.
6] The Petitioners submit that it is pertinent to note that the functions of customs, immigration, plant and quarantine etc. are being performed by the respective officials of Respondent No.1. Similarly, in respect of import/export of goods through the Air Cargo Complexes, the custody of such cargo till the time it is cleared for export or home consumption lies 5/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *6* wp.584 & 697.13 with the custodian appointed under Section 45 of the Act. Further to the OMDA and the SSA and for uninterrupted handling of cargo operations at CSIA, the Ministry of Civil Aviation vide letter dated 28 th April, 2006 requested the Respondent No.2 to issue a necessary notification under the Customs Act, 1962 to declare/appoint the Petitioner as custodian.
7] The Petitioners further submit that accordingly, Respondent No.3 vide Public Notice No,1/2006 ACC dated 3 rd May, 2006 appointed the Petitioner as custodian of the Air Cargo Complex under section 45 of the Customs Act. At this point, it is submitted that vide the above Public Notice, the custodianship of the Air Cargo Complex was transferred to the Petitioner from the Airports Authority of India and Air India who were joint custodians vide Public Notice No.1/2002 ACC dated 19 th October, 2002.
8] After legislative history of duties, functions and obligations of custodian appointed under section 45 of the Customs Act, 1962, the Petitioners state that a Circular No.34/2002-CUS dated 26 th June, 2002 (Annexure-D) was issued and condition No.10 thereof reads as under:-
" (10) The custodian shall bear the cost of the Customs Staff posted at the Sea Ports and Air Cargo Complexes. The 6/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *7* wp.584 & 697.13 Commissioner of Customs shall decide the number of staff, which is required to be posted in the facility considering the workload in the station."
9] Subsequently, vide Circular No.27/2004-CUS dated 6th April, 2004, it was notified by Respondent No.2 that certain categories of custodians shall be exempt from following the guidelines issued under the aegis of Circular No.34/2002-CUS dated 26th June, 2002. Relevant paragraph of the aforementioned Circular is reproduced herewith:-
".......Doubts have been raised by the field formations whether these guidelines will apply only to custodianship of new ports and new air cargo complexes or they will also apply to the following cases in respect of already functional ports or air cargo complexes (including courier terminals).
(i) Custodian notified under section 45 of Customs Act, prior to 26th Jun, 2002 and no change in custodianship or area after 26th June, 2002.
(ii) Custodian notified prior to 26th June, 2002 but part or whole of the same premises transferred (on lease or otherwise) to new custodian on or after 26th June, 2002 (e.g. Airport Authority of India (AAI) is the custodian of Mumbai Air th Cargo Complex from a period prior 26 June, 2002. They th have later, after 26 June, 2002, transferred custodianship for part of the Air Cargo Complex to Air India).
(iii) Custodian notified prior to 26th June, 2002 but premises 7/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *8* wp.584 & 697.13 extended after 26th June, 2002 under the same custodianship.
2. The matter has been examined by the Board and it is clarified that the new guidelines issued vide Board's Circular No.34/2002-Cus, dated 26th June, 2002 will not apply to the above categories of cases...."
10] Vide Notification No.26/2009-Cus (N.T.) dated 17 th March, 2009, the Handling of Cargo in Customs Areas Regulations, 2009 (hereinafter referred to as "Regulations") were notified by Respondent No.2. The Regulations were made in exercise of powers under section 141 read with section 157 of the Act. Clause 5 of the Regulations therein laid down the conditions required to be followed by the custodian. Sub-clause (2) of Regulation (5) reproduced the Condition No.10 of Circular No.34/2002 i.e. the Custodian has to bear the cost of Customs staff posted there.
11] Circular No.13/2009-Cus dated 23th March, 2009 was issued by Respondent No.2, wherein the scope and operations of the Regulations was clarified. At para 5.3 of the circular, it was specifically stated that Custodians who were exempt under Circular No.27/2004-Cus dated 6 th April, 2004 would continue to be exempt even under the Regulations.
Subsequently vide Notification No.96/2010-Cus (N.T.) dated 12 th November, 2010, the said Clause (5) was substituted.
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12] In furtherance of the amendment vide Notification No.96/2010-Cus
(N.T.) dated 12th November, 2010, the Respondent No.2 issued Circular No.4/2011-Cus dated 10th January, 2011 2 whereby it was stated at para 8 that existing custodians even if appointed before the Regulations came into force, were liable to comply with Regulations (5) and (6) of the Regulations. In lieu of the same, vide Public Notice No.02/2011 dated 5 th May, 2011, the Respondent No.3 at clause (24) of the Public Notice held that the Petitioner is liable to bear the cost of customs staff posted at the Air Cargo Complex.
13] The Petitioner vide letter dated 9th May, 2011, requested Respondent No.3 for some time since they intended to take up the matter with the Respondent No.1. Vide letter dated 20th May, 2011, Joint Commissioner of Customs accorded the concurrence for commencement of operations at the new Perishable Cargo Terminal for export cargo with effect from 16 th May, 2011, however, for the limited hours from 8.00 a.m. to 10.00 p.m. against the Petitioner's request for 24X7 hours.
14] The Petitioner vide its letter dated 28th May, 2011 responded to the Respondents letter dated 20th May, 2011 explained the practical difficulties faced by the Petitioner for the limited operation from 8.00 a.m. to 8.00 9/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *10* wp.584 & 697.13 p.m. and once again requested to allow 24 hours custom operations. Vide letter dated 6th June, 2011, the Respondent No.3 sought intimation as to the Tariff for the new perishable cargo terminal has been approved by Airport Economic Regulatory Authority (AERA) and also sought total tonnage of cargo handled at new perishable cargo terminal for the month of May 2011. Subsequently, the Respondent No.7 vide letter dated 8 th June, 2011, directed the Petitioner to pay cost recovery charges in terms of the regulations amounting to Rs.8,16,366/-. However, no word on this was received from the Respondents to the aforementioned letter.
Accordingly, vide letter dated 10th June, 2011 addressed to Respondent No.7, the Petitioner paid the entire amount of Rs.8,16, 366/-, under protest and without prejudice to the rights and remedies available to the Petitioner.
15] The Petitioners submit that the Joint Commissioner of Customs of the Respondents vide its letter dated 16 th June, 2011 sought information on approval of tariff by AERA to the new perishable cargo terminal and also directed to comply with the regulations of Handling of Cargo in Customs Area Regulations 2009. Subsequently, vide Circular No.29/2011- Cus dated 18th July, 2011, it was clarified that the custodians exempt under Circular No.13/2009-Cus would continue to enjoy the exemption 10/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *11* wp.584 & 697.13 from the regulations, including that in respect of cost recovery charges.
The earlier Circular No.4/2011-Cus dated 10th January, 2011 was modified to this extent.
16] Hence, the Petitioner cannot be saddled with payment of such charges. The Petitioner is not a custodian within the meaning of Section 45 of the Customs Act, 1962. Therefore, Regulation 5(2) or levy of such cost recovery charges is in-applicable to the Petitioner.
17] Without prejudice to the above, the Petitioner is not liable to comply with the mandate of Regulation 5(2) of the Regulation vide Para 5.3 of Circular No.13/2009-Cus dated 23rd March, 2009, as re-affirmed by para 3 of Circular No.29/2011-Cus dated 18th July, 2011. Prior to coming in force of the subject regulations, the custodians appointed under the Act were liable to follow with the guidelines mentioned in Circular No.34/2002-Cus dated 26th June, 2002, the annexure whereof gave an identical condition for provision of cost recovery charges. Subsequently, it was clarified that certain categories of custodians were made exempt from the operation of the guidelines, as mentioned above, vide Circular No.27/2004-Cus. The categories are reproduced below for ready reference.
11/44 ::: Downloaded on - 16/10/2014 23:48:23 :::*12* wp.584 & 697.13 "I am directed to invite your attention to Board's Circular No.34/2002-Cus, dated 26-6-2002 [2002 (143) E.L.T. T49] vide which a set of guidelines was prescribed for appointment of custodians of Air Cargo Complex and Seaports. Doubts have been raised by the field formations whether these guidelines will apply only to custodianship of new ports and new air cargo complexes or they will also apply to the following cases in respect of already functional ports or air cargo complexes (including courier terminals).
(i) Custodians notified under section 45 of Customs Act, prior to 26-6-2002 and no change in custodianship or area after 26-6-2002.
(ii) Custodians notified prior to 26-6-2002 but part or whole of the same premises transferred (on lease or otherwise) to new custodian on or after 26-6-2002. [e.g. Airport Authority of India (AAI) is the custodian of Mumbai Air Cargo Complex from a period prior 26-6-2002. They have later, after 26-6-2002, transferred custodianship for part of the Air Cargo Complex to Air India].
(iii) Custodians notified prior to 26-6-2002 but premises extended after 26-6-2002 under the same custodianship.
2. The matter has been examined by the Board and it is clarified that the new guidelines issued vide Board's Circular No.34/2002-Cus, dated 26-6-2002 will not apply to the above categories of cases. However, the conditions and obligations already being discharged by the earlier custodians for such existing air cargo complexes (including courier terminals) or ports should be retained and applied to the new custodians also."
A bare perusal of the same shows that the Petitioner is covered within clause (ii) of the same.
18] The Petitioners further submit that the Respondents have neither 12/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *13* wp.584 & 697.13 denied this fact nor disputed it since the OMDA and the SSA were entered into in 2006. The Respondents are now levying the cost recovery charges from the Petitioner in view of the Regulations and Circular No.4/2011-Cus dated 10th January, 2011 which makes is mandatory for the Custodian to comply with Regulations 5 and 6 of the Regulations. The Respondent No.2, has time and again, vide various circulars confirmed the position that custodians falling within Circular No.27/2004-Cus are not liable to comply with Regulation 5(2) of the Regulations. Circular No.29/2011-Cus dated 18th July, 2011 is the latest circular issued by Respondent No.2 and takes into the entire devolution of this issue from 2002 onwards. It is submitted that circulars are binding on the Customs Authorities. Hence, in view of the same, the Petitioner is not liable to pay such cost recovery charges in terms of Regulation 5(2) of the impugned regulations.
19] Finally, it is urged that Regulation 5(2) is ultravires section 157 and 158 of the Customs Act, 1962. Relying on section 141(2) and section 157, it is urged that the Regulation 5(2) which casts the burden of the costs of the Customs officers posted at the custom area, on cost recovery basis, on parties like the Petitioner, does not fall within the purview of the above provisions. Mr. Sridharan has invited our attention to the grounds in the Writ Petitions while elaborating this challenge.
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20] For all these reasons, it is submitted that the Writ Petitions be
allowed.
21] Mr. Sridharan, placed reliance on the following judgments in
support of his above contentions:-
1) Board of Trustees of the Port of Bombay V/s. Union of India
reported in 2009 (241) ELT 513 (Bom);
2) International Airports Authority V/s. Grand Slam International
of India reported in 1995 (77) ELT 753 (S.C.);
3) Lohara Steel Industries Ltd. & Anr. V/s. The State of Andhra
Pradesh & Anr. reported in (1997) 2 Supreme Court Cases 37;
4) Calcutta Municipal Corporation & Others V/s. Shrey Mercantile (P)Ltd. & Others Reported in 2005 (4) SSC 245; and
5) Order passed in Writ Petition No.27840 of 2010 in the case of GMR Hyderabad International Airport Ltd. V/s. Central Board of Excise & Customs & Ors.
22] On the other hand, Mr. Jetly, learned counsel, appearing on behalf of the Respondents submit that there is no merit in the Writ Petitions and deserve to be dismissed. He submits that the Petitioner have not pointed out the true and correct facts. It is the Petitioners who requested for construction of Perishable Cargo Center for exports vide their letter dated 13th April, 2009. By letter dated 26 th March, 2010, the Petitioners submitted certain features of this Center. Thereafter, a letter dated 3 rd 14/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *15* wp.584 & 697.13 May, 2011 was received from the Vice President, Cargo, of the Petitioners regarding custodian bond and indemnity bond for center for perishable cargo. Further, request was made to grant approval as per section 45 of the Customs Act, 1962 to the Petitioners and M/s. CSC India Pvt.Ltd. who act as custodian and an outsourced agency to operate the facility and issue necessary Notification and approval in this regard.
23] The Commissioner of Customs (Exports) approved the appointment of Cargo Service Center India Pvt. Ltd. as Customs Cargo Service Provider for a period of two years from the date of issue of the letter.
24] Mr. Jetly, therefore, submits that not only this document but a Notification issued on the very date i.e. 5 th May, 2011 under section 8(a) of the Customs Act, 1962 declaring the Perishable Cargo Terminal as customs area would support the Respondents stand. Notification No.2/2011 dated 5th May, 2011 was issued under section 45(1) and 141(2) of the Customs Act, appointing the Petitioners as custodian of Perishable Cargo Terminal. Thereafter, by the letter of the very date, the Commissioner (Exports) granted permission to the Petitioners to set up a Perishable Cargo Terminal in terms of the handling of Cargo in Customs Area Regulations, 2009. By para 4(XXIII), the Petitioners were informed 15/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *16* wp.584 & 697.13 that they would have to bear the charges of Customs Staff posted at the Perishable Cargo Terminal, by the Commissioner of Customs (Air Cargo Complex) on cost recovery basis in terms of the Ministry's guidelines issued from time to time. On 10th June, 2011, the Petitioners paid cost recovery charges amounting to Rs.8,16,336/-. They have also paid the charges by letters dated 12 th December, 2011 and 21 st August, 2012 in the sum of Rs.21,994,598/- and Rs.55,68,330/-.
25] Hence, Mr. Jetly submits that there is no substance in the challenge raised by the Petitioners. He submits that the Petitioners argument that the Regulations apply only to those custodians appointed under the Airport Authority of India Act, 1994 and not the Customs Act, 1962, is not tenable in law. Therefore, their challenge to the Regulation 5(2) is also devoid of merits.
26] Mr. Jetly submits that in exercise of the powers conferred by section 141(2) read with section 157 of the Act, the Regulations which have been referred above, have been framed and later on notified. Mr. Jetly further submits that all Customs Cargo Service Providers, who were already approved, on or before the date of coming into force of these regulations, are required to comply with the conditions contained in these regulations 16/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *17* wp.584 & 697.13 as specified in the Regulations. Regulation 5 sets out the conditions to be fulfilled by Customs Cargo Service Providers.
27] Mr. Jetly further submits that reliance by the Petitioners is placed on the fact that they are the Custodians appointed not by the Commissioner of Customs but are created under respective statutes such as Airport Authority of India Act. Section 45 of the said Act provides that no custodian other than approved by Commissioner of Customs or notified under any other statute should act as Custodians. This read with 'Handling of Cargo in Customs Area Regulation' 2009 implies that while the Custodians approved under any other statute need not take approval of the Commissioner of Customs, they are not absolved from their obligation and responsibilities as envisaged under the Handling of Cargo in Customs Area Regulation, 2009. These regulations have been framed under section 141(2) which is uniformly applicable for manner of receipt, storage and dispatch of goods in customs area. In other words irrespective of the fact whether Custodians are appointed by Customs or are created under any other statute, the manner of receipt, storage and dispatch of goods in customs area etc. shall be uniform and also the responsibilities and obligation cast upon Custodians under HCCAR framed under section 141 of the said Act.
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28] Mr. Jetly submits that as per Regulation 5(2) of Handling of Cargo
in Customs Area Regulations, 2009, the CCSP shall undertake to bear the cost of 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 India in the Ministry of Finance. The Custodian is essentially required to take charge of the imported goods from the carrier, arrange its proper storage and safety and allow clearance to the importers only after they fulfill all the Customs formalities, pay requisite duties and other charges/fees and discharge various other obligations. No goods can be cleared from a Customs Area without the express permission of the Customs. Moreover, the said Act, obliges the custodians to ensure safe custody of the goods till delivery.
29] Mr. Jetly further submits that the Ministry of Civil Aviation vide letter F. No.AV.24011/04/2004-AAI (Pt.I) dated 28 th April, 2006 specified transfer of custodianship from AAI to the Petitioners in case of Mumbai Airport. The Petitioners addressed a letter to the Commissioner of Customs, Air Cargo Complex on 2 nd May, 2006 requesting to amend the standing order to bestow the custodianship in favour of JVC, namely, the Petitioners. This fact confirms that the Petitioners are a Custodian by 18/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *19* wp.584 & 697.13 virtue of the provisions of the said Act for the purposes as specified under the Handling of Cargo in Customs Area Regulations, 2009. Unlike the Airports Authority of India which hitherto financed, developed, operated and maintained the airports, the Petitioners are a private entity with commercial concerns.
30] Mr. Jetly further points out that the Government sanctions additional manpower resources at the request of the Custodian to be posted at these ports/terminals over and above the regular strength to service the facility run by their custodians for their own commercial gains.
The cost recovery charges at a specified rate are levied for the postings of customs officials additionally sanctioned over and above regular posts.
Therefore, if such charges are not recovered, that could amount to profiting at the expense of tax payers. The charges are required to be paid to the Government for the costs incurred by the exchequer towards its staff posted at these ports and not directly as salaries and allowances to the government employees. Hence, the demand cannot be said to be illegal and invalid. Mr. Jetly has relied upon the Notifications whereby there is a bifurcation of areas of Custodians of Airport Authority of India and Air India. Copies of the same have also been annexed to the affidavit in reply. It is urged that the area on which new Perishable Cargo Terminal 19/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *20* wp.584 & 697.13 is constructed was not notified as Customs Area. This is a new construction and new customs notified area. Thereafter, Mr. Jetly has pointed out that the customs Commissionerate has also notified a new Air Freight Station at Mulund vide Notification No.3/2012 dated 9 th April, 2012 for which the cost recovery charges have been demanded.
Therefore, a Government of India undertaking also paid the same. Mr. Jetly relied upon several policies and guidelines formulated for controlling the activities of Custodians and urged that the handling of Cargo in Customs Areas Regulations, 2009 have been framed by the Department consequent to the amendment of the said Act. Therefore, according to Mr. Jetly, Section 141(2), 157 and the Notifications and Circulars should be read together. Mr. Jetly relied upon a Custodian Bond submitted by the Petitioners for Perishable Cargo Terminal and a copy thereof is annexed as Annexure 11. He relied upon para 9 thereof at page 164 of the paper book.
31] Mr. Jetly submits that for the reasons that have been set out in the affidavit, it is apparent that the Petitioners will have to comply with the demand. They have always understood that the liability to pay these charges would have to be borne by them. That is how they executed the undertakings and bonds. For all these reasons, he submits that there is no 20/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *21* wp.584 & 697.13 merit in the Writ Petition and it should be dismissed.
32] The Petitioners have filed a rejoinder affidavit in Writ Petition No.697 of 2013. The Petitioners have also filed an affidavit in reply in Writ Petition No.697 of 2013 wherein they have sought to clarify that the liability or obligation to make payment does not arise and in the circumstances set out in the Writ Petition. The Petitioners have placed reliance upon the statements which contain the figures of payment of rent and electricity and water charges. They have pointed out that all the amenities and facilities have been provided by the Petitioner to the Respondents for smooth functioning and operations of their work at CSIA and Air Cargo Complex. They have also placed reliance upon a Circular No.13/2009-Cus dated 23rd March, 2009 to claim exemption from payment of the subject charges. They have also referred to the Minutes of the Meeting held on 12th November, 2010. The Petitioners placed reliance on Circular No.29/2011-Cus dated 18th July, 2011. It is, therefore, reiterated that certain custodians are out of the purview of the resolutions and they cannot be applied to them. It is in this background that they deny all the contentions in the affidavit in reply. It is claimed that the present case is not one where the sovereign appoints customs officers at every Air Cargo Complex. It is submitted that certain places are notified 21/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *22* wp.584 & 697.13 as ports of import/export etc. under section 7 and 8 of the Customs Act, 1962. At these notified places, in order to conduct business more efficiently, the sovereign appoints private players to aid in discharge of their functions. Therefore, this is not an unfair or unjust enrichment at the expense of the Respondents or the tax payers. It is in these circumstances that it is submitted that the sovereign function has not been discharged and there is no need for any payment rather it is the Respondents who should suitably compensate the Petitioners. For all these reasons, it is submitted that the Writ Petition be allowed.
33] For properly appreciating the rival contentions, the basic facts need to be referred. The basic facts are that Ministry of Civil Aviation addressed a letter to the Central Board of Excise and Customs, New Delhi, on 28th April, 2006. That was on the subject of transfer of custodianship.
A copy of this letter is annexed as Annexure-A to the Writ Petition and the same reads as under:
"For development and management of world-class airport at Delhi and Mumbai Airports the Government of India had decided to form a Joint Venture Company with strategic private partners holding 74% of the equity and the balance 26% to be held by AAI. After international competitive bidding process, a consortium led by M/s. GMR Infrastructure Ltd. was selected for the strategic partnership for operation, development and management of Delhi Airport and similarly consortium led by M/s. GVK Industries Ltd. for Mumbai 22/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *23* wp.584 & 697.13 Airport. The two Joint Venture Companies namely Delhi International Airport Private Limited and Mumbai International Airport Private Limited have accordingly been incorporated to take over Operations and Management of Delhi and Mumbai Airport.
At present AAI, erstwhile IAAI, is declared as Custodian of cargo in respect of IGIA, New Delhi vide Custom's Public Notice No.30 of 1986 (copy enclosed). Similarly in respect of Mumbai, Commissioner of Customs, Air Cargo Complex, Sahar, Andheri (East) Mumbai has issued Notification No.01/2002 (ACC) dated 19.10.2002 for allowing dual custodianship in the name of Airports Authority of India and Air India Limited (copy enclosed).
In accordance with the provisions of the Operations, Management and Development Agreement (OMDA), the two Joint Venture Companies (JVCs) shall be taking over their responsibilities form AAI very shortly for uninterrupted handling of cargo operations at these two airports, it is necessary that the two JVCs viz. Delhi International Airport Private Ltd. and Mumbai International Airport Private Ltd. are declared custodians for import/export and transshipment of goods and cargo at IGI and CSI Airport respectively in place of AAI. It is requested that necessary notification to be effective from the date the two companies take over from AAI may please be issued at the earliest."
34] Thereafter and as explained by the Respondents in their affidavits, the Notification under section 45(1) of the Customs Act, 1962 has been issued on 3rd May, 2006. That notifies the appointment of the Petitioner as custodian of the imported goods unloaded at Air Cargo Complex, Sahar, Mumbai, as detailed in the schedule below the Notification, until they are cleared for home consumption or for warehousing or for transshipment in accordance with the provisions of Chapter VII and Chapter VIII of the 23/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *24* wp.584 & 697.13 Customs Act, 1962, as the case may be. Similarly, the Petitioner will also be the custodian of the export goods brought into the Customs Area earmarked for the purpose as detailed in the schedule below the Notification. The Notification itself states that as custodian of the imported goods, the Petitioner would be required to comply with the provisions of section 45(2) and 48 of the Customs Act, 1962 as well as the Rules and Regulations and instructions issued from time to time in this regard. Even with regard to export Cargo the Petitioner will ensure the movement of the Cargo to respective Airlines storage areas, immediately after the "Let Export" order is given by the customs authorities. The Notification No.1/2002 dated 19th October, 2002 as amended on 28th October, 2003 was further amended to this extent.
35] A bare perusal of section 45(1) would reveal that all imported goods unloaded in a customs area shall remain in the custody of such persons as may be approved by the Commissioner of Customs until they are cleared for home consumption or warehoused or for transshipment in accordance with the provisions of Chapter VII. It is this sub section of section 45 which is part and parcel of the Notification dated 3 rd May, 2006.
Then, by sub section(2) of section 45, the duties and obligations of the persons having custody of any imported goods in a Customs Area have 24/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *25* wp.584 & 697.13 been set out. Then, by sub section (3) the liability to pay duty on the goods which are pilfered shall be of the person having custody of the imported goods. In other words, if the imported goods are pilfered after unloading thereof in a customs area while in the custody of the person within the meaning of sub section (1) of Section 45, then, it is his responsibility and he will be liable to make good the loss caused by such pilferage.
36] The Notification dated 19th October, 2002, copy of which is at Annexure-C appoints Airport Authority of India and M/s. Air India Ltd. to be the custodians in terms of the above provision. The Petitioners have stepped into their shoes. The guidelines which have been issued on 26 th June, 2002, namely, standard set of guidelines for appointment of custodian of Sea Ports and Air Cargo Complexes have an annexure and which clarifies that the custodian should provide safe, secure and spacious premises for loading/unloading/storing of the Cargo. The infrastructure for loading/unloading and storage operations should be designed to handle the projected traffic of the port or Air Cargo Complex. The annexure to these guidelines, copy of which is at Annexure D to the Writ Petition at page 45 in clause (10) clarifies further that the custodian shall bear the cost of the Customs staff posted at the Sea Ports and Air Cargo 25/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *26* wp.584 & 697.13 Complexes. The Commissioner of Customs shall decide the number of staff, which is required to be posted in the facility considering the workload in the station. The custodian is obliged to provide free furnished space for the Customs Department.
37] On 6th April, 2004, a clarification has been issued, copy of which is at annexure E page 47 by which the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs. It states that there will be no change in custodianship or area of custodians notified under section 45 of the Customs Act prior to 26 th June, 2002 and thereafter.
38] In the case of custodians notified prior to 26 th June, 2002 but part or whole of the same premises transferred (on lease or otherwise) to new custodian on or after 26th June, 2002 so also in case of custodian notified prior to 26th June, 2002 but premises extended after 26 th June, 2002 under the same custodianship, the matter was examined by the Board and it is clarified that the new guidelines issued on 26 th June, 2002 by Board Circular No.34/2002 will not apply to the categories of cases referred to in this circular. However, the conditions and obligations already being discharged by the earlier custodians of such existing Air Cargo Complexes 26/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *27* wp.584 & 697.13 (including courier terminals) or ports should be retained and applied to the new custodians also.
39] Thus, in these circumstances that one must see the application of the Regulations at Annexure-F entitled "The handling of Cargo in Customs Area Regulations, 2009." The Regulations in clause (2) contain the definitions. The term Customs Cargo Services Provider is defined under clause 2(1)(b) and reads as under:-
"Customs Cargo Services Provider" means any person responsible for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods and includes a custodian as referred to in section 45 of the Act and persons as referred to in sub-section (2) of section 141 of the said Act."
40] It has been also clarified that these Regulations apply to the handling of imported goods and exported goods in Customs Area as specified under Customs Act, 1962. By clause (4) the Regulations have been given a retrospective operation.
41] By clause (5) the conditions to be fulfilled by an applicant for custody and handling of imported or export goods in a customs area are 27/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *28* wp.584 & 697.13 set out. That clarifies that any person who intends to be approved as a Customs Cargo Service Provider for custody of importer goods or export goods and for handling of such goods in a customs area labeled as an applicant, has to fulfill the conditions specified in clause 5(1)(i) and 5(2) which states that that this 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 payment at such rates and in the manner prescribed, unless specifically exempted by an order of the Government of India, Ministry of Finance.
42] The Petitioners rely upon a Circular No.13/2009-Cus dated 23 rd March, 2009 and particularly clause 4.1 and 4.2 thereof, to urge that they are existing custodian under the Airport Authority of India, 1994 and continue to be authorised to function as custodians under their respective Acts and these Regulations shall not impact their approval as a custodian.
They would not, therefore, be required to make any application under Regulation 4 or 9 for approval or renewal under the Regulations. Reliance is placed on these clauses 4.1, 4.2 and 5.3 of which 5.3 reads as under:-
"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 28/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *29* wp.584 & 697.13 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 custodians at ports/airports would continue to be exempt from the payment of charges for the customs officers deployed therein."
43] Then, the amendment to the Regulation is notified in the Government of India Gazette dated 12th November, 2010 (Notification No.96/2010-Cus) (N.T.). These Notifications proceed to amend the 2009 Regulations and clause (2) thereof is to be found at page 58.
44] Then, Circular No.4/2011-Cus, Annexure-I dated 10 th January, 2011 clarifies that as far as Regulation 5 is concerned, this Regulation need not be subjected to exemption by any authority as they concern over all safety and security of the premises. Clause (7) and (8) of this Circular are to be found at page 60 and they read as under:-
"7. Vide Notification No.96/2010-Customs dated 12.11.2010, Regulation 5 has been amended to the effect that in addition to other obligations, all CCSPs for custody of imported or export goods and for handling of such goods in the Customs area shall provide free of cost or rent, fully furnished office accommodation, EDI service center along with basic amenities and facilities. Further, amendments have also been made to make it mandatory to all such CCSP to provide residential accommodation and transport facilities to the Customs staff.29/44 ::: Downloaded on - 16/10/2014 23:48:23 :::
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8. In this regard, it is clarified that no exemption is available to existing Custodians/CCSP in so far as provision of facilities and fulfillment of the prescribed conditions in Regulation 5 and 6, as applicable, within the specified limit are concerned. Further, custodians under the Major Port Trusts Act, 1963 and Airports Authority of India Act, 1994 shall not be required to make an application under Regulation 4 or 9 for approval or renewal under these regulations, but they would be required to necessarily discharge the responsibilities cast upon them in terms of Regulations 5 and 6 of the regulations without any exception."
45] Then, we find a Notification No.2/2011 dated 5th May, 2011 issued under section 45(1) and 141(2) of the Customs Act, 1962 and copy of the same is at Annexure-J which approves the appointment of the Petitioner as custodian of the export goods. That is because of an agreement between the Petitioner and Cargo Service Center (I) Pvt. Ltd. (CSC) to operate the Perishable Cargo Terminal on their behalf and in pursuance to a bond styled as a Bond and Indemnity Bond in terms of the 2009 Regulations.
46] The first response by the Petitioner to this communication/Circular is that, they intend to take up the matter with the Ministry of Civil Aviation at New Delhi for resolution and on the subject of charges of customs staff posted at Perishable Cargo Terminal on cost recovery basis.
30/44 ::: Downloaded on - 16/10/2014 23:48:23 :::*31* wp.584 & 697.13 Thus, they are aware of the obligations and to pay the charges or bear them on cost recovery basis. The Petitioner, then, was informed on 20 th May, 2011 by the Commissioner of Customs (Export) that their letter dated 9th May, 2011 as above has been received and concurrence is given for commencement of operations at the new Perishable Cargo Terminal for export Cargo with effect from 16th May, 2011 and on the terms specified therein.
47] The Petitioners sought a clarification on 28th May, 2011 and requested that the said Cargo Terminal be allowed to be operated for 24 hours. Thereafter, the correspondence continued on the subject of the Tariff for the new Perishable Cargo Terminal and its approval.
48] On the subject of payment of cost recovery charges for custom staff posted at the new Perishable Cargo the Petitioner was called upon by the Assistant Commissioner of Customs, Preventive (Administration) to pay Rs.8,16,336/- as cost recovery charges. The Petitioner may have corresponded thereafter and requested that the payment be accepted without prejudice and under protest but what we find is that the authorities never granted any exemption. There was no clarification from the Aviation Ministry as well and which the Petitioner was trying to seek 31/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *32* wp.584 & 697.13 through that Ministry's intervention. Therefore, the Petitioner were called upon to comply with the prior Circulars, the Regulations and further Regulation dated 18th July, 2011. What the Petitioner is relying upon is the clarification given by this last Circular No.29/2011 which exempts the custodians already exempted by the Circular dated 6 th April, 2004 and by para 5.3 of Board Circular dated 23 th March, 2009. The department of customs continue to demand the payment and what the Petitioners pointed out was that the payments are made under protest and without prejudice to the rights and remedies available to resolve the issue for which the Petitioner will be separately approaching the customs. The Petitioner made an application to the Chairman, Central Board of Excise and Customs Department of Revenue and prayed for exemption of payment for cost recovery charges for custom staff posted at this Terminal.
They referred to the agreements with the authorities enabling them to step in and further documents by which the MIAL being declared as a custodian in place and instead of Airport Authority of India. The Petitioner relied on the position which according to them emerges from the agreement enabling them to take over the operations and management of the CSIA and Air Cargo Terminal. They submitted that they step into the shoes of AAI and therefore, automatically and legally entitled to the exemption which AAI enjoyed from payment of cost 32/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *33* wp.584 & 697.13 recovery charges. The department of customs, however, went on dispatching the demand notices and the Petitioner claimed to have made payment under protest and without prejudice. However, what they pointed out by their letters is that there is no such exemption which the Petitioner enjoyed and the reliance placed on the order passed by the Andhra Pradesh High Court, namely, GMR Hyderabad International Airport Private Limited dated 11 th June, 2012 is misplaced. The public notice dated 29th August, 2012 and the further documents and which are annexed to the Writ Petition would go to show that the Petitioner was seeking all benefits and advantages of being a custodian but does not wish to comply with the obligation to pay the cost recovery charges.
49] To our mind, there is no substance in the Petitioners challenge. As explained by the Respondents, the Petitioner cannot rely on the other statute, namely, the Airport Authority of India Act, 1994. Mr. Sridharan placed reliance upon this Act to contend that the definition of the term "Private Airport" has been brought in by amendment to this Act in the year 2003. The functions of the authority, namely, Airport Authority of India to manage the area civil installation and the aeronautic communication stations efficiently or assist private parties in that regard, according to Sridharan has been taken over and in these circumstances, 33/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *34* wp.584 & 697.13 the position of the private entity, like the Petitioner must be understood accordingly.
50] However, so long as a customs area and as defined under the Customs Act, section 2(11) and other definitions under section 2 together with Chapter II, III, IV, IVA to IVC, Chapter VI, VII and all sections appearing therein are read together, it is apparent that, none can be said to be beyond the purview of the Customs Act, 1962. Section 45 of the Customs Act, 1962 provides for restrictions on custody and removal of imported goods. That it is well within the ambit and scope of a comprehensive legislation like Customs Act to provide for such restrictions is beyond doubt. There is nothing illegal about such a stipulation. If the Customs Act, 1962 seeks to regulate the imports into India so as to ensure levy, assessment and recovery of the duty prescribed thereon, then such a provision can be very well incorporated. Therefore, sub section (1) of section 45 could be read as making a exception only if there is anything otherwise contained in any law. All imported goods unloaded in a customs area have to remain in the custody of such person as may be approved by the Commissioner of Customs. There is no dispute that the person has to seek approval of the Commissioner of Customs to take custody of the imported goods and to retain the same. Unless such 34/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *35* wp.584 & 697.13 approval is granted, a person cannot be called a custodian. Once he is a custodian and is obliged to act in terms of sub section (2) of section 45 and all other provisions enabling clearance of imported and exported goods, then, it is not possible to agree with Mr. Sridharan. There is at best and what could be called as an appointment of a custodian. That may be in a given case under some other law but if the only requirement that is dispensed with is of seeking approval from the Commissioner of Customs that does not relieve the Petitioners from compliance with other legal obligations. Else, it would have not sought exemption from such clearance. There is much substance in the contentions of Mr. Jetly in that regard. We find that the stand taken by the Respondent and reiterated before us by Mr. Jetly, deserves to be accepted once the above legal position is appreciated and in proper perspective.
51] Mr. Jetly was, therefore, justified in urging that the Petitioners communication firstly requesting for grant of a status as a custodian and thereafter seeking approval would bely their contentions and to the contrary. If some governmental functions have been now allowed to be performed and carried out by the private entities that will not make any difference. In that regard, Mr. Jetly's reliance on para-10 of the affidavit in reply and the annexures thereto, is well placed. Mr. Jetly also is 35/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *36* wp.584 & 697.13 justified in relying on section 141(2) and the language of section 157 of the Customs Act to support the validity and legality of the Regulations. By Act 18 of 2008, section 141 has been renumbered as sub section(1) and sub section (2). By sub section (1) what has been clarified is that all conveyances and goods in a customs area are subject to control of officers of customs. They are incharge of enforcing the provisions of this Act and duty bound to do so. It is in that regard and to enable them to enforce the provisions of the Customs Act properly and effectively that by sub section (2) the receipt, storage, delivery, dispatch or otherwise handling of the imported and exported goods in a customs area has to be regulated and controlled. Therefore, it is open to the authorities to make prescription by way of rules or regulations so that responsibilities of person engaged in all the above activities are fixed. Therefore, these regulations are traceable and safely to this legal provision.
52] Similarly, the general power to make the regulations by section 157 to carry out the provisions of the Act enables the authorities to frame the regulations. We do not find substance in the contentions of Mr. Sridharan that the regulations travel beyond the Act or that they are ultravires the Act.
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53] If that was not be the position, the Petitioners would not have
furnished a bond as required by the authorities. It is in these
circumstances that we are unable to agree with the Petitioners as they do not have any absolute exemption as claimed by them. The Petitioners have understood the law and its applicability to mean stepping into the shoes of a Authority like AAI does not mean automatic exemption. All custodians on which the status is claimed have to be complied with unless exempted.
The staff of the Customs Department is deployed to enable the movement of goods from the notified Customs Area. That movement is possible only after the proper officer permits it. That proper officer is from the Department and if he is posted with a specific subject and purpose, then, charges of such posting will have to be borne by the Petitioners.
54] There is justification for the argument of the Respondents that even if there was a certain exemption in favour of their predecessor in title or the Airport Authority of India that is specific and qua the premises. That could be qua part or whole of the premises transferred. The Respondents have clarified that custodianship for part of the Air Cargo Complex was transferred to Air India by the Airport Authority of India. That is why the exemption enjoyed by these two entities and claimed by the Petitioners is restricted to the area. The Perishable Cargo Complex is a facility which 37/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *38* wp.584 & 697.13 has been developed and with the participation of another entity. That was not covered as original premises and under the Notification issued on 19 th October, 2002. Therefore, as regards this Perishable Cargo Terminal, there cannot be any exemption. Similarly, the argument of the Respondents that in the backdrop of the Circulars and Notifications referred by us above, it is apparent that none of the functions under the Customs Act could be discharged and carried out nor the power exercised in that behalf, except by the officers functioning under the Customs Act is accurate. The Customs staff is under control of the Commissioner of Customs. It is in these circumstances that it is fallacious to argue that the staff of this Customs Department reports to other entities much less the Petitioners.
None can displace them or take over their duties and functions which are statutory. Even if that is not the position in law still it would be open for the authorities under the Customs Act to call upon parties like the Petitioner to pay the costs and charges in respect of the staff of the customs department posted at the terminal or in the area which is a notified Customs area. If this staff is posted to work there at and since the area or premises are claimed by the Petitioners, then, all the more, by their understanding and agreement itself, they have to pay the charges.
55] Mr. Jetly's reliance upon section 7 and 8 of the Customs Act is also
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well placed. These sections have to be read together with the other
provisions of the Act including section 45 and 141 so as to enable the customs staff to be posted by the Commissioner at the proper places in any Customs port or Customs airport for loading and unloading of goods or for any classes of goods. Similarly, if some ports and airports alone are customs airports or some places alone shall be designated as air freight station, and further some places alone shall be land customs stations for the clearance of goods imported or to be exported by land or inland container or any classes of such goods, then, the staff of the customs department posted therein is for enforcing the provisions of the Customs Act, 1962. The charges and expenses in relation thereto, have to be, therefore, paid and that is how the Circulars, guidelines and Regulations must be read and interpreted. So read, interpreted and considered, there is no scope for the argument that the Petitioners are not duty bound to pay the cost recovery charges or that any stipulation in that behalf is ultravires the Customs Act over the mandate of Article 14 and 19(1)(g) of the Constitution of India. Mr. Jetly has rightly traced the entire history of the Regulations and to our mind he has, in that regard, justifiably placed reliance on the detailed affidavit in reply filed in these Writ Petitions.
56] Once the Petitioners have taken the responsibility and have agreed
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to abide by all the terms and conditions imposed on them, then, there is no substance in the contentions of Mr. Sridharan.
57] We find that reliance by Mr. Jetly on Exhibit 7 to the affidavit in reply is, thus, well placed. There the Perishable Cargo Terminal permission refers to the Handling of Cargo in Customs Area Regulations, 2009. As per para 4 (XXIII) thereof, the Petitioners have to bear the charges of the Customs staff posted at the Perishable Cargo Terminal by the Commissioner of Customs, Air Cargo Complex, Mumbai on cost recovery basis. The Petitioners would not have been permitted to outsource the function of handling of Cargo within this terminal premises unless the Regulation 6(2) of these Regulations had permitted them to do so. Further, they could not have been appointed as custodian and within the meaning of the said term and as contemplated section 45 of the Customs Act, 1962, unless, they subjected themselves to these provisions.
That they did so voluntarily does not mean that they can pick and choose favourable or beneficial terms and conditions and leave our or omit the so called onerous one's. Therefore, "shall remain in custody of such person"
are the relevant words and to understand the concept. The permission to set up a Perishable Cargo Terminal for exports was sought by the Petitioners. That the facility was constructed by the Cargo Service Centre 40/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *41* wp.584 & 697.13 India (P)Ltd. on a Build, Operate and Transfer basis is clear from Exhibit '7' to the affidavit in reply. That entity is also designated as "Customs Cargo Service Provider" is further clear. The function of Cargo is outsourced but the Petitioners appointment as custodian under the Customs Act is not disturbed and remains untouched. Therefore, conditional approval contained in Exhibit '7' binds the Petitioners or else the approval would fall. Once the permissions have been sought and from the various authorities under the Customs Act, then, it is not proper to urge that the conditions imposed by such authorities will not be binding.
59] For these reasons, we do not find any substance in this Writ Petition.
Rule is discharged in both of them.
60] The reliance placed by Mr. Sridharan on the judgment in the case of Board of Trustees of the Port of Bombay V/s. Union of India reported in 2009 (241) E.L.T. 513 (Bom.) is misplaced. There, the argument was that customs duty cannot be recovered from the port trust for the goods which were pilfered whilst in their custody. The Petitioners, Bombay Port Trust, challenged the show cause notices and the orders in that behalf by pointing out they are port trust under the Major Port Trust Act, 1963.
Therefore, their counsel rightly urged that the responsibility cannot be 41/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *42* wp.584 & 697.13 that of the Port Trust and the goods may be under their custody but they are not liable to pay the duty in respect of pilfered goods because of their typical and peculiar position as emerging from the Customs Act and the Major Port Trust Act, 1963. The position as the custodian of the goods in terms of the Major Port Trust Act, therefore, enabled this Court to Rule in favour of the Port Trust. This judgment, therefore, is of no assistance to the Petitioners. The reliance placed, then, on the judgment of Lohara Steel Industries Ltd. (supra) is entirely misplaced. That is not a judgment which would assist us in deciding the present controversy. Insofar as the judgment in the case of Calcutta Municipal Corporation V/s. Shrey Mercantile (P) Ltd. reported in 2005(4) SCC 245, that is also not of any assistance because of the fact that it dealt with the controversy as to what is fee and if a fee is in fact a tax without sanction of law, then, that is bad unless it is specifically permitted and approved or sanctioned. It is in the context that the expression "regulatory fee" though not defined was held to be in effect and substance a tax. It is in that regard that the principles have been referred to.
61] We do not decide any larger controversy. As far as the judgment of the Andhra Pradesh High Court is concerned, we find that there as well, the learned Single Judge has without in any manner appreciating the 42/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *43* wp.584 & 697.13 position of the Customs Officers and their authorities under the Act held that Regulation 5(2) purports to levy a tax. We are of the opinion that cost recovery charges are not being recovered from the importer/exporter.
It is because the Petitioners under a specific document sought the approval firstly, to set up a Perishable Cargo Terminal and for exports. That was granted and in that terminal, services of the Customs staff had to be provided so as to enable the goods exported being cleared therefrom. For the purposes of clearance of imported and exported goods, and making of entries in relation thereto, by the proper Officer before a importation and equally for home consumption and payment of import duty, enabling recovery thereof in accordance with law that the customs staff alone would be in a position to take the requisite steps. They alone are competent to administer and implement the Act. That their services are utilized is clear and therefore the reimbursement of the charges incurred on them is undertaken to be made by the Petitioners. Such a payment and of cost recovery charges does not come within the ambit of the controversy dealt with by the Hon'ble Supreme Court. It is in these circumstances that this is a payment and more particularly by way of reimbursement of the costs in relation to such staff. That staff is deployed by the department of Customs and particularly the Commissioner. In such circumstances, and with great respect, we are unable to agree with 43/44 ::: Downloaded on - 16/10/2014 23:48:23 ::: *44* wp.584 & 697.13 the learned Single Judge of the Andhra Pradesh High Court. We find much substance in the contentions of Mr. Jetly that these matters cannot be looked at from the angle and in the manner approached by the Petitioners.
62] Alternatively, we find substance in the argument of Mr. Jetly that the cost recovery charges are in the nature of fee for the services rendered by Customs Officers to the custodian of the Port Terminal. These are officers posted on additional sanctioned posts than the regular strength.
The details have been provided in the affidavit in reply. In that regard, we find that Mr. Jetly has rightly relied upon paras 32 to 37 of the affidavit in reply, wherein it has been pointed out as to how additional cost has to be incurred for providing the services of the staff and posting them at the disposal of the station. It is in these circumstances that though it is denied that this is in the nature of a tax or a fee but the recovery is supported assuming to be a fee by co-relating it with these services provided. There is, therefore, quid pro quo. There is no element of tax therein.
63] As a result of the above discussion, both the Writ Petitions fail and Rule is discharged but without any orders to costs.
(B.P. COLABAWALLA, J.) (S.C. DHARMADHIKARI, J.) 44/44 ::: Downloaded on - 16/10/2014 23:48:23 :::