Heard Mr. P. Chidambaram vs Assistant Solicitor General Of ...
2021 Latest Caselaw 3628 AP

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                   HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

                             MAIN CASE No: W.P.No.11229 of 2021

                                     PROCEEDINGS SHEET
                                                                                       OFFICE
Sl.     DATE                                    ORDER                                   NOTE
No.

6.    20.09.2021                      (Through Video-Conferencing)

                                           I.A.No.2 of 2021
                      Heard Mr. P. Chidambaram, learned senior counsel assisted by
                   Mr. Abhishek A. Rastogi and Mr. K. Siddharth Rao - learned
                   counsel for the applicant/petitioner, Mr. N. Harinath, learned
                   Assistant Solicitor General of India, appearing for respondent

Nos.1 & 2 and Mr. M.V.J.K. Kumar, learned senior standing counsel for Customs, appearing for respondent Nos.3 & 4.

On 30.06.2021, this Court had passed the following order:

" Heard Mr. G. Shivadass, learned Senior Counsel assisted by Mr. P. Bhaskar, learned counsel for the petitioner. Also heard Ms. Alekhya, learned counsel representing Mr. N. Harinath, learned Assistant Solicitor General of India, appearing for respondents No.1 and 2, and Mr. Suresh Kumar Routhu, learned Senior Standing Counsel for Customs appearing for respondents No.3 and 4.

By this writ petition, the petitioner challenges Regulation 5(2) & 6(1)(o) of the Handling of Cargo in Customs Areas Regulations, 2009 (for short, 'the Regulations'), as ultra vires the Customs Act, 1962 (for short, 'the Act'). Challenge is also made to an order dated 01.03.2021 passed by respondent No.3- Principal Commissioner of Customs, Customs House, Visakhapatnam, the operative portion of which reads as under:

"ORDER

(i) The appointment of M/s. VCTPL as custodian of the said premises u/s Section 45(1) of the Customs Act, 1962, made vide Order in F.No.S10/5/2003-Prev dated

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18.06.2003 and renewed from time to time, stands suspended w.e.f 01.07.2021 under Regulation 11(1) of HCCAR, 2009 for violation of conditions of the bond executed under Regulation 5(2) and for non-compliance of condition 6(1)(o) r/w Regulation 13 of HCCAR, 2009 and the staff posted at VCTPL stands withdrawn.

(ii) In case M/s. VCTPL complied with the above mentioned Regulations by paying the outstanding cost recovery charges along with applicable interest and penalty, the order at

(i) above shall be deemed to be withdrawn with effect from the date of such payment.

(iii) I impose a penalty of Rs. 50,000/- (Rupees fifty thousand only) on M/s VCTPL under Regulation 12 (8) of Handling of Cargo in Customs Area Regulations 2009. This order is issued without prejudice to any other action that may be taken/proposed to be taken in future against M/s. VCTPL or any other person concerned under Customs Act, 1962 and/or any other law for the time being in force in the Republic of India, including recovery of outstanding arrears of cost recovery charges payable as per demand notices issued from time to time."

The said order was passed on the basis of a show- cause notice dated 05.02.2020 issued under Regulation 12(1) of the Regulations.

The petitioner pleads that it was given a custodian order under Section 45(1) of the Act by an order dated 18.06.2003 of the Commissioner of Customs, Visakhapatnam.

Drawing attention of the Court to a letter dated 04.10.2004 of the Commissioner of Customs,

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Visakhapatnam, it is contended by Mr. G. Shivadass, learned Senior Counsel, that the said letter states that the petitioner was not being asked for cost recovery charges and that by the said letter, the Commissioner had also sought the views of the Central Board of Excise and Customs, as was known then, on the subject. Much later, the Commissioner of Customs had taken a different view and accordingly, by a letter dated 18.07.2014 of the Commissioner of Central Excise & Customs, Visakhapatnam Zone, the Director General, Human Resource Development, Customs & Central Excise, was informed that the petitioner appears to be liable to pay cost recovery charges.

It is contended by Mr. G. Shivadass that in the aforesaid letter dated 18.07.2014, the Board was also requested to consider the contention of the petitioner that no other private container terminal, who is similarly situated and is operating under the aegis of the Major Ports, was being made to bear cost recovery charges. Drawing attention of the Court to the letter dated 28.02.2019 of the Central Board of Indirect Taxes and Customs, Mr. G. Shivadass submits that by the aforesaid letter, the Board had agreed with the view as expressed in the letter dated 18.07.2014. However, the contention advanced by the petitioner that no other private container terminal operating under the aegis of the Major Ports was being made to bear the cost recovery charges, which was requested to be looked into by the Board, was not even adverted to. In the meantime, there was a development in the sense that the Regulations had come into play. By virtue of Section 5(2) of the Regulations, cost of the custom officers posted at a custom area, on cost recovery basis, by the Commissioner, was made applicable and such payment was required to be made at such rates and in the manner prescribed unless specifically exempted by an order of the Government of

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India in the Ministry of Finance. 6(1)(o) of the Regulations is also on similar lines, Mr. G. Shivadass contends.

It is further submitted by Mr. G. Shivadass that a single Bench of the composite High Court at Hyderabad had struck down Section 5(2) of the Regulations as ultra vires and an appeal is pending consideration. He has also submitted that the Delhi High Court, in a recent judgment, however, has taken a contrary view with regard to the Regulation in question. Mr. Suresh Kumar Routhu, learned Senior Standing Counsel for Customs, submits that against the impugned order, an appeal lies under Section 129 of the Act to the Southern Bench of the Customs, Excise And Service Tax Appellate Tribunal at Hyderabad and, therefore, this writ petition may not be entertained. He has also submitted that in a writ appeal, being W.A.No.1321 of 2012, the order of the learned single Judge, whereby Section 5(2) of the Regulations was struck down as ultra vires, was suspended.

On a copy of the order being produced, Mr. G. Shivadass agrees with the submission of Mr. Suresh Kumar Routhu regarding suspension of the order of the learned single Judge.

The impugned order goes to show that a sum of Rs.15,88,36,561/- is due and payable by the petitioner towards cost recovery charges for the period January, 2004 to March, 2021, along with applicable interest. Essentially, the issue arising in this petition is as to whether the cost recovery charges are liable to be paid by the petitioner. Since the validity of Regulations is in issue, we are inclined to entertain this petition. Issue notice.

No formal steps are called for as the respondents are duly represented. However, extra copies be furnished.

Considering the matter in its entirety, as an interim

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measure, we provide that the impugned Order-in- Original dated 01.03.2021 passed by respondent No.3- Principal Commissioner shall remain suspended subject to the petitioner, without prejudice to its rights and contentions as advanced in this petition, deposits before the Principal Commissioner 50% of the amount of Rs.15,88,36,561/- within a period of two months from today.

Registry will list this case after two months. In the meantime, pleadings may be exchanged.

Thereafter, the present I.A. came to be filed by the applicant/petitioner praying for modification of the interim passed by this Court on 30.06.2021.

By the order dated 30.06.2021, it was provided that as an interim measure, the impugned Order-in-Original dated 01.03.2021 passed by respondent No.3-Principal Commissioner shall remain suspended subject to the petitioner, without prejudice to its rights and contentions as advanced, deposits before the Principal Commissioner 50% of the amount of Rs.15,88,36,561/- within a period of two months from that day. As the period of two months as indicated in the order dated 30.06.2021 was going to expire on 31.08.2021, the earlier interim order was extended till 15.09.2021 and it was observed that orders as may be considered appropriate would be passed after hearing the parties. Thereafter, by order dated 17.09.2021, interim order dated 30.06.2021 was extended till today.

Mr. Chidambaram submits that the applicant/petitioner is implementing a comprehensive project involving the construction of a second Container Terminal at the Visakhapatnam Port Trust on a Design-Build-Finance-Operate and Transfer ('DBFOT') basis, which is estimated at Rs.951 crores. The targeted date of completion of the project was March, 2021. However, due to the unprecedented COVID-19 pandemic, the construction got delayed and presently same is expected to be completed before 02.02.2022.

It is submitted that the applicant/petitioner had invested a significant sum of Rs.179 crores till August 2021 and is required to

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deploy a further sum of Rs.59 crores within the period of next six months. The applicant/petitioner is also required to create debt reserve account of approximately Rs.40 crores which shall be placed under lien towards the debt/borrowing of Rs.713 crores. The applicant/petitioner has free fixed deposits and cash balances of only Rs.64.57 crores as on 31.07.2021 and, therefore, the applicant/petitioner is required to generate further liquidity of Rs.34.43 crores in the next 5-6 months. He further submits that the impugned Order-in-Original dated 01.03.2021 is appealable under Section 129-A of the Customs Act, 1962 (for short, "the 1962 Act") and in that connection, he has also drawn the attention of the Court to Section 129-E of the 1962 Act, which provides that against a decision or order referred to in clause (ii) of Section 129-A of the 1962 Act, appeal shall not be entertained unless the appellant had deposited 7.5% of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order.

Mr. Chidambaram has submitted that present is not a case of duty and penalty, but it is a case of recovery of cost and, therefore, stricto sensu the provision as contained in Section 129-A

(ii) of the 1962 Act may not apply. But, he submits that it is the legislative spirit and, therefore, in the attending facts and circumstances where the applicant/petitioner is undertaking a project of national importance and when the applicant/petitioner is undergoing liquidity crunch, additional liability of Rs.7,94,18,281/-, which constitutes 50% of the amount demanded, may not be saddled with the applicant/petitioner and in the light of the legislative intendment, imposition of such percentage of deposit has to be considered in the facts and circumstances of the case. Mr. M.V.J.K. Kumar submits that this Court on due consideration and also taking note of the provision for appeal, as contained in Section 129 of the 1962 Act, had passed order directing deposit of 50% of the amount demanded as a condition precedent for suspending the Order-in-Original dated 01.03.2021 and, therefore, no case is made out for modifying the aforesaid order. It is submitted by him that if at all the applicant/petitioner

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was aggrieved by the aforesaid interim order directing deposit of 50% of the amount demanded, it ought to have availed remedy as available in law.

Mr. N. Harinath also endorses the above submission of Mr. M.V.J.K. Kumar.

We have extended our consideration to the submissions advanced by Mr. Chidambaram as well as Mr. M.V.J.K. Kumar and Mr. N. Harinath.

This Court on due consideration of the matter, also taking note of Section 129 of the 1962 Act, by order dated 30.06.2021, suspended the impugned Order-in-Original dated 01.03.2021 subject to the applicant/petitioner, without prejudice to its rights and contentions as advanced by it, deposits before the Principal Commissioner 50% of the amount of Rs.15,88,36,561/- within a period of two months from that day.

In the background of the aforesaid order, though it is contended by Mr. Chidambaram that the applicant/petitioner is facing financial crunch, we are of the opinion that in the attending facts and circumstances of the case, no modification of the order dated 30.06.2021 is called for and, accordingly, the present I.A. is dismissed. However since the period for deposit of 50% of the amount demanded is going to expire today, in order not to cause any prejudice to the applicant/petitioner, we provide that the aforesaid amount may be deposited on or before 27.09.2021. At this stage, Mr. N. Harinath submits that he is going to file counter-affidavit within a period of two weeks from today. Mr. M.V.J.K. Kumar submits that he has already filed counter- affidavit.

Rule Nisi. Call for records.

No formal steps are called for as the respondents are duly represented.

Registry will list the writ petition for hearing in the 3rd week of November 2021.

ARUP KUMAR GOSWAMI, CJ NINALA JAYASURYA, J MRR