Bombay High Court
Sarveshwar Logistics Services ... vs Union Of India Thou Its Joint ... on 18 August, 2023
Bench: G. S. Kulkarni, Jitendra Shantilal Jain
2023:BHC-AS:23556-DB
Tauseef 06-WP.10670.2022.J..doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.10670 OF 2022
Sarveshwar Logistics Services Pvt. Ltd.,
A company registered under the
Companies Act, Through its Director Offcer
having its registered offce at The Great
Eastern Summit, B-Wing, Sector-15,
Plot No.66, CBD Belapur, New Mumbai. ...Petitioner
Versus
1. Union of India,
Through its Joint Secretary Ministry
of Law and Justice Branch Secretariate
at Mumbai, 242/C, Aayakar Bhavan
Marine Lines, Mumbai.
2. The Joint Director (CRB),
Ministry of Finance, Department of Revenue
Directorate General of Human Resources
Development, Indirect Taxes & Customs IRCO
Building, West Wing, Ground Floor Plot No.C-4,
New Delhi - 110 017.
3. The Principal Commissioner of Customs (General)
CFS Management Cell, Jawaharlal Nehru Custom
of House, Customs Zone (3) Uran, Raigad,
Maharashtra - 400 707.
4. The Asstt./Deputy Commissioner of Customs,
Customs Cargo Service Provider (CCSP) Cell
NS- General, Jawaharlal Nehru Customs
House Mumbai Zone - 3.
5. The Asstt./Deputy Commissioner of Customs,
CFS Management Cell, NS-General Jawaharlal
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Nehru Customs House, Mumbai Zone - 3. ...Respondents
********
Mr. D. N. Salvi a/w. Mr. Sahil D. Salvi, Mr. Sagar Redkar and Mr.
Narendra L. Kalpoth for the Petitioner.
Ms. Shehnaz V. Bharucha a/w. Mr. Dhananjay Deshmukh for
Respondent (UoI).
********
CORAM : G. S. KULKARNI,
JITENDRA JAIN, J.J.
RESERVED ON : 17th JULY, 2023.
PRONOUNCED ON : 18th AUGUST, 2023
Oral Judgment (Per Jitendra Jain, J.)
1. This petition under Article 226 of the Constitution of
India is fled praying for the following relief:-
"(a) This Hon'ble Court be pleased to issue an appropriate
Writ, Order or direction in the nature of Certiorari and
be pleased to direct the authority to modify the CRB
Order No.5/2021, dated 25.02.2021 issued by the
Respondent No.2 and direct the Respondents to grant
exemption from payment of cost recovery charges
effective from 01.04.2020."
2. Narrative of the relevant events:-
(i) On 21st December 2015, Respondent No.1 approved a
proposal of the Petitioner for setting up Container Freight
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Station (CFS) at village Dighode, District Raigad,
Maharashtra.
(ii) On 6th December 2016, a notifcation was issued by
Respondent No.3 being CFS Notifcation No.11/2016,
notifying the CFS station of the Petitioner for 'unloading of
imported goods and for loading of export goods'.
(iii) On 21st August 2017, Respondent No.3 issued a further
Notifcation No.10/2017 appointing the Petitioner to be a
'Custodian' of the imported goods received at the CFS of the
Petitioner. The Petitioner was also approved as 'Customs
Cargo Service Provider' under the said notifcation. The
duration for which the Petitioner was appointed as
'Custodian' and as a 'Customs Cargo Service Provider' was for
two years from the date of the notifcation dated 21 st August
2017.
(iv) On 7th November 2017, Respondent No.3 issued a public
notice notifying the Petitioner as Customs Cargo Service
Provider w.e.f. 7th November 2017.
(v) On 16th January 2020, an application was made by the
Petitioner to Respondent No.4 seeking exemption of Cost
Recovery Charges in respect of CFS since the Petitioner
completed two years of service (from 7th November 2017) and
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the Petitioner had paid all dues with respect to cost recovery
for the said two years. The said application was made
pursuant to a Circular No.13/2009-Customs dated 23 rd
March 2009.
(vi) On 18th February 2020, Respondent No.3 informed the
Petitioner that precondition for seeking exemption as per
para 5.5 of Circular No.13/2009-Customs is that the CFS
should be in existence for a consecutive period of two
fnancial years and the fnancial year has been specifed to be
'April to March', for grant of exemption. Respondent No.3,
therefore, expressed his inability to process the application
since the Petitioner's CFS had not completed its tenure of
operation of consecutive period of two fnancial years.
(vii)On 19th February 2020, Respondent No.3 directed the
Petitioner to deposit the Cost Recovery Charges for the
period up to March 2020, so as to complete the tenure of
operations for a consecutive period of two full fnancial years
and further advised the Petitioner to resubmit after 31 st
March 2020, application for waiver from payment of cost
recovery charges.
(viii)On 28th April 2020, the Petitioner informed Respondent No.4
that they have made part payment of Rs.40,00,000/- towards
the Cost Recovery Charges up to March 2020, for the
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customs staff posted at CFS of the Petitioner. The Petitioner
also requested Respondent No.4 to issue notifcation
exempting the Petitioner from payment of cost recovery and
it further records that the formal proposal is already
submitted vide letter dated 16th January 2020.
(ix) On 26th November 2020, the Petitioner informed Respondent
No.2 that they have paid all dues for the 'Custom' staff posted
at its CFS till March 2020. The Petitioner requested
Respondent No.2 to expedite the process of processing
exemption application pending with the Respondent No.2.
The copy of the said letter was also marked to Respondent
No.3.
(x) Meanwhile, on 19th January 2021, Respondent No.1 issued
Circular No.2/2021-Customs. The said circular records that
various issues were brought to the notice of the Board
through various representations including the issue of
effective date of exemption from the Cost Recovery Charges,
interest payable on delayed payments, etc. The said circular
records the delay in getting the approval from the competent
authority for the grant of exemption from payment of cost
recovery charges in respect of eligible facilities. The said
circular, therefore, lays down guidelines which subsumes
various circulars/letters/instructions including Circular
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No.13/2009-Customs dated 23rd March 2009. The said
Circular No.2/2021-Customs revamps the whole norms and
process with respect to posting of staff at customs area and
collection of cost recovery charges. Para 8 of the said
circular deals with eligibility for exemption for cost recovery
charges. It states that the cost recovery post should have the
Department of Expenditure's specifc permission for
continuation before seeking/claiming exemption in respect of
any given customs facility. Para 8.2 provides for exemption
from payment of cost recovery charges upon fulflling the
performance criteria given in the table therein. The period
for meeting the criteria was two fnancial years or four
fnancial years as the case may be. Para 8.5 of the said
circular states that in respect of all the cases for which
exemption from cost recovery charges have not yet been
granted though, application for the same is received and all
other cases for which application would be received hereafter
shall be subject to the conditions specifed therein. Para 8.6
lays down that regulation process and approval shall be
completed within a period of three months in order to enable
the exemption to be available from the beginning of the
fourth month.
(xi) On 29th June 2021, Respondent No.3 issued a demand notice
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to the Petitioner for payment of cost recovery charges for the
period of 1st April 2020 to 18th April 2021. Alongwith said
demand notice, Respondent No.3 enclosed exemption
Notifcation No.5/2021 approving the exemption from
payment of Cost Recovery Charges by the Petitioner w.e.f.
19th April 2021.
3. It is on this background that, the present petition is fled
seeking direction from the Court that the exemption granted by
the Respondents to the Petitioner should be effective from 1 st
April 2020 and not from 19 th April 2021 as notifed in CRB order
No.5/2021 dated 25th February 2021.
4. SUBMISSIONS OF THE PETITIONER:- The Petitioner
contended that vide letter dated 28 th April 2020, it had requested
Respondent No.4 to issue notifcation for cost recovery exemption
since partly the dues up to March 2020 were paid. The Petitioner
in the said letter requested Respondents to consider the
application made on 16th January 2020 for granting exemption to
the Petitioner from payment of Cost Recovery Charges. The
Petitioner once again reiterated its request for considering the
exemption application vide letter dated 26th November 2020 and
in the said letter it was stated that all the dues are fully paid upto
30th March 2020. The Petitioner submitted that the exemption
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order does not give any reason as to why the said notifcation was
not made effective from 1st April 2020. The Petitioner further
stated that Circular No.2/2021-Customs dated 19 th January 2021
cannot be applied retrospectively to the application of the
Petitioner which were fled prior to 19th January 2021 and same
were pending on the date of the said circular for the reasons not
attributable to the Petitioner. The Petitioner, therefore, submitted
that the Respondents ought to have issued exemption order w.e.f.
1st April 2020 and not from 19th April 2021 and consequently the
demand made ought not to have been raised for the period from
1st April 2020 to 18th April 2021.
5. SUBMISSIONS OF THE RESPONDENT :-The Respondents
in the reply have stated that fnal payment towards Cost
Recovery Charges up to 31st March 2020 was paid on 20th July
2020 by the Petitioner and, thereafter, vide letter dated 4 th
August 2020, Respondent No.3 forwarded the application for
exemption to Director General of Human Resource Department
(DGHRD) for waiver of Cost Recovery Charges. The Respondents,
therefore, contended that since there was a delay in making the
payment, the application was not considered till July 2020. The
Respondents also relied on an undertaking of the Petitioner dated
4th May 2020, wherein, they had undertaken to pay all the
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arrears for the Cost Recovery Charges as per demand notice
issued by customs. The Respondents relied upon Circular
No.2/2021-Customs dated 19th January 2021 to justify the grant
of exemption w.e.f. 19th April 2021.
6. REJOINDER OF THE PETITIONER :- In rejoinder, the
Petitioner stated that Circular No.2/2021-Customs should be read
to have application prospectively and not retrospectively. The
Petitioner further contended that at no point of time, the
Respondents intimated that the claim of exemption is not being
considered on account of non-payment of dues and it is only in
reply to the present petition that the said case is made out. The
Petitioner stated that payment of Cost Recovery Charges (CRC)
as a condition for granting exemption was introduced for the frst
time in Circular No.2/2021-Customs dated 19th January 2021 and
same was not a condition in Circular No.13/2009-Customs dated
23rd March 2009 and in any case delay in payment would not
amount to non-payment of dues.
7. We have heard learned counsel for the Petitioner and
learned counsel for the Respondents. With their assistance, we
have perused the record.
8. ISSUE :- The short issue which arises for consideration
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in the present proceeding is whether the Respondents were
justifed in granting exemption to the Petitioner from payment of
Cost Recovery Charges w.e.f. 19th April 2021, although, the
application for exemption was made in April 2020.
9. ANALYSIS AND CONCLUSION:- The Petitioner's CFS
completed two consecutive fnancial years successfully on 31 st
March 2020 which was the condition for grant of exemption. The
Petitioner vide letter dated 20th April 2020 requested Respondent
No.4 to consider the application for exemption which was already
fled on 16th January 2020. Therefore, application for exemption
was made immediately on completion of 2 years. On 26 th
November 2020, the Petitioner reminded Respondent No.2 to
expedite the process for grant of exemption since the Petitioner
had paid all the dues till 31st March 2020. A copy of the said
letter dated 26th November 2020 was also marked to Respondent
No.4. On the date, when the Petitioner had fled its request for
grant of exemption i.e. on 20th April 2020 and 26th November
2020, the circular which held the feld was Circular No.13/2009-
Customs dated 23rd March 2009. The application of the Petitioner
for exemption has to be considered based on the said circular of
2009 which was prevalent at the time of making an application.
The delay on the part of the Respondents' to consider the
Petitioner's exemption application cannot be attributable to the
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Petitioner and, therefore, the Respondents cannot apply the
Circular No.2/2021-Customs while granting exemption vide CRB
Order No.5/2021 dated 25th February 2021 and apply the
exemption from 19th April 2021. The exemption order dated 25 th
February 2021, addressed by the Government of India, Ministry
of Finance to Respondent No.3 itself refers to a letter of
Respondent No.3 to the Ministry of Finance dated 20 th October
2020, for grant of exemption from payment of Cost Recovery
Charges in respect of the Petitioner. Therefore, in our view, the
Respondents were not justifed in issuing exemption order w.e.f.
19th April 2021, when the application was made by the Petitioner
in April 2020 and reiterated vide letter dated 26 th November
2020 and the delay by the Respondent in processing the
application is not attributable to the Petitioner.
10. It is settled position that the circulars cannot be given
effect retrospectively unless expressly provided therein and if the
law so permits. The circular dated 19th January 2021 revamps
various circulars issued from time to time and a totally new set of
guidelines are issued for dealing with Cost Recovery Charges,
Exemption, etc. The eligibility condition as per Circular
No.2/2021-Customs itself has changed drastically compared to
the eligibility condition specifed in Circular No.13/2009-Customs.
The Circular No.2/2021-Customs specifes meeting of criteria I
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and criteria II in preceding two fnancial years or anyone of the
criteria in the preceding four fnancial years for being eligible to
claim exemption. The criteria I and criteria II deals with volume/
value of cargo/fights and number of documents/passengers
handled in a year. These criterias were not present in 2009
circular, therefore, in our view, Circular No.2/2021 could not be
made applicable retrospectively to the application made by the
Petitioner on April 2020 seeking exemption. In our view, para 8.5
of Circular No.2/2021-Customs which provides that the
application pending on the date of the said circular would be
subject to the condition specifed therein is bad in law, inasmuch
as that would amount to giving retrospective effect to the circular.
The right of the Petitioner for being eligible for exemption got
crystallised on 31st March 2020 when period of 2 consecutive
fnancial year got over and, therefore, Circular No.13/2009 would
be governing the Petitioner's case.
11. The Respondents have not alleged that the Petitioner is
not eligible for grant of exemption as per Circular No.13/2009.
Para 5.5 of Circular No.13/2009 deals with eligibility for grant of
exemption, namely the CFS is in existence for a consecutive
period of two fnancial years and parameters such as total
number of import or export containers handled, customs
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declaration fled for import or export, etc. are satisfed. The
Respondents have not averred that any of the conditions specifed
in para 5.5 of Circular No.13/2009 is not complied by the
Petitioner. The delay in payment of Cost Recovery Charges also
does not form as a precondition for non-eligibility of exemption
from 1st April 2020 and in any case delay in payment would not
amount to non-payment of dues.
12. It is also worth noting that the Respondents have not
shown us any document which states that if there is a delay in
clearing dues the exemption would not be granted for the period
of delay and, therefore, the contention of the Respondent on this
account does not survive. Even otherwise, admittedly all the dues
were cleared before Circular No.2/2021 was issued and even
application was made much before the said circular and,
therefore, even on this account Respondents' contention fails on
this account.
13. Circular No.13/2009 does not specify delay in payment
as a condition for exemption not to be granted during the period
of delay. Circular No.16/2013 dated 10th April 2013 only provides
for non-outstanding of cost recovery charges as a condition for
exemption and not delay in payment of such charges. The
condition of exemption shall be prospective in the said circular
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would not mean that the period for which delay is not attributable
to the applicant should come in the way of exemption not being
applicable for such period. The letter of DGHRD dated 10 th August
2018 specifying check list for exemption provides that all the
payment should have been paid till the date of waiver. In the
instant case, the Petitioner has made all the payments upto
March 2020 albeit delayed.
14. Para 13 of Circular No.2/2021 states that earlier
circular to the extent of its inconsistency with Circular No.2/2021
would continue to apply. This shows that Circular No.2/2021 is
not retrospective in its application.
15. It is also to be noted that when application was made in
January 2020, there was no outstanding dues since the
Petitioner had paid all the dues upto December 2019, which is not
disputed by the Respondents. The undertaking given on 24 th
December 2019 by the Petitioner that they will pay all dues was
on the premises that they will get exemption from January 2020
when frst time application was made and when in fact as stated
above there was no outstanding or demand notice.
16. The view which we have taken above is supported by the
decision of the Gujarat High Court in case of Adani Ports and
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Special Economic Zone Limited & Anr. Vs. Union of India & Ors.
in Special Civil Application No.4083 of 2016 dated 4 th December
2017. The issue before the Gujarat High Court was identical to the
issue which is posed for our consideration in the present petition.
The Petitioners before the Gujarat High Court applied to the
Commissioner of Customs under letter dated 12 th April 2013 for
grant of exemption from payment of cost recovery charges in
terms of circular dated 10th April 2013. On 30th April 2013, the
Commissioner of Customs wrote to the Director General of Human
Resources Development forwarding the documents of the
Petitioners for grant of exemption from payment of cost of
recovery charges. On 15th December 2015, the Chief
Commissioner conveyed to the petitioners that it has been
decided to exempt the cost recovery charges w.e.f. 15th December
2015. However, the Chief Commissioner observed that for the
period between 12th April 2013 when the Petitioners applied for
such exemption till 15th December 2015 when the order was
passed, the Petitioners would be liable to pay the same. The
issue arose before the Gujarat High Court as to whether the
Revenue was justifed in granting exemption from 15 th December
2015 and not from the date of the application made by the
Petitioners. The Gujarat High Court after analysing the scheme
came to the conclusion that the exemption ought to have been
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granted from the date of the application and not from the date
when the Chief Commissioner decided to grant exemption. The
relevant paragraphs read as under :-
"17. In this context, the conditions be laid down in clauses
(b) and (c) of para 5 would have to be examined. Clause
(b) of para 5 does provide that such exemption from cost
recovery charges would be prospective and clause (c)
provides that no cost recovery charges should be
outstanding. These two clauses are pressed in service by
the department for denying exemption to the petitioners
from the date of application. Since these two conditions in
some sense overlap, we may examine the applicability and
fulfllment of these conditions by the petitioners
simultaneously.
18. When clause (b) of para 5 of the circular provides that
the exemption from cost recovery charges would be
prospective, in our opinion, it never aims to make such
exemption available only from the date of order and not
from the period anterior to the date of the order. This is for
variety of reasons. Firstly, upon issuance of the circular,
the Commissioner in terms of para 6 would undertake an
exercise to review the facilities and the cargo handling data
of a particular seaport and make a recommendation within
60 days. Any such report of the Commissioner would have
to be processed minutely by the concerned departments
and this would take a reasonable time. The circular never
intended that during all this while even if a particular
entity is entitled to exemption, such exemption would be
denied for the period during which the authorities i.e. the
Commissioner and the concerned department take time to
process the data and come to a defnite conclusion. Further,
para 6 itself provides that similar exercise would be
undertaken in April of every year. Even otherwise, no such
exercise can be undertaken prior to month of April since it
is the cargo handing over the last two years a sea port for
the purpose of clause (2) of immediately preceding year
which would decide its eligibility for grant of exemption.
The data for such period would be available only after 31 st
March of a particular year. The question of grant or non-
grant of exemption from payment of cargo handling
charges would relate to a beginning of the fnancial year
and can be examined only after the end of the previous
fnancial year. No intention appears from the circular that
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year after year every port would lose the exemption from
the period during which such exercise is undertaken and
completed. The purpose of mentioning that the exemption
shall be prospective was to ensure that no entity can claim
such exemption for a period prior to the date of the circular
or for a period prior to the application for such period i.e.
the period under review for exemption.
19. The reference to no cost recovery charges shall be
outstanding also has a bearing on this aspect of the matter.
If on one hand, the Government of India expects that the
custodian should pay up the charges and not be in arrears
of such charges, when the application for exemption is
being processed, the contention that such exemption even
if later on granted, would only be prospective, would be
incongruent. On one hand, the custodian would have to,
pending fnalization of the application for exemption, go on
depositing the recurring charges with the Government of
India, failing which, he would be stated to be breaching
condition contained in clause (c) of para 5 of the circular,
and on the other hand when such application is granted,
the custodian would be told that no refund can be granted
for such charges already deposited since the exemption is
always prospective. Grant of exemption from the date of
the application, if the application is in order and no delay
can be attributed to the petitioners in either making the
application or supplying necessary information to the
department, cannot be stated to be retrospective operation
of the order of exemption.
20. It is possible to take one view that pending such
application for exemption, the custodian cannot
discontinue depositing the charges with the Government.
In a given case, it may happen that the application is
ultimately rejected for valid reasons. It is possible to argue
that in such circumstances, the Government of India,
cannot be left uncovered for the period during which such
application was made and was pending with the
authorities. It is perhaps therefore correct on the part of
the Government of India to insist that pending such
application for exemption, the petitioners should have gone
on depositing the recurring cost recovery charges.
However, in the present case, non-payment of the charges
cannot be the base for rejecting the grant of exemption
from the date of the application. This is so because
admittedly all the while when such application was
pending, the petitioners were never conveyed that such
application shall not be processed, entertained or granted
since the current charges are not paid. It is part of the
record that once the petitioners through show cause notice
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were called upon to make such payments, the same were
made without delay. If the stand of the department
therefore was that even for the period during which the
petitioners had applied for exemption, till such exemption
is not granted, the petitioners must go on depositing the
charges as scheduled, the department should have
conveyed the same to the petitioners. One way of looking at
condition contained in clause (c) of para 5 is that at the
time of making of the application, no past charges should be
pending. If the stand of the Government of India was and a
stand which may even be plausible, that awaiting outcome
for application of exemption, the custodian should continue
to deposit such amount with the Government, it should
have specifed the stand with the petitioners.
22. In the result, petition is allowed. The condition of grant
of exemption under impugned order dated 15.12.2015 of
the exemption being available from the date of the order is
struck down. It is provided that such exemption for
payment of cost recovery charges would be available from
the date of application i.e. 12.04.2013. ....................................
23. Petition is disposed of."
17. In our view, the fact of the present petition being
similar to that before the Gujarat High Court, the analysis done
by us would require us to come to a conclusion that the
Respondents were not justifed in granting exemption w.e.f. 19 th
April 2021 when the application was made in April 2020.
18. In view of above, the CRB order No.5/2021(Exemption)
dated 25th April 2021 would be effective from 1 st April 2020 and
not from 19th April 2021 and, therefore, the Respondents are
directed to modify the exemption order granting exemption from
payment of Costs Recovery Charges from 1st April 2020 making
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the Petitioner eligible for exemption from said date that is 1 st
April, 2020.
19. Petition is allowed in the above terms. No order as to
costs.
[JITENDRA JAIN, J.] [G. S. KULKARNI, J.]
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