The Delhi High Court recently held that the cost recovery charges are intended to cover expense of government in deputing Customs personnel to ICDs/CFSs/ACCs/EPZs and is legally valid. While upholding the vires of the levy, the Court confirmed that such levy is authorized by law.
A two-judge bench comprising Justices Sanjiv Khanna and Chander Sekhar was hearing a bunch of petitions wherein the petitioners sought for a declaration that the levy and collection of cost recovery charges for posting of and work performed by the custom officers and staff at the Inland Container Depots (ICDs)/Container Freight Stations (CFSs)/Air Cargo Complexes (ACCs)/Export Processing Zones (EPZs) of the petitioners is illegal, unlawful, null and void. The petitioners also sought refund of all the charges collected from them since inception.
The division bench noted that the cost recovery charges have been worked out and were/are payable by the Department of Revenue on the basis of general principles laid down in the General Financial Rules. As a condition for being appointed as a custodian, the petitioners had undertaken to bear the cost of the customs staff posted at the ICDs/CFSs/ACCs/EPZs.
Customs officers may perform statutory or sovereign functions, however, the sovereign is not liable to provide service and permit setting up ICDs/CFSs/ACCs/EPZs.
“The payment is in the nature of fee for the services rendered. Further, payment of cost recovery charges for the customs officers who are posted for manning such additional facilities is one of the conditions of appointment as a custodian in terms of Notification under Section 45(1) of the Act and Regulation 5(2) of the impugned Regulation. In this regard, necessary undertakings were given by the petitioners before they were so appointed as custodian under Section 45 of the Act. They are therefore bound to bear the cost of the customs staff, posted for the ICDs/CFSs/ACCs/EPZs. The payment of cost recovery charges by the custodian of ICDs/CFSs/ACCs/EPZs has the statutory force of law and is within the jurisdiction of the respondents,” the bench said.
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