In a recent decision the Telangana High Court held that Handling of Cargo in Customs Areas Regulations for which cost of living expenses recoverable from the customs cargo service provider is ultra vires the Customs Act, 1962. The intra court appeal was filed against the order passed by the Single Judge by which the Judge has allowed the writ petition preferred by respondent No.1 and has inter alia held that Regulation 5(2) of the Handling of Cargo in Customs Areas Regulations, 2009 has no legal substratum to survive and held that consequential levy made on respondent No.1 towards cost recovery charges is wholly unsustainable.
The Additional Solicitor General of India submitted that the Company, at the time of submission of application seeking appointment as Custodian, had furnished an undertaking that it shall abide by the 2009 Regulations and therefore, the undertaking binds the Company. It is further submitted that learned Single Judge ought to have appreciated that 2009 Regulations have been framed in exercise of powers under Section 141 read with Section 157 of the Customs Act, 1962. The Senior Counsel for the Company submitted that neither Section 141 nor Section 157 of the Customs Act, 1962 contemplates framing Regulations with regard to cost recovery charges.
Therefore, the impugned 2009 Regulations are ultra vires the Customs Act, 1962. It is pointed out that after submitting the application seeking appointment of Custodian under Section 45(1) of the Customs Act, 1962, the Company had submitted applications on 16.05.2007 and 22.11.2007 seeking to waive condition Nos.10 to 13 of Circular No.34/2002, dated 26.06.2002.
Therefore, the plea of estoppel does not apply in the facts and circumstances of the case. A Division Bench of Chief Justice Alok Aradhe and Justice Anil Kumar Juganti observed that “Thus, from a perusal of Section 157 of the Customs Act, it is evident that Section 157 does not enumerate any specific provision under which cost recovery charges i.e., the amount of salary payable to the officials of the Customs Department, who are deployed at the Airport who perform their statutory duties, can be recovered. The 2009 Regulations have been framed in exercise of the powers conferred under Section 141 and Section 157 of the Customs Act.
From a close scrutiny of the aforesaid provisions of Sections 141 and 157, it is evident that there is no express statutory provision conferring authority on the appellants to levy cost recovery charges.” “In the absence of any special authorization to levy cost recovery charges, appellants have no authority to impose cost recovery charges by means of a Regulation. The inevitable conclusion is that the 2009 Regulations are ultra vires the Customs Act, 1962” the Court concluded