High Court of KeralaSingle Judge2024-02-29Writ petition disposed of with directions for c...

Asian Terminals, a division of Royal Indian Holding Ltd. v Union of India and Others

Case / Petition Number:WP(C) No.36133/2018

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Dinesh Kumar Singh, J.
Judgment Date: 2024-02-29
Court Decision / Holding: With the above directions, this writ petition stands finally disposed of. The court held that the petitioner is eligible for exemption from cost-recovery charges from the date of payment of pending arrears (principal plus interest). The department is directed to compute and inform the petitioner of the interest and any other dues payable for complete settlement for the period 2011-2013. Upon payment, it is directed to consider applications for waiver and denotification expeditiously, preferably within one month.
Final Disposition: Writ petition disposed of with directions for computation of interest and consideration of waiver/denotification within a month after payment of arrears; exemption from cost-recovery charges from the date of payment of pending arrears (principal + interest) to be granted if conditions are satisfied.

Parties to the Case

Appellants / Petitioners

Asian Terminals, a division of Royal Indian Holding Ltd.

Respondents

Union of India
Central Board of Excise and Customs
Chief Commissioner of Customs
Commissioner of Customs Willingdon Island
Assistant Commissioner of Customs (I&B)
Deputy Commissioner of Customs Willingdon Island

Legal Representation & Advocates

Counsels for Petitioners

• A.A. Ziyad Rahman
• Lal K. Joseph
• V.S. Shiraz Bava
• Joseph Kuriann Vallamattam
• K. Jaju Babu (Sr.)

Counsels for Respondents

• Sreelal N. Warrier, SC
• Sri Suvin R. Menon, CGC

Case Synopsis & Summary

Asian Terminals, a division of Royal Indian Holding Ltd., challenged cost-recovery charges imposed by customs authorities on its Willingdon Island container freight station (CFS) operations, invoking Article 226 of the Constitution of India. The petitioner had satisfied two consecutive years of operation with performance benchmarks and claimed eligibility for exemption from cost-recovery charges under the 2005 waiver framework (Ext. P1) and related communications, with eligibility pegged to action from 30.06.2010. The Department initially recommended exemption conditioned on payment of pending arrears; past disputes regarding arrears, including proceedings in W.P. No. 8914/2011 and Supreme Court involvement (SLP(C) No. 3760/2013), resulted in orders directing settlement of arrears in installments. The petitioner remitted amounts as required and sought exemption from further charges or, at minimum, exemption from interest on arrears. The respondents contended that the exemption scheme remains in force and that the applicant must pay the principal sum plus interest, with any waiver contingent upon settlement of arrears. The High Court held that the exemption scheme had not been withdrawn and that the petitioner is eligible for exemption from cost-recovery charges from the date of payment of pending arrears (principal plus interest). The court directed the department to compute interest and other dues, and to consider waivers/denotification expeditiously, preferably within a month, upon payment. The petition stands disposed with these directions.

Provisions of Law Cited

Constitution of India, Article 226Customs Area Regulations 2009

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that the exemption scheme issued by the CBEC/Customs, not withdrawn, remains alive and that the waiver should be granted prospectively from 30.06.2010, without regard to past arrears, or at least that interest should be confined to the arrears itself. It argues that payment of pending arrears (principal) was completed, and that interest for the entire prior period is unjust; the matter of arrears is an enforcement of an administrative scheme rather than a tax or duty, and thus not proper to impose interest beyond the arrears. It emphasizes that the waiver/denotification should be considered once arrears are settled and that the petitioner has already complied with Supreme Court directions to clear amounts in instalments.

Contentions of Respondents

The respondents submit that the exemption scheme remains valid and that the applicant must pay the principal amount along with interest as determined. They argue interest should accrue on the amount due after accounting for payments already made, and that the government’s waiver is contingent upon settlement of all arrears; the applicant’s claim to retroactive exemption conflicts with the scheme’s terms and the ongoing calculation of charges. They maintain that Ext. P12 and Ext. P13 reflect a valid process for determining arrears and exemptions, and that the matter requires computation of interest and dues before any waiver can be granted.

Cited Precedents (3)

Case Name	Citation	Treatment	Explanation
W.P.(C) No. 8914/2011	WP(C) 8914/2011	Mentioned Only	Judgment in WP(C) 8914/2011 is cited as part of the procedural history and to illustrate precedent on cost recovery disputes without being a binding authority in the current matter.
SLP(C) No. 3760/2013	SLP(C) 3760/2013	Mentioned Only	Supreme Court order cited (02.07.2013) concerning installments and arrears; referenced to show procedural posture but not as binding substantive precedent in the instant decision.
WP(C) No. 8642/2016	WP(C) 8642/2016	Mentioned Only	Judgment dated 25/07/2018 in WP(C) 8642/2016 is cited as Exhibit P11; used to illustrate prior adjudication relevant to waivers/arrears but not as direct binding authority in the present ruling.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## IN THE HIGH COURT OF KERALA AT ERNAKULAM ## PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 29[TH] DAY OF FEBRUARY 2024 / 10TH PHALGUNA, 1945 WP(C) NO. 36133 OF 2018 ## PETITIONER/S: ASIAN TERMINALS, A DIVISION OF ROYAL INDIAN HOLDING LTD., 24/418, WILLINGTON ISLAND, COCHIN REPRESENTED BY ITS CHAIRMAN TISSAN J. THACHANKARRY. BY ADVS. A.A.ZIYAD RAHMAN LAL K.JOSEPH V.S.SHIRAZ BAVA JOSEPH KURIAN VALLAMATTAM K.JAJU BABU (SR.) ## RESPONDENT/S: - 1 UNION OF INDIA, REPRESENTED BY ITS UNDER SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, HUDCO VISHALA BUILDING, 6TH FLOOR, BHIKAJI CAMA PALACE, NEW DELHI-110001. - 2 CENTRAL BOARD OF EXCISE AND CUSTOMS, ROOM NO.159A, NORTH BLOCK, NEW DELHI-110001,REPRESENTED BY ITS DIRECTOR. - 3 THE CHIEF COMMISSIONER OF CUSTOMS, OFFICE OF THE CHIEF COMMISSIONER OF CUSTOMS, I, CENTRAL REVENUE BUILDING, S PRESS ROAD, KOCHI - 682018. - 4 THE COMMISSIONER OF CUSTOMS, OFFICE OF THE COMMISSIONER OF CUSTOMS, WILLINGTON **-2-** ## **W.P.(C) No.36133/2018** ISLAND,KOCHI - 682009. - 5 THE ASSISTANT COMMISSIONER OF CUSTOMS (I AND B), OFFICE OF THE COMMISSIONER OF CUSTOMS, WILLINGTON ISLAND, KOCHI - 682009. - 6 THE DEPUTY COMMISSIONER OF CUSTOMS, OFFICE OF THE COMMISSIONER OF CUSTOMS, WILLINGTON ISLAND, KOCHI - 682009. BY ADVS. SRI.SUVIN R.MENON, CGC SREELAL N. WARRIER, SC, CENTRAL BOARD OF EXCISE ## OTHER PRESENT: ADV.K. JAIJU BABU (SR) SREELAL N. WARRIER-SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 29.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **W.P.(C) No.36133/2018** **-3-** ## J U D G M E N T The present writ petition under Article 226 of the Constitution of India has been filed for the following reliefs. - _i._ Issue a Writ of certiorari or any other appropriate Writ or order quashing Ext. P12, to that extent, the petitioner was denied the exemption from cost recovery charges from 30.06.2010. - _ii._ Issue a Writ of certiorari or any other appropriate Writ order quashing Ext. P13 demand notice. - _iii._ Declare that the petitioner is eligible to be exempted from payment or cost recovery charges in the light of Ext. P1 with effect from 30.06.2010. - _iv._ Issue a Writ of Mandamus or any other Writ order directing the first and second respondents to pass appropriate orders exempting the petitioner from payment of cost recovery charges in the light of Ext. P1, Ext. P3 and Ext.P7, at least with effect from 30.06.2010 - _v._ Pass such other orders which this Honourable Court may deem fit in the facts and circumstances of the case.” 2. The petitioner is a company registered under the Companies Act and is conducting a Container Freight Station (CFS For short) in Willingdon Island Ernakulam. As per the handling of cargo in the Customs Area Regulation 2009 made **W.P.(C) No.36133/2018** **-4-** by the first respondent, all CFSs have to bear the costs of the customs officers posted at such customs area, on a cost recovery basis and shall make payments at such rates and in the manner prescribed, unless specifically exempted by an order of the first respondent. The said payments have to be effected for each quarter of the year. 3. The first respondent _Vide_ Circular dated 12.09.2005 has intimated to all officers of the Customs that, the first respondent has decided to grant waiver/exemption from cost recovery charges to those CFSs that have been in operation for two consecutive years with particular performance benchmarks as Waiver could be prospective with no claims for the past period and there should be no pending dispute /payment on cost recovery charges as on 31.08.2005. 4. As the petitioner has attained the performance benchmark prescribed in Ext. P2, the petitioner has submitted **-5-** ## **W.P.(C) No.36133/2018** an application dated 31.10.2009 before the first respondent claiming exemption from cost recovery charges prospectively. The eligibility for waiver arises only from 30.06.2010. However, the fourth respondent recommended the exemption on the condition that the waiver of cost recovery charges may be granted, provided that the petitioner pays the pending arrears of cost recovery charges. Because of some disputes regarding the quantification of arrears of cost recovery charges at the relevant time, the petitioner had filed Writ petition WPC No. 8914/2011 before this Hon’ble Court, and the same was disposed of, directing the petitioner to clear the amounts due in four equal monthly instalments first of which was payable on 15.02.2011 and the said time was extended up to 30.09.2013 by the Hon’ble Supreme Court by the order dated 02.07.2013 in SLP(C) No. 3760/2013. The petitioner remitted the amount and requested the respondent to consider the **-6-** ## **W.P.(C) No.36133/2018** application for exemption from cost recovery charges. To consider the application, the petitioner has filed WPC No. 8642/2016 before this Hon’ble Court, and it was disposed of, directing the respondents to consider the application for a waiver within 2 months from the date of receipt of a copy of the judgment. The fourth respondent considered the petitioner's application and issued the impugned Ext. P 12 order granting a waiver of Cost recovery charges with effect from October 2015 and issued Ext. P 13 Notice demanding Rs 1,41,60,914/- as arrears of cost recovery charges from April 2010 to September 2015. 5. Mr. K. Jaju Babu, learned Senior Counsel for the petitioner, fairly submits that in compliance with the order of the Hon’ble Supreme Court, the petitioner has paid the due amount on 19.09.2013 and by Ext. P6(a), the petitioner requested the Department to intimate about the interest, if **W.P.(C) No.36133/2018** **-7-** any, payable by the petitioner to complete their obligation. It is further submitted that the petitioner is willing to pay the interest for the period 2011-13 after adjusting the payments already made. It was also submitted that this is arrears of charge and not of tax or duty payable by the petitioner; hence, imposing interest for the entire period is not justiciable. 6. Mr. Sreelal N. Warrier, learned standing counsel for the respondents, does not dispute the fact that the Ext. The P1 Exemption scheme has not yet been withdrawn, and the application for waiver is still alive. It is submitted that as per the judgment of this Hon’ble Court, the petitioner is liable to pay the principal amount along with interest, and the offer to pay the interest on intimation is not remittance. Hence, the petitioner is still in arrears, and the application of the petitioner will become valid only after discharging the same. The interest should be on the amount which should have been **-8-** ## **W.P.(C) No.36133/2018** paid along with the application and it should be on the amount due after setting off the amount already paid by the petitioner. 7. I have considered the submissions and the fact that the exemption scheme issued by the Central Board of Direct Taxes and Customs are not withdrawn, I am of the considered view that the petitioner is eligible for exemption from cost recovery charge from the date of payment of the pending arrears _i.e._ Principal amount along with interest. The department is directed to compute and intimate the petitioner the interest and any other dues payable by the petitioner in complete settlement for the period 2011-2013. Once the petitioner makes the payment, the concerned authority is directed to consider the applications for waiver and denotification as expeditiously as possible, preferably within one month. ## **W.P.(C) No.36133/2018** **-9-** With the above directions, this Writ petition stands finally disposed of. Sd/- DINESH KUMAR SINGH JUDGE jjj **W.P.(C) No.36133/2018** **-10-** ## APPENDIX OF WP(C) 36133/2018 PETITIONER EXHIBITS - EXHIBIT P1 TRUE COPY OF THE CIRCULAR BEARING NO.F.NO.434/17/2004-CUS-IV DATED 12/09/2005. - EXHIBIT P1(A) - TRUE COPY OF THE CIRCULAR BEARING NO. D.O.F. NO.A.11018/12/2008-AD-IV DATED 02/07/2008. - EXHIBIT P2 TRUE COPY OF THE COMMUNICATION DATED 31/10/2009 ISSUED BY THE PETITIONER. - EXHIBIT P3 TRUE COPY OF THE COMMUNICATION DATED 20/05/2010 ALONG WITH THE PROFORMA. - EXHIBIT P4 - TRUE COPY OF THE JUDGMENT DATED 05/04/2011 IN WP(C) 8914/2011. - EXHIBIT P5 TRUE COPY OF THE ORDER DATED 02/07/2013 IN SLP(C) NO.3760/2013 PASSED BY THE HONOURABLE SUPREME COURT. - EXHIBIT P6 TRUE COPY OF THE NOTICE DATED 22/08/2011 ALONG WITH THE STATEMENT. - EXHIBIT P6(A) TRUE COPY OF THE APPLICATION DATED 19/09/2013. - EXHIBIT P7 - TRUE COPY OF THE COMMUNICATION BEARING F NO.S20/08/1995 1 & B-CUS DATED 28/05/2014 ISSUED BY THE 4TH RESPONDENT. - EXHIBIT P8 TRUE COPY OF THE COMMUNICATION DATED 19/11/2014 ADDRESSED TO THE 4TH RESPONDENT. - EXHIBIT P9 TRUE COPY OF THE COMMUNICATION DATED 09/12/2014 ISSUED BY THE 4TH RESPONDENT. ## **W.P.(C) No.36133/2018** **-11-** - EXHIBIT P10 - TRUE COPY OF THE COMMUNICATION WHICH WAS ACKNOWLEDGED BY THE 4TH RESPONDENT ON 27/08/2015. - EXHIBIT P11 TRUE COPY OF THE JUDGMENT DATED 25/07/2018 IN WP(C) NO.8642/2016. - EXHIBIT P12 TRUE COPY OF THE BEARING C.NO.VIII/48/208/CCO V DATED 03/10/2018. - EXHIBIT P13 TRUE COPY OF THE DEMAND NOTICE DATED 23/10/2018 ALONG WITH THE CALCULATION STATEMENT. - EXHIBIT P14 - TRUE COPY OF THE CIRCULAR DATED 03/11/2015. - Exhibit P15 TRUE COPY OF THE COMMUNICATION DATED 24.02.2015 TO THE ADDITIONAL DIRECTOR GENERAL(HRM), CENTRAL BOARD OF EXCISE AND CUSTOMS, DIRECTORATE GENERAL OF HUMAN RESOURCE DEVELOPMENT DEEPSHIKHA, NEW DELHI, 110008 - Exhibit P16 TRUE COPY OF THE COMMUNICATION DATED 29.04.2015 TO THE ADDITIONAL DIRECTOR GENERAL(EMC) - Exhibit P17 TRUE COPY OF THE REQUEST FOR DENOTIFICATION OF CFS TO THE 4TH RESPONDENT DATED 13.03.2023 - Exhibit P18 TRUE COPY OF THE F NO. S20/08/1995 I&B DATED 12.05.2023