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The objections raised by the operators of Container Freight Station (CFS) and Inland Container Depots (ICD) against the demand of the Customs Department for payment of establishment charges could not be accepted and no case was made out to interfere with the demand notices issued, the Madras High Court has ruled.
Three writ petitions were filed by the operators – Hari CFS, SEC CFS and St John ICD – all based in Thoothukudi – challenging orders dated January 29, 2009, December 19, 2008 of the Administration Officer (Establishment), Customs House, Thoothukudi demanding payment of various amounts towards arrears of establishment charges of the Customs Officers from January 2006 to September 2008.
According to the petitioners, Customs Officers were discharging statutory duties under the Customs Act, and their function was a sovereign one.
No fee could be levied for discharge of statutory or sovereign function. Since the Government was empowered to levy customs duty under the Customs Act, further cost recovery was void ab initio and violative of Articles 14 and 265 of the Constitution.
Charging at the rate of 185 per cent of total salary of the officers was extravagant and exorbitant.
The respondents – Revenue Secretary, Commerce & Industry Secretary and Commissioner of Customs, Thoothukudi – contended that the demand for cost recovery charges had statutory force of law.
When the ICDs and CFSs were run by custodians for their own commercial gains, cost recovery charges would have to be paid for posting of Customs officials who were additionally sanctioned for these ICDs and CFSs over and above regular posts.
The Government could not bear the cost of additional manpower sanction.
The respondents cited the judgment of the Supreme Court in the Government of Maharashtra vs Deokar's Distillery [reported in 2003 (5) SCC 669 in respect of collection made for deputed excise officials in distilleries. The objections raised by the distilleries were repelled by the apex court.
Hearing the petitions, Mr K. Chandru, held that the objections of the petitioners did not stand scrutiny of law.
No case was made out to interfere with the impugned demand notices. All the petitions would stand dismissed.
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