2026-VIL-1111-CESTAT-KOL-CU
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CUSTOMS CESTAT Cases

Customs - Cost Recovery Charges versus Merchant Over Time basis for customs supervision services in special bonded warehouse operations - Whether the appellant is liable to pay supervision charges on Cost Recovery Charges basis or on Merchant Over Time basis when the services of customs officers have been availed only for less than a full day or better part thereof, in terms of Regulation 3(e) of the Special Warehouse Licensing Regulations, 2016 read with Paragraph 11 of CBEC Circular No. 32/2016-Cus dated 13.07.2016 – HELD - The Circular clearly provides that Cost Recovery Charges are applicable only in three specific situations: firstly, where the warehouse is at such distance from the customs office that the officer's absence from office is for an entire day or better part thereof; secondly, where services are required more than once in a day; and thirdly, where round-the-clock services are requested. The determination of which basis applies must be made by the Principal Commissioner of Customs taking into consideration the projected requirement, distance of the warehouse, business hours and frequency of operation as indicated by the licensee. In the present case, the evidence on record clearly demonstrates that the customs officers' services have been availed only for six hours or part of a day. There exists no corroborative evidence to establish that the services of Customs officers have been utilized for the entire day or for better part thereof as alleged by the revenue - Moreover, the fact that an identical matter pertaining to the company's operations at another airport has been decided by the Deputy Commissioner dropping a similar demand for Cost Recovery Charges on the ground that no exclusive officer was posted reinforces that Cost Recovery Charges cannot be imposed without substantive evidence of full-day services or dedicated posting of officers. The demand for Cost Recovery Charges imposed without such evidence is unsustainable in law - The impugned order is set aside and the appeal is allowed
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By CA Vivek Jalan

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