Case Note & Summary
The dispute arose out of the levy and recovery of cost recovery charges pertaining to the Inland Container Depot, Bhagat Ki Kothi, Jodhpur. M/s Container Corporation of India Limited (CONCOR), a Government of India undertaking under the Ministry of Railways, was appointed as the Custodian of the Inland Container Depot under Section 45(1) of the Customs Act, 1962. Under the applicable policy and terms of appointment, CONCOR was liable to bear cost recovery charges in respect of Customs staff deployed at the said Inland Container Depot in the event the prescribed benchmark volume of trade was not achieved. A Show Cause Notice dated 04.07.2018 was issued and Order-in-Original No.16/2018 dated 14.12.2018 confirmed the demand of cost recovery charges against CONCOR. Aggrieved, CONCOR preferred Customs Appeal No.50732/2019 before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi. The Tribunal, vide Final Order No. FO/C/A/51771-51772/2025-CU[DB] dated 12.11.2025, allowed the appeal and set aside the Order-in-Original. The Commissioner of Customs (Preventive) filed D.B. Custom Appeal No. 3/2026 under Section 130 of the Customs Act, 1962, along with connected matters, challenging the Tribunal's order. The High Court noted that both parties were authorities under the Union of India and fell within the ambit of 'other authority' under Article 12 of the Constitution, making the litigation an inter se dispute between two instrumentalities of the State. The Court encouraged amicable resolution and proposed mediation. Learned counsel for the Commissioner sought time to obtain instructions and subsequently submitted that for the year 2009-10, during which the prescribed benchmark was admittedly not achieved, the corresponding cost recovery charges would be borne by CONCOR. For subsequent periods, an appropriate assessment would be undertaken and wherever the benchmark was found achieved, no recovery would be effected and waiver would be considered strictly in accordance with law. Any amount lying with either party would be duly adjusted and released in accordance with law. Learned counsel for CONCOR accepted the proposal and agreed to extend full cooperation in verification and assessment. The Court recorded the consensus and directed that cost recovery charges for 2009-10 be borne by CONCOR; for subsequent periods the Customs authority undertake due verification regarding fulfillment of the prescribed benchmark and grant waiver wherever applicable strictly in accordance with law; and any amount found due and payable to either party be appropriately adjusted and released within six months. The batch of matters was disposed of as a successful outcome of judicially facilitated mediation. The Court observed that mediation between State instrumentalities advances constitutional ideals of good governance, administrative efficiency and responsible utilization of public funds.
Headnote
A) Customs Law - Cost Recovery Charges - Section 45(1) Customs Act, 1962 - Custodian's liability for cost recovery charges arises when prescribed benchmark volume of trade is not achieved - Dispute between Customs authority and CONCOR regarding liability for such charges was resolved by consensus where charges for 2009-10 were to be borne by CONCOR and for subsequent periods verification and waiver as per law. Court disposed of batch as successful judicially facilitated mediation. Held that consensus resolution between State instrumentalities conserves public resources and judicial time (Paras 2-4). B) Constitutional Law - Article 12 - Instrumentalities of State - Mediation in inter se disputes - Both parties being authorities under Article 12, judicially facilitated mediation advances constitutional ideals of good governance, administrative efficiency and responsible utilization of public funds. Held that disputes between public authorities may be resolved through dialogue and consensus (Paras 3-6).
Issue of Consideration
Whether CONCOR, as custodian under Section 45(1) of the Customs Act, 1962, was liable to bear cost recovery charges for Customs staff deployed at Inland Container Depot, Bhagat Ki Kothi, Jodhpur, particularly for periods where prescribed benchmark volume of trade was not achieved; and whether the dispute between two instrumentalities of State under Article 12 of the Constitution should be resolved through judicially facilitated mediation rather than adversarial litigation.
Final Decision
The batch of matters, including D.B. Custom Appeal No. 3/2026 and connected cases, was disposed of as a successful outcome of judicially facilitated mediation. The Court recorded consensus: (i) cost recovery charges for year 2009-10, when benchmark was admittedly not achieved, shall be borne by CONCOR; (ii) for subsequent periods, Custom authority shall undertake due verification regarding fulfillment of the prescribed benchmark and grant waiver strictly in accordance with law wherever applicable; (iii) any amount found due and payable to either party shall be appropriately adjusted and released within six months from date of order. No opinion on merits expressed.
Law Points
- Custodian under Section 45(1) of Customs Act
- 1962 liable for cost recovery charges when benchmark volume of trade not met
- disputes between State instrumentalities may be resolved through judicially facilitated mediation
- mediation advances good governance and efficient use of public funds
- waiver subject to verification strictly in accordance with law
