IMPORTANT POINT
The main legal point established in the judgment is that the 2009 Regulations are ultra vires the Customs Act, 1962 as there is no express statutory provision conferring authority to levy cost recovery charges. The levy of cost recovery charges, in fact, salaries payable to the customs staff deployed at the Airport, is in the nature of administrative charges and is a tax. It cannot be exacted without any statutory provision.

JUDGMENT

Alok Aradhe, CJ. - This intra court appeal is filed against the order dated 11.06.2012 passed by the learned Single Judge by which the learned Single 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 dispute in this appeal pertains to cost recovery charges between the years 2008 and 2013. In order to appreciate the challenge of the appellants to the impugned order, the relevant facts need mention which are stated infra.

2. In the year 1999, the Government of India (GoI), Airports Authority of India (AAI) and the erstwhile Government of Andhra Pradesh (GoAP) agreed to set up a new Greenfield International Airport at Hyderabad on Public Private Participation basis. On 26.06.2002, guidelines were issued vide Circular No.34/2002 by Central Board of Excise and Customs for appointment of Custodian of Sea Ports and Air Cargo Complexes. A tender was issued in which respondent No.1 (hereinafter referred as 'the Company') was declared as a preferred bidder and a Concession Agreement on 20.12.2004 was executed between the Ministry of Civil Aviation, GoI and the Hyderabad International Airport Limited for development, construction, operation and maintenance of Greenfield Airport at Shamshabad near Hyderabad.

3. Under the aforesaid Concession Agreement, the Company had to operate, maintain and perform airport activities and non-airport activities. Article 3.2.1(b) of the Concession Agreement recognises the right of the Company to carry on any activity or business in connection with or related to the arrival, departure and/or handling of aircraft, passengers, baggage, cargo and/or mail at the Airport. Under Article 8.4 of the Concession Agreement, GoI was under an obligation to establish the customs immigration and quarantine procedures at its own cost.

4. On 07.12.2006, the Company submitted an application for appointment as Custodian under Section 45 of the Customs Act, 1962. Thereafter, on 16.05.2007, the Company submitted a representation to Central Board of Excise and Customs requesting the GoI to waive condition Nos.10 to 13 of Circular No.34/2002 dated 26.06.2002 and to issue necessary instructions to the GoI to grant Custodianship without imposing any onerous conditions. Again a reminder was submitted on 22.11.2007 to GoI.

5. The Commissioner of Customs and Central Excise, Hyderabad vide Notification No.2/2008, dated 11.03.2008 granted Custodianship to the Company which provided for payment of cost of customs department by the Company. The Assistant Commissioner of Customs, Air Cargo Complex, Hyderabad by a communication dated 01.03.2008 requested the Company to bear the cost of Customs Staff posted at Air Cargo Complex from the date of operation at the Airport premises. Thereafter, again a reminder was issued on 15.03.2008. The Additional Commissioner, Customs, thereafter on 09.04.2008 again directed the Company to deposit cost recovery charges for three months for the staff posted at Air Cargo Complex.

6. The Company thereupon filed W.P.No. 13188 of 2008 in which the action of the appellants in seeking to recover customs cost recovery was challenged. The learned Single Judge of this Court by an interim order dated 21.11.2008 stayed all further proceedings in pursuance of the letter dated 09.04.2008. Thereafter, a Notification No.26/2009, dated 17.03.2009 was issued by Central Board of Excise and Customs by which in exercise of powers under Section 141(2) and Section 157 of the Customs Act, 1962, the Regulations, namely the Handling of Cargo in Customs Areas Regulations, 2009 (hereinafter referred to as 'the 2009 Regulations') were framed with retrospective effect i.e., from 17.03.2009.

7. The Company thereafter on 23.03.2009 withdrew the writ petition, namely W.P