Cost recovery charges for unmet trade benchmarks are payable; subsequent waivers require verification under law.

M/s Container Corporation of India Limited (CONCOR) was appointed custodian of the Inland Container Depot at Bhagat Ki Kothi, Jodhpur under Section 45(1) of the Customs Act, 1962.

Under the applicable policy and conditions of appointment, CONCOR was liable to pay cost-recovery charges for Customs staff deployed at the depot if the prescribed benchmark volume of trade was not achieved.

Following a show-cause notice dated 04.07.2018, the Commissioner of Customs (Preventive), Jodhpur confirmed the demand through Order-in-Original No. 16/2018 dated 14.12.2018.

CONCOR challenged that order before the CESTAT, which allowed the appeal and set aside the Order-in-Original by Final Order dated 12.11.2025.

The Commissioner thereafter filed D.B. Custom Appeal No. 3/2026 under Section 130 of the Customs Act, 1962.

Whether CONCOR was liable to bear cost-recovery charges for the period during which the prescribed benchmark volume of trade was not achieved, particularly the year 2009–10?

Whether, for the subsequent periods, CONCOR was entitled to waiver of cost-recovery charges where the prescribed benchmark was achieved?

Whether the batch of proceedings could be finally resolved on the basis of the parties’ consensus through judicially facilitated mediation?

The Court applied Section 45(1) of the Customs Act, 1962, governing the appointment and responsibilities of a custodian of imported goods at a customs area, and Section 130, under which a customs appeal may be preferred before the High Court on a substantial question of law.

It further applied the applicable cost-recovery policy and the conditions governing CONCOR’s appointment, under which exemption or waiver from cost-recovery charges depended upon achievement of the prescribed benchmark volume of trade; where the benchmark was not achieved, the custodian was liable to bear the charges.

The Court also relied on the constitutional and public-law principle that disputes between instrumentalities of the State should, where appropriate, be resolved through cooperation, mediation and efficient use of public resources.

The Court noted that the dispute was between the Customs authorities, representing the Union of India, and CONCOR, a Government of India undertaking falling within the ambit of “other authority” under Article 12 of the Constitution.

Since the liability to pay cost-recovery charges depended upon whether the prescribed trade benchmark had been met, the Court encouraged an amicable resolution rather than continuing adversarial litigation.

The Customs authorities conceded that charges for 2009–10, when the benchmark was admittedly not achieved, would be borne by CONCOR.

For later periods, the parties agreed that the Customs authorities would verify the actual trade volume and grant waiver wherever the benchmark had been achieved, strictly in accordance with law.

The Court accepted this consensus as resolving the entire controversy and directed adjustment or release of any amount found payable after verification.

CONCOR was directed to bear the cost-recovery charges for 2009–10, during which the prescribed benchmark was not achieved.

For subsequent periods, the Customs authorities were directed to undertake due verification; where the benchmark was achieved, the applicable waiver was to be granted in accordance with law.

Any amount found due to either party was to be adjusted and released within six months from the date of the order.