Custodians are liable for cost recovery charges regardless of formal post sanctioning if customs services were utilized.

The Petitioner No. 1, a notified ‘custodian’ under Section 45(1) of the Customs Act, 1962, operated a Container Freight Station (CFS) at Haldia Port

Under Public Notice No. 34/12, the Petitioner was mandated to bear the "cost recovery charges" for Customs Officers posted at the CFS

The Petitioner paid these charges from 2012 to 2014 but ceased thereafter, claiming they were paid in "ignorance of law"

The Respondent issued demand notices in 2016 and 2020 for outstanding dues and subsequently suspended movement of cargo to the CFS on August 12, 2020

The Petitioner challenged these demands, arguing that since no posts were formally sanctioned by the Department of Expenditure specifically for their CFS, no liability existed

A previous challenge to the validity of the Regulations was dismissed by the Delhi High Court

1. Whether the liability to pay cost recovery charges is contingent upon the formal sanction of posts by the Department of Expenditure and actual physical deployment of personnel.

2. Whether the Petitioner is estopped from challenging the liability after having previously accepted the terms, paid charges, and applied for waivers.

3. Whether the administrative subsuming of diverted posts into the cadre strength extinguishes the custodian’s liability to pay cost recovery charges.

Section 45 and Section 8 of the Customs Act, 1962, regarding the appointment and responsibilities of custodians

Regulations 5(2) and 6(1)(o) of the "Handling of Cargo in Customs Areas Regulations, 2009," which mandate that a customs cargo service provider must bear the cost of officers posted on a cost recovery basis unless specifically exempted

Principle of Contemporanea Expositio regarding administrative practice

Doctrine of "Substantial Compliance" and legal principles of Estoppel and Acquiescence

Distinction from R.K. Sabharwal v. State of Punjab regarding sanctioned posts and reliance on Allied ICD Services Limited v. Union of India which upheld the validity of the 2009 Regulations

The Court reasoned that the Petitioner’s appointment as a custodian was subject to the express condition of paying cost recovery charges, which they unequivocally accepted by furnishing bonds and making initial payments

The Court rejected the "ignorance of law" plea, noting that a commercial entity cannot benefit from operating a CFS while disavowing the statutory costs of the necessary Customs supervision

The Court found that the internal administrative regularisation (subsuming) of posts into the department's cadre did not automatically waive the Petitioner's liability, as exemption requires a specific order based on performance norms, which the Petitioner failed to obtain

Applying the "Substantial Compliance" doctrine, the Court held that the actual provision of Customs services at the facility—without which the CFS could not function—created the liability, regardless of internal procedural formalities regarding post-sanctioning

The Court held the petition was barred by the principle of estoppel and the previous adjudication by the Delhi High Court

The Court found the demand notices and the restriction order dated August 12, 2020, to be legally valid and not arbitrary; the Writ Petition (WPA 10583 of 2020) was dismissed.