JUDGMENT : Per Dr. Pushpendra Singh Bhati, J : 1. The present bunch of appeals and writ petitions have been preferred claiming, in sum and substance, the following reliefs: Appeals by the Revenue (Customs Department): “1. It is, therefore, prayed that this appeal be accepted and the Hon’ble Court may be pleased to set aside the impugned final order dated 26.07.2019 passed by the ld. CESTAT and restore the Order-in-Original dated 26.02.2019 passed by the ld. Commissioner. 2. It is also prayed that the substantial question of law mentioned in para 12 of the present appeal, arising out of the impugned Final Order dated 26.07.2019 passed by the ld. CESTAT may be admitted, decided, considered and an ordainment or direction, which may be just and proper in favour of the appellant may be passed. 3. It is also prayed that an ad-interim stay be granted and the operation of the impugned Final Order dated 26.07.2019 passed by the ld. CESTAT may be stayed until the final decision of the instant appeal is taken. 4. Any other order or direction which this Hon’ble court deems just and proper in the facts and circumstances of the case may also be passed in favour of the appellant.” Writ Petitions Companies (in short, ‘Dry Ports’): “It is, therefore, most humbly and respectfully prayed that the present writ petition may kindly be allowed and by an appropriate writ, order or direction: i. The impugned show cause notice dated 11.10.2019 issued by the Respondent-Commissioner of Customs (Preventive), Jodhpur be quashed and set aside and so also the consequential actions be taken in pursuance thereof. ii. The respondents be directed not to revoke the license of custodianship granted to the petitioner. iii. The respondents be directed not to recover the cost of recovery charges from the petitioner. iv. Any other writ, order or direction that this Hon’ble Court may deem appropriate in the facts and circumstances of the case may kindly be passed in favour of the petitioner.” 2. A Coordinate Bench of this Court had formulated the following substantial question of law, while admitting the instant appeal(s): “Whether learned Customs, Excise & Service Tax Appellate Tribunal (CESTAT) was justified in law in holding that the authority had no jurisdiction either under the Customs Act or under the Handling of Cargo in Customs Areas Regulations, 2009 (HCCAR) to order recovery?” 3. Brief facts of the case, as noticed by this Court, are that in the year 1995, the Central Government made efforts to decongest the ports by providing entry points to facilitate the customs clearance of goods for exports and imports in Dry Ports. Thus, the creation of the entry points away from the Ports and providing customs facilities therein, was with an intention of providing smooth export and import facilities to the business enterprises and also to make the process hassle free for the businessmen. The Inland Container Depots (ICDs) and Container Freight Stations (CFSs) were set in and a mechanism was drawn by Circular dated 17.10.1997, whereby the postings of staff in ICDs and CFSs pertaining to collection of cost recovery charges were made. 4. The Dry Ports in question in accordance with the said Policy of 1995 sought to set up their CFSs at the respective towns, in this case, it is Jodhpur by an application dated 25.10.1998. The CFSs at Jodhpur pertaining to export and import cargo were thus proposed to be made and all the necessary facilities were to be provided. The Ports in question, were to be provided certain facilities by the Commissioner of Customs to enable smooth functioning of the CFSs/ICDs on the basis of cost recovery charges. The Dry Ports in question, like M/s. Thar Dry Port was declared as custodian vide notification dated 19.11.2001 and declared as an ICD vide order dated 29.11.2001. 5. As the facility developed, the Government brought in a notification dated 17.03.2009, notifying the Handling of Cargo in Customs Areas Regulations, 2009 (hereinafter referred to as ‘HCCAR, 2009’) and thereby replaced the earlier Guidelines of 1995. On 08.01.2013, a show cause notice was given by the Commissioner of Customs for the suspension or revocation in terms of Regulation 11(1) of HCCAR, 2009 and the order of forfeiture of security and also an outstanding cost recovery charges of Rs.1,71,44,034/- on account of arrears of 6th Pay Commission and the non-payment of Rs.69,57,425/- for the period from 01.04.2011 to 31.03.2012 along with the interest; in addition a sum Rs.40,98,978/- for the period from 01.07.2013 to 21.12.2013 and therefore, the aggregate amount of Rs.8,92,58,172 was sought to be recovered. 6. 6. This Court also takes note of the Circular dated 19.01.2021, wherein it has been stated in para 4 that there is no requirement of bearing the cost of custom staff posted at customs for custodians notified before 26.06.2002, unless it falls in the exceptional category, which was not in the present case. 7. After issuance of the show cause notice, a hearing was fixed on 05.11.2018 and 28.11.2018. The Dry Port submitted that all the dues of the cost have been duly deposited in advance and the representations for grant of exemptions/waiver are pending approval of Central Board of Indirect Taxes & Customs (CBIC), New Delhi, and as such the allegations were not correct. 8. The contention of the Dry Ports is that CBIC in similar circumstances had granted waiver/exemption to another ICD, such as Dynamic Logistics Private Limited and as such, they were also entitled to exemption of cost recovery charges from 01.06.2006, but in this case, after the benchmark of exceptional trading was achieved on 15.01.2011, no charges were required to be paid. 9. It has been argued that for the reasons stated in the impugned order dated 26.07.2019, the Customs, Excise & Service Tax Appellate Tribunal, New Delhi (CESTAT) held that the demand raised as per the show cause notice is confirmed subject to a reduction of a demand of Rs.3,38,472/- for the period from 01.04.2016 to 31.12.2016 and ordered for recovery of the same in terms of condition No.(iii) of Public Notice No.27/2011 (Customs) dated 13.11.2001. The Ports were to submit the revised bond and bank guarantee, keeping in in view their import/ export in the last financial year. However, the Commissioner did not make any adverse order to revoke the custodianship nor did he forfeit the security deposit as per the show cause notice dated 08.01.2013. 10. The Port filed an appeal before the learned CESTAT under Section 129 A(d) of the Customs Act, 1962 (in short, ‘Act of 1962’), which was allowed vide the impugned order dated 26.07.2019. 10. The Port filed an appeal before the learned CESTAT under Section 129 A(d) of the Customs Act, 1962 (in short, ‘Act of 1962’), which was allowed vide the impugned order dated 26.07.2019. On a perusal of the impugned order passed by the learned CESTAT, it is clear that it has considered the following issue: “The issue that arises for consideration in this appeal is as to whether the recovery of cost recovery charges could have been confirmed by the Commissioner exercising powers under Regulation 5(2) and 6(1)(o) of the 2009 Regulations and whether penalty of Rs.5,000/- could have been invoked.” 11. The said issue was considered by the CESTAT in para 26 of the impugned order and it noticed that the said issue has been considered and decided by it in the case of Container Corporation of India Vs. Commissioner of Customs, Jodhpur, 2019 (366) E.L.T. 745 (Tri. Del.); relevant portion whereof reads as under: “13. The issue involved in this case is regarding confirmation of cost recovery charge against the Appellant vide the impugned order. The learned Adjudicating Authority has confirmed the demand under the provision raised by the show cause notice dated 29 march, 2016. The show cause notice at para 16 (ii) has invoked the provisions of Regulations 5(2) and 6(1)(o) of HCCAR). However, the commissioner has confirmed the demand without invoking any of those regulations. For the better appreciation of the issue involved we would like to refer to Regulation 5(2), 6(1)(o) and 12 of the Regulation of HCCAR. A perusal of the regulation reveals that the same is intended for levying of cost recovery charge and payment thereof. Similarly, the condition at 5(2) only states that custodian or CCSP will have to undertake to bear expenses of the Customs officers posted in the customs area on cost recovery charge basis as per the manner prescribed unless and until the same is exempted by the Ministry of Finance. Therefore, regulation 6(1)(o) of the Regulation (6) is not meant for recovery of default payment but only is says that the CCSP will have to bear the cost of officer deployed at their premises. Similarly Regulation (12) of the HCCAR does not prescribe for the recovery of defaulted cost recovery charge. But only states that the same cost procedure for suspension or revocation of approval and imposition of penalty. 14. Similarly Regulation (12) of the HCCAR does not prescribe for the recovery of defaulted cost recovery charge. But only states that the same cost procedure for suspension or revocation of approval and imposition of penalty. 14. In view of above, we find that the learned Adjudicating Authority has not appreciated the legal provision as contained in HCR referred above which do not indicate the machinery for realization of cost recovery charge on account of being defaulted as is the case before us. In fact, we find that the show cause notice has invoked the provisions of regulation 12 of HCCAR which does not provide for the realization of the cost recovery charge but only revocation of the licence granted to the CCSP on account of various breaches as contained therein. This regulation has no provisions for recovery of unpaid cost recovery charge on account of non-fulfillment of criteria as laid down in the CBEC circular. Thus, we find that the order passed by the learned Adjudicating Authority is beyond the scope of the provisions of HCCAR, 2009 more so when he has not decided not to cancel the licence of the appellant and only imposed penalty. Further, the learned Adjudicating Authority has also held that there is no provision of recovery of interest under the Regulation 2009. It is not appreciable that when he has held that there is no provision for imposition of interest under the Rule for the default made by the CCSP then how is attention escaped to notice that there is also no similar provision for recovery of default payment either under Regulations 5(2), 6(1)(o) of the Regulation. We also find that the Regulation 5(2) states ‘undertaken to bear the cost of Custom officer posted at such Customs area, on cost recovery basis, by the commissioner and shall make payment at such rate and in the manner prescribed unless specifically exempted by an order of the Government of India in the Ministry of Finance.” 12. Learned counsel for the Ports submitted that in the case of Container Corporation of India (supra), the Revenue had invoked the provisions contained in the Regulations 5(2) and 6(1) (o) of HCCAR, 2009, whereas in the present case, the learned Commissioner in the impugned show cause notice had only invoked Regulations 11(1) and 12(8) of the HCCAR, 2009, however, confirmed the demand without invoking any of those Regulations. 12.1. 12.1. Learned counsel further submitted that Commissioner had only invoked Regulation 5(2) and 6(1)(o) ordering for recovery of outstanding demand and thus, in view of the fact that both the Regulations do not provide for recovery, there could have been no recovery ordered under the aforesaid Regulations. 12.2. Learned counsel also submitted that there is a complete absence of any regulation in HCCAR, 2009 providing for either an order to be made for recovery or any mechanism or rules providing the manner of recovery, and thus, no recovery could have been ordered other than that of revocation/suspension of custodianship. 12.3. Learned counsel further submitted that as no other provision have been invoked nor any other provision had been cited in support of the stance that there exist any provision either in the HCCAR, 2009 or in the Act of 1962, recovery of cost recovery charges could not be made. In fact, there had been an obligation and requirement to pay and collect the cost recovery charges in advance. 12.4. Learned counsel also submitted that a Circular No.02/2021 (Customs) dated 19.01.2021 has subsumed all earlier circulars including the Circular No. F 434/17/2004 – Cus. (IV) dated 12.09.2005, wherein the CBIC has directed that the requirement that the custodian shall bear the cost, applies only to such custodian who has been notified after 26.06.2002; whereas the Ports have been notified prior to the aforesaid date i.e., 06.11.2001 and as such, there remained no requirement for the Ports to bear the cost of staff and as such no recovery otherwise could be made from them. 12.5. Learned counsel further submitted that in the said circular No.02/2021 itself, it has been further specifically provided in para 8.4 that the cost recovery posts which had been sanctioned or diverted from the regular cadre strength to the various Customs facilities before 18.12.2013 were subsumed in the regular cadre strength of CBIC, implying thereby that such staff which had been posted prior to 18.12.2013 are not staff which are cost recovery staff. In the case of the Ports, staff had been sanctioned in the year 2002 and as such at least from 18.12.2013, no recovery could be made. 12.6. In support of such submissions, reliance has been placed on the following judgments: (1) State of Orissa v. Dr. (Miss) Binapani Dei and others, AIR 1967 SC 1269 . In the case of the Ports, staff had been sanctioned in the year 2002 and as such at least from 18.12.2013, no recovery could be made. 12.6. In support of such submissions, reliance has been placed on the following judgments: (1) State of Orissa v. Dr. (Miss) Binapani Dei and others, AIR 1967 SC 1269 . (2) R.B. Shreeram Durga Prasad and Fatechand Nursing Das v. Settlement Commission and others, 176 ITR 169 at Pg. 172. (3) KSM Metullurgiical Ltd. v. The Commissioner of Customs Chennai, WA No. 352 of 2021, CMP No. 1404 of 2021. (Madras High Court) (4) Adani Ports and Special Economic Zone Ltd. v. Union of India (2017) SCC OnLine Guj. 1837 (5) Commissioner of Central Excise v. MPV and Engg. Industries, 2003 (153) E.L.T. 485 (SC). (6) Santdas Idanmal and Company v. Union of India, 1981 (8) E.L.T. 561 (Del.) (7) M/s. Pearls Ports and Water Housing Private Limited v. Union of India, W.P. (MD) No. 7744 of 2021. (8) Commissioner of Customs, Ludhiana v. Krishna Cargo Movers Pvt. Ltd., 2020 (371) E.L.T. 633 (P&H). (9) M/s Sun Global Logisitics Pvt. Ltd. v. Union of India, W.P. No. 7937, 7938 and 8248 of 2013 (Madras High Court). (10) Central Board Excise and Customs Delhi v. M/s GMR Hyderabad International Airport Limited, Writ Appeal No. 1321 of 2012. (11) Commissioner of Central Excise Surat v. Favourite Industries (2012) 7 SCC 153 . 12.7. Learned counsel for the Revenue submitted that the Dry Ports like M/s. Thar Dry Port, were appointed as Custodian of ICD, Pal-Barmer Road, Village Pal, Jodhpur under Section 45(1) of the Act of 1962 vide Public Notice No.27/2001 (Customs) dated 13.11.2001, subject to the conditions laid down therein. As per Condition No.(iii), the custodian were under obligation to pay cost recovery charges of the Customs Officers posted at ICD, as prescribed, in advance on year basis. 12.7.1. The Custodian communicated their acceptance of the guidelines dated 14.12.1995 on stamp paper and submitted undertaking that the custodian shall bear the cost of Customs staff posted at ICD concerned. As per para 10 of the undertaking, the custodian shall bear the cost of customs staff posted at ICD concerned, besides other conditions. 12.8. 12.7.1. The Custodian communicated their acceptance of the guidelines dated 14.12.1995 on stamp paper and submitted undertaking that the custodian shall bear the cost of Customs staff posted at ICD concerned. As per para 10 of the undertaking, the custodian shall bear the cost of customs staff posted at ICD concerned, besides other conditions. 12.8. Learned counsel further submitted that the HCCAR, 2009 were promulgated vide Notification dated 17.03.2009 by the CBIC in exercise of powers conferred under sub-section (2) of Section 141 read with Section 157 of the Act of 1962. The said Regulations provided a mechanism for handling of goods in a customs area and set out the terms and conditions for all facilities where customs cargo is handled. 12.8.1. The proviso to Regulation 10(1) of the HCCAR, 2009 provides that a custodian/CCSP already approved on or before the date of coming into force of these Regulations, shall be deemed to be approved as custodian/CCSP under the said Regulations for a period of five years from the date of compliance with the conditions of these Regulations stipulated in Regulation 4. 12.9. Learned counsel also submitted that Regulation 5(2) read with Regulation 6(1)(o) of the HCCAR, 2009 require the custodian to bear and pay CRC in respect of the Customs Officers deployed at ICD/CFS/Port/Airport etc., at such rates and in the manner specified by the Government of India in the Ministry of Finance unless specifically exempted by an Order of the said Ministry. The Ports were not exempted by an order issued by the Ministry of Finance or by a circular or instructions issued by the Ministry of Finance. 12.10. Learned counsel further submitted that the learned CESTAT before passing the impugned order was required to examine whether the custodian was required to discharge cost recovery charges 185% of salary which includes D.A., H.R.A., Transport Allowance etc., in terms of Regulations 5(2) & 6(1)(o) of the HCCAR, 2009 as the Ports were not exempted, as mentioned above. 13. Heard learned counsel for the parties as well as perused the record of the case along with the judgments cited at the Bar. 14. This Court observes that the facility for customs clearance of goods for export/import and for assessment, levy and collection of custody duty in hinterland in important cities was formulated to decongest the Ports at Entry Points in 1995. 14. This Court observes that the facility for customs clearance of goods for export/import and for assessment, levy and collection of custody duty in hinterland in important cities was formulated to decongest the Ports at Entry Points in 1995. The Customs Area and Customs Ports were formulated and CFSs, Air Cargo Complexes (ACCs) and ICDs were opened to facilitate imports and exports of goods away from the Ports in hinterland at Dry Ports. 15. This Court further observes that there is a dispute between the parties regarding waiver of cost recovery charges, which are being raised by the Revenue for handling of the cargo in Customs Area as per the HCCAR, 2009. There was another notification which was issued on 12.09.2005 regarding Cost Recovery Posts in respect of Customs staff posted in ICD/CFC/ACC. The Ports in question claimed that they have achieved the requisite target and thus, they are seeking the waiver of cost recovery charges. 16. This Court also observes that the Commissioner in pursuance of the notices made earlier confirmed the demand of outstanding cost recovery charges under Regulations 5(2) & 6(1)(o) of the HCCAR, 2009; against which appeals were preferred before the learned CESTAT. 17. At this juncture, this Court considers it appropriate to reproduce Regulations 5(2), 6(1)(o), 11(1), 12(1) & 12(8) of the HCCAR, 2009, as hereunder: Regulation 5(2): “5. Conditions to be fulfilled by an applicant for custody and handling of imported or export goods in a customs area.- Any person who intends to be approved as a Customs Cargo Service Provider for custody of imported goods or export goods and for handling of such goods, in a customs areas, hereinafter referred to as the applicant, shall fulfil the following conditions, namely:- (1) .... (2) the applicant shall undertake to bear the cost of the Customs officers posted, at such custom area, on cost recovery basis, by the Commissioner and shall make payment at such rates and in the manner prescribed, unless specifically exempted by an order of the Government of India in the Ministry of Finance.” Regulation 6(1)(o): “6. Responsibilities of Customs Cargo Service provider: (1) The Customs Cargo Service provider shall: ..... Responsibilities of Customs Cargo Service provider: (1) The Customs Cargo Service provider shall: ..... (o) shall bear the cost of the customs officers posted by the Commissioner of Customs on cost recovery basis and shall make payment at such rates and in the manner specified by the Government of India in the Ministry of Finance unless specifically exempted by an order of the said Ministry.” Regulation 11(1): “11. Suspension or revocation of approval for appointment of a Customs Cargo Service provider.- (1) The Commissioner of Customs may, subject to the provisions of these regulations, suspend or revoke the approval granted to the Customs Cargo Service provider subject to the observance of procedure prescribed under regulation 12 and also order for forfeiture of security, if any, for failure to comply with any of the provisions of the Act and the rules, regulations, notifications and orders made thereunder.” Regulations 12(1) & 12(8): “12. Procedure for suspension or revocation of approval and imposition of penalty.- (1) The Commissioner of Customs shall issue a notice in writing to the Customs Cargo Service provider stating the grounds on which it is proposed to suspend or revoke the approval and requiring the said Customs Cargo Service provider to submit within such time as may be specified in the notice not being less than thirty days, to the Assistant Commissioner or Deputy Commissioner of Customs nominated by him, a written statement of defence and also to specify in the said statement whether the Customs Cargo Service provider desires to be heard in person by the said Assistant Commissioner or Deputy Commissioner of Customs. (2) to (7) . . . . . (8) If any Customs Cargo Service provider contravenes any of the provisions of these regulations, or abets such contravention or who fails to comply with any provision of the regulation with which it was his duty to comply, then, he shall be liable to a penalty which may extend to fifty thousand rupees.” 18. This Court observes that the recovery of cost recovery charges being in issue the CESTAT in the appeal(s) dealt with the recovery of cost recovery charges, in pursuance of the show cause notices issued in 2013 and the order of the Commissioner passed in the year 2019. 19. This Court observes that the recovery of cost recovery charges being in issue the CESTAT in the appeal(s) dealt with the recovery of cost recovery charges, in pursuance of the show cause notices issued in 2013 and the order of the Commissioner passed in the year 2019. 19. The learned CESTAT after detailed consideration found that the recovery of the cost recovery charges under the aforesaid provisions of HCCAR, 2009 was not possible. The penalty as per the learned CESTAT was imposed under Regulation 12 (8) of the HCCAR, 2009, and thus, the cost recovery charges could not have been recovered under the provisions of HCCAR, 2009. 20. In the opinion of this Court, the impugned notices and the order of the Commissioner, ought to have been considered on merits by the learned CESTAT while also dealing with the issue as to whether such recovery was lawful or not. Further, it was also a point of determination as to whether if at all the recovery was required, under which provisions the same can be made. This is more so when the record reveals that the revenue has not been able to point out any such provision. The learned CESTAT in such circumstances should have remanded the matter back to the Commissioner for passing appropriate orders pertaining to recover in question under the relevant provisions, if any, which it has missed out. 20.1. Rather than resorting to the above-said exercise under appeal, though the learned CESTAT did not disagree on the aspect of demand but recorded its opinion that there is no provision to satisfy such demand in the form of recovery of cost recovery charges. 21. Thus, in light of the aforesaid observations, the instant appeals are allowed, accordingly the impugned orders dated 26.07.2019, passed by the learned CESTAT are quashed and set aside. Furthermore, while quashing and setting aside the orders of the Commissioner of Customs, which were under challenge in the appeals before the learned CESTAT, the matter is remanded back to the Commissioner of Customs for passing appropriate orders afresh, after giving adequate opportunity of hearing to all the parties concerned, while keeping into due consideration the law discussed by the learned CESTAT and this judgment and without being prejudiced by the earlier orders. 21.1. 21.1. After making due consideration as directed above, the Commissioner of Customs comes to the conclusion that the recovery in question is sustainable the aggrieved parties shall be at liberty to approach the learned CESTAT, and lead all their submissions regarding the provisions of law applicable like exemptions/waiver, demand, recovery, etc. who in turn shall be required to firstly ascertain the legality and the validity of recovery in question; thereafter if the demand of recovery in question is lawfully established then such recovery can be made. 22. In terms of the above-said observations and directions the write petitions are disposed of, while directing the Commissioner to pass orders, strictly in accordance with law, while keeping into consideration this judgment.