INDIAN CUSTOMS MANUAL 2023 updated till 31.12.2022
CUSTOMS CARGO SERVICE PROVIDERS
Chapter 28 of Indian Customs Manual 2023 explains about Customs Cargo Service Providers under mainly three categories ; Salient features of the HCCAR, 2009, Posting of staff at Customs areas and collection of Cost Recovery Charges, Eligibility norms for exemption from cost recovery charges.
Salient features of the HCCAR, 2009
Posting of staff at Customs areas and collection of Cost Recovery Charges
Eligibility norms for exemption from cost recovery charges
The extract of Chapter 28 of Indian Customs Manual 2023 updated till 31st March, 2022 is stated under:
Chapter 28: Customs Cargo Service Providers
1. Introduction:
1.1 The Public Accounts Committee (PAC) in its 27th Report (2005-06) recommended formulating
appropriate legal provisions and guidelines to control the activities of custodians. In pursuance of
these recommendations, the Government inserted a new Section 141(2) to the Customs Act, 1962
and thereafter under its authority framed the Handling of Cargo in Customs Areas Regulations,
2009 (HCCR, 2009).
1.2 The HCCAR, 2009 provide for the manner in which the imported goods/ export goods shall be
received, stored, delivered or otherwise handled in a Customs area. The regulations also prescribe
the responsibilities of persons engaged in the aforesaid activities.
2. Salient features of the HCCAR, 2009:
2.1 The HCCAR, 2009 apply to all “Customs Cargo Service Providers” (CCSPs), who are persons
operating in a Customs area and engaged in the handling of import/export goods. These include
the custodians of imported/export goods and those handling such goods and all persons working
on their behalf such as fork lift or material handling equipment operators, etc. Consolidators/ break
bulk agents and other persons handling imported/export goods in any capacity in a Customs area
are also covered.
2.2 The HCCAR, 2009 indicate various responsibilities and conditions for different kinds of CCSPs.
The conditions prescribed under its Regulation 5 apply to the CCSPs who desire to be approved
as custodians of imported/export cargo and thus handle goods in Customs areas. These
conditions shall not apply to persons who only provide certain services on their own or on behalf
of the custodians.
2.3 Responsibilities prescribed in Regulation 6 of the HCCAR, 2009 apply to both custodians and
persons who provide various services, though certain responsibilities specifically apply to one or
the other category. For example, the responsibility for safety and security, pilferage of goods under
their custody, disposal of uncleared, unclaimed or abandoned goods within the prescribed time
limit, payment of cost recovery charges of the Customs officers posted in the facility are applicable
to an approved custodian who handled imported or export goods. On the other hand,
responsibilities for publishing or display of the schedule of charges for the activities undertaken in
respect of imported/ export goods shall apply to both categories of persons. These responsibilities
are aimed at expeditious clearance of goods, reduction of dwell time, transaction cost and
safeguarding revenue.
2.4 As specified in Regulation 3 of the HCCAR, 2009, these regulations shall apply to handling of
imported goods and export goods in Customs area specified under Section 8 of the Customs Act,
1962. This would cover all Customs facilities such as ports, airports, ICDs/CFSs and LCSs. Also,
imported goods would cover goods under transshipment and all goods held under the custody of
CCSP. However, these regulations do not apply to Customs bonded warehouse or to the
warehoused goods covered by Chapter IX of the Customs Act, 1962.
2.5 Major ports notified under the Major Port Trusts Act, 1963 and airports notified under the Airports
Authority of India Act, 1994 will continue to be authorized to function as custodians under their
respective Acts and these regulations shall not impact their approval as a custodian. Thus, in
terms of Section 45 of the Customs Act, 1962, the Port Trusts of the notified major ports and the
Airports Authority of India shall not be required to make an application under Regulation 4 or 9 of
the HCCR, 2009 for approval or renewal under these regulations. However, they would be required
to discharge the responsibilities cast upon them as specified in its Regulation 6.
2.6 Regulation 5 of the HCCAR, 2009 provides the conditions to be fulfilled by an applicant who wishes
to be appointed as a custodian of the imported/ export goods in a Customs area. This contains an
exhaustive list of infrastructure and operational requirements for efficient handling of imported or
export goods, though sufficient discretion is provided for the Commissioner of Customs to decide
on the nature of infrastructure and equipment required. The requirement may vary between
Customs areas at different places in the country. The Commissioner of Customs can also specify
general standards or requirements such as height of boundary wall, quantum and specifications
of material handling and other equipment etc., to ensure the facilities are adequate for effective
and efficient handling of cargo.
2.7 Under Regulation 5(1) of the HCCAR, 2009, the infrastructure required to be provided by the
custodian shall include the civil and electrical infrastructure including properly airconditioned office
space, cabins with proper furniture, power backup facilities, hardware, networking and secure
connectivity to Customs data centres for Customs officers and service centres specified by
Customs. Facilities required for secure exchange of electronic information between the custodian
and Customs shall also be provided. In addition, the custodian would undertake site preparation
including civil works, electrical works, electrical fittings, air-conditioning, etc. and provide DG Set
for power back up and link to the Customs EDI server. The networking, communication equipment,
UPS, computers/personal computers/thin clients, servers, printers and other computer peripherals
as may be specified by the Directorate General of Systems shall also be provided by the custodian.
2.8 Board has clarified that custodians already exempted from payment of cost recovery charges
under Circular No.27/2004-Cus., dated 6-4-2004 and Para 5.3 of Circular No.13/2009-Cus., dated
23-3-2009 would continue to avail the exemption even after issue of Circular No.4/2011-Cus.,
dated 10-1-2011.
2.9 Commissioner of Customs, subject to his satisfaction, should not insist for residential
accommodation for staff from CCSP in cases where concerned facility of CCSP is located in the
city area. The underlying idea is to provide for residential facilities for staff deployment at Customs
facilities located in far flung and remote areas where it is difficult to have appropriate residential
facility and which can not be easily commuted by the officers. Therefore, requirement of residential
accommodation should not be insisted upon in cases where the location is commutable from the
base town/city. Commissioner of Customs concerned should exercise due diligence before
enforcing provisions of 5(1)(i)(b) of Notification No.96/2010-Cus(NT)., dated 12-11-2010. The type
of residential accommodation to be provided to Customs staff would be determined as per
entitlement of the officer of Central Government.
[Refer Circular No.29/2011-Cus., dated 18-7-2011, Notification No. 29/2019-Cus
dated 01.04.2019]
CCSPs are required to have weigh bridges installed at their facilities preferably near the
entry/exit gate and all containers must be weighed.
[Refer Instruction F.No.450/81/2011-Cus.IV, dated 18-8-2011]
2.10 In a large number of cases, containers detained by Directorate of Revenue Intelligence (DRI),
Special Intelligence & Investigation Branch (SIIB) or Preventive formations are not being released
for considerable time and this has caused undue hardship to shipping companies by paying
exorbitant demurrage charges. One reason for longer detention can be lack of adequate space for
storing such goods in a Customs area. In this regard, Board desires that sufficient space for
custody / storage of detained imported / export goods should be provided by Customs Cargo
Service Provider (CCSP) as per regulations 5 (1) (o) of the HCCAR, 2009 so that detained goods
may be stored after de-stuffing from the containers and empty containers be returned to the
concerned Shipping Line. Further, in terms of regulation 6 (1) (l) of the HCCAR, 2009 CCSP shall
subject to any other law for the time being in force not charge any rent or demurrage on detained
goods. In case containers are detained / seized under the Customs Act, 1962, the same may be
considered for provisional release subject to furnishing of Bond and Bank Guarantee under the
Customs Act, 1962.
[Refer Instructions F. No.450/24/2012-Cus.IV, dated 14-3-2012]
2.11 Regulation 5(2) of the HCCAR, 2009 requires the custodian to pay cost recovery charges in
respect of the Customs officers deployed at the ICD/CFS/port/airport etc., unless exempted by a
specific order or a circular or instructions issued by the Ministry of Finance. Presently, payment of
cost recovery charges in respect of ports and airports has been exempted for three categories of
custodians, as follows:
(i) Custodians notified under Section 45 of the Customs Act, 1962 prior to 26-6- 2002 and there
is no change in custodianship or area after 26-6-2002;
(ii) Custodians notified prior to 26-6-2002 but part or whole of the same premises is transferred
(on lease or otherwise) to new custodian on or after 26-6-2002 (e.g. AAI, custodian of
Mumbai Air Cargo Complex prior to 26-6-2002 later transferred part custodianship to Air
India); and
(iii) Custodians notified prior to 26-6-2002 but premises extended after 26-6-2002 under the
same custodianship.
[Refer Circular No.27/2004-Cus., dated 6-4-2004]
2.12 The Greenfield Airports Policy framed by the Government and notified by the Ministry of Civil
Aviation specifies that the applicant for setting up of a greenfield airport will obtain clearance from
the Department of Revenue for provision of Custom services and the cost of providing these
services will be borne by the Airport Company.
2.13 Regulation 6(1)(m) of the HCCaR, 2009 deals with disposal of imported or export goods lying
unclaimed, uncleared or abandoned in ICDs/CFSs/Customs areas by the CCSP who is holding
custody of such goods. Proper and timely disposal of unclaimed, uncleared or abandoned goods
is to be ensured.
[Refer Circular No.50/2005-Cus., dated 1-12-2005]
2.14 In order to ensure security of premises and to prohibit unauthorized access of person in the
Customs area all CCSP/ Custodians should provide CCTV/ Video Camera and give video footage
of the same to the Customs Officer who shall monitor it regularly.
[Refer Circular No 3/2013-Cus., dated 1-1-2013]
2.15 Cases of lease, gift, sale or subletting or transfer of the premises in any other manner, in a
Customs area by major ports may be firstly examined to see whether required permission from
the Central Government / Ministry / Cabinet Committee has already been obtained or not. In cases
where appropriate authority has already given this permission, then necessary written permission
may also be given by the Commissioner for such lease or transfer. On the contrary, if no approval
of the Government has been obtained, then appropriate action may be initiated against the erring
Custodian under the said Regulations and the Customs Act, 1962. Thus, further permission from
the Commissioner of Customs would not be required in respect of PPP projects approved by the
Government / PPA Appraisal Committee or Cabinet Committee on Infrastructure.
[Refer Circular No.54/2011-Cus., dated 29-12-2011]
2.16 The power to exempt the conditions required to be fulfilled by CCSPs is provided under Regulation
7 of the HCCAR, 2009 to the Commissioner of Customs. For example, the requirement of sufficient
facilities for installation of scanning equipment may not be an immediate requirement in respect of
ICD/CFS who have established their operations as new custodian. However, when this
requirement becomes a necessity, then these conditions may have to be fulfilled by such custodian
at that point of time. Hence, the Commissioner of Customs needs to examine individual cases
where exemptions are sought to be given to the custodian and record the reasons in writing before
providing exemptions. However, no exemption shall be granted in respect of any of the conditions
in Regulation 5 where the overall safety and security of the premises are likely to be affected
thereby.
2.17 In order to overcome situations where clearances of imported/ export goods are getting affected
by congestion at a particular Customs facility (e.g. CFS), it has been provided that the
Commissioner of Customs may consider regulating the entry of goods in that particular CFS for a
temporary period, say, 15 days, in terms of Regulation 7(2) of the HCCAR, 2009. In such cases,
the Commissioner of Customs may not allow any import/ export cargo to be received and handled
in the facility or may allow such reduced quantity as considered sufficient for being handled
efficiently for such temporary period till the congestion is cleared and the delay in clearance of
goods is sorted out.
2.18 In terms of Regulation 9 of the HCCAR, 2009, at the time of submission of applications for
acquiring custody and handling of imported/export goods, the applicant shall provide complete
details of the facility such as extent of the area, equipment, infrastructure etc. for receiving,
unloading/loading, stacking, storage, delivery of imported/ export goods including the map.
Further, the projected capacity of the cargo or container proposed to be handled at the premises,
would form the basis for determining the adequacy of the infrastructural facilities and bond or bank
guarantee, wherever applicable. For example, in respect of containers, the volume in terms of
Twenty feet Equivalent Units (TEUs) may be ascertained. As regards X-Ray scanning equipment,
the custodians are expected to provide for suitable land and other site requirements, but the actual
scanning equipment would be installed by the Customs department subject to conditions as may
be prescribed.
2.19 Only such CCSPs who wish to be appointed as custodian of imported/ export goods need to take
approval as specified in Regulation 10 of the HCCAR, 2009. CCSPs who either operate on behalf
of the custodian or with his permission, do not require any approval. However, custodian will be
responsible for fulfilment of the conditions of these regulations by such CCSPs.
2.20 The procedure for approval of appointment, renewal, suspension or revocation of CCSP as per
Regulations 10 to 13 of the HCCAR, 2009 is based upon transparency and objectivity. Cases
involving outright transfer of custodianship, leasing of premises without informing Customs,
subletting, sub-contracting, outsourcing, gift or lease of any of the services of CFS/ICD have to be
dealt by the jurisdictional Commissioner of Customs. In case of violations of the conditions or
obligations prescribed under the regulations, necessary action may be taken against the erring
CCSP including imposition of penalty. Further, action would need be initiated against the CCSP,
wherever lack of infrastructure facilities is noticed leading to deterioration in services or damage
of imported or export goods, loss of value and loss of revenue etc. In case of CCSP authorized
under the Authorised Economic Operator (AEO) Programme, the approval granted may be
extended for a period of ten years at a time.
[Refer Instructions F.No.450/105/2008-Cus.IV, dated 25-7-2008]
2.21 All the CCSPs are required to publish a schedule of charges associated with various services in
relation to imported or export goods in the Customs area and its display at prominent places
including webpage or website of the CCSP. It has also been clarified that no exemption is available
to existing custodians / CCSPs in so far as the provisions of facilities and fulfilment of prescribed
conditions in Regulation 5 & 6, as applicable, within the specified limits are concerned.
2.22 Custodians under the Major Port Trusts Act, 1963, and Airports Authority of India Act, 1994 shall
not be required to make an application under Regulation 4 or 9 for approval or renewal under
these regulations, but they are required to necessarily discharge the responsibilities cast upon
them in terms of Regulation 5 and 6.
2.23 The CCSP will also undertake to indemnify the Commissioner of Customs from any liability arising
on account of damages caused or loss suffered on imported or export goods, due to accident,
damage, deterioration, destruction or any other unnatural cause during their receipt, storage,
delivery, dispatch or otherwise handling by furnishing an indemnity bond.
2.24 No relaxation or exemption from requirements on safety and security of premises shall be allowed
by the Commissioner of Customs to the custodians or CCSPs in terms of provisions of Regulation
7 of HCCAR, 2009. also keeping in view the paramount importance of overall safety and security
of imported / export goods, detailed guidelines are prescribed to ensure that all concerned persons
ensure that suitable arrangements are put in place for safety and security of premises relating to
imported or export goods.
2.25 The HCCAR, 2009 provide for levy of penalty in case the CCSP contravenes any of the provisions
of the regulations or fails to comply with the regulations. However, these provisions do not impact
the past proceedings against the custodian, if any, where necessary action has been initiated
against erring custodians.
2.26 For the purposes of Regulation 6 (1) of HCCAR, the following officers are notified as Proper
Officers as discussed in Table 28.1.
Table 28.1: Notified Proper Officer for purposed of Regulation 6 (1) of HCCAR
S.
No.
Clause under
Regulations 6(1)
Designation of the Proper Officer
1 A
Inspector of Customs or Preventive Officer or Examining
Officer
2 F Superintendent of Customs or Appraisers
3 g, h, k Deputy Commissioner or Assistant Commissioner of Customs
4 L
Superintendent of Customs or Appraiser or Inspector of
Customs or Preventive Officer or Examining officer
2.27 Regulation 5(1)(iii) of HCCAR, 2009 provides that CCSPs shall provide to the satisfaction of
Commissioner of Customs, insurance for an amount equal to the average value of goods likely to
be stored in the customs area based on projected capacity and for an amount as Commissioner
of Customs may specify having regard to the goods which are already been insured by the
importers or exporters. Board has clarified that the amount of insurance to be provided by CCSPs
should be equal to the average value of goods likely to be stored in the Customs area for a period
of 30 days (based on projected capacity), and for an amount the Commissioner of Customs may
specify having regard to the goods already insured by the importers or exporters.
2.28 Regulation 5(3) of HCCAR, 2009 mandates CCSPs shall execute a bond equal to the average
amount of duty involved on imported goods and 10% of the value of export goods that is likely to
be stored in the customs area during a period of 30 days and furnish a bank guarantee or cash
deposit equivalent to ten percent of such duty. Board has appreciated that there is justification in
increasing the validity period of the bond, which would remove procedural hassles. Therefore,
noting that under Regulation 10 of HCCAR, 2009, the new CCSPs are approved initially for 2
years, which is renewed for 5 years at a time, while existing CCSPs are straightaway approved
for 5 years, it is clarified that the carrier bond executed by CCSPs i.e. ICDs/CFSs shall have a
validity period of 2 years (in case of new CCSP which can be renewed for 5 years) or 5 years (in
case of existing CCSP).
2.29 Ministry of Agriculture has raised the issue of temporary ban on Import of Rice and Peanuts from
India due to detection of quarantine pest in an import consignment and highlighted that CFSs
conducting phytosanitary measures have no designated area for fumigation and separate storage
for keeping fumigated/ treated cargo which leads to cross contamination from untreated
goods/commodities. Ministry of Agriculture has desired that facilities provided by CFSs should be
improved to ensure that treated cargo is adequately sanitized in a separate storage enclosure.
Board has therefore decided that all CCSP/Custodians shall provide separate and dedicated
storage space for fumigation and post fumigated storage sites to enable Plant Quarantine
Authorities to carry out necessary checks for both imported / export goods under the Handling of
Cargo in Customs Area Regulations, 2009.
2.30 In order to obviate the situation of compromising cargo integrity on account of subcontracting
operations relating to handling of import / export cargo, under no circumstances, CCSPs shall
lease, gift, sell or sublet or in any other manner transfer any of the premises in a Customs area;
or sub contract or outsource functions permitted or required to be carried out by him in terms of
these regulations without written approval of the jurisdictional Commissioner of Customs.
Jurisdictional Commissioners of Customs are required to review the conditions and obligations to
be fulfilled by CCSP under HCCAR, 2009 and promptly initiate remedial action in case non[1]compliance is noticed. Cases of violation of regulation 6(2) shall be dealt with sternly according to law.
2.33 CBEC has prescribed comprehensive guidelines on safety and security of premises where
imported or export goods are loaded, unloaded, handled or stored. Pursuant to the decision of the
High Court in the Writ Petition No. 3651/2011, a joint Technical Committee comprising of Members
from MoEF, Ministry of Shipping, CBEC, Port Trust, etc., was constituted to give recommendations
on the distance(s) to be maintained between the hazardous cargo and the general cargo in the
customs area on one hand and between the hazardous cargo and the administrative building on
the other. Based on the recommendations, Board has accordingly prescribed the distance to be
maintained between hazardous cargo including explosives and general cargo or administrative
building in a Customs area.
[Refer Circulars No. 52/97-Cus., dated 17-10-1997, No.80/98-Cus., dated 26-10-1998, No.27/2004-
Cus., dated 6-4-2004, No.13/2009-Cus., dated 23-3-2009, No.18/2009-Cus., dated 8-6-2009,
No.21/2009-Cus., dated 4-8-2009, No.4/2011-Cus., dated 10-1-2011, No. 16/2013- Cus IV,
dated 10-4-2013, No.32/2013 Cus., dated 16-8-2013 and No.45/2013Cus., dated 31-12-2013
and Instruction F.No.450/19/2005-CusIV., dated 23-7-2013, Circular 42/2016-Customs dated
31.08.2016, Circular 40/2016-Customs dated
26.08.2016]
2.34 As part of Government's initiatives for improving “Ease of Doing Business”, it has emerged that
introduction of electronic messaging for issue of Delivery Order instead of a paper based Delivery
Order will result in considerable simplification in the Customs Clearance process, and can
demonstrably reduce transaction costs and time taken in the clearance of Cargo. To implement
the electronic Delivery Order System, as a prerequisite, the Custodian should have the technical
capability to implement an electronic messaging system for the receipt of electronic Delivery
Order. Apart from the above prerequisites, it will facilitate trade if Shipping Lines, Airlines and
Consol Agents can adopt a system of electronic invoicing of all charges along with the facility to
conclude the payment process using e-Payment facilities. In respect of some categories of
imports, namely - unaccompanied baggage, Direct Delivery, and one-time individual importers,
the Shipping Line/ Airline may retain manual (i.e. paper copy) of the Delivery Order, if desired.
Further, if for technical reasons, in case of any failure of the system of electronic transfer of
Delivery Order, the concerned Shipping Line/ Airline or Consol Agent may issue manual Delivery
Order, as a purely temporary measure, in order to avoid any difficulty or delay in clearance of
imported goods.
[Refer Circular No.24/2015-Customs dated 14.10.2015]
2.35 Board has decided to extend 24x7 customs clearance to all bills of entry and not just facilitated
bills of entry. It has amended the Customs (Fees for Rendering Services by the Customs Officers)
Regulations, 1998 to provide that at 24x7 customs ports, CFSs attached to it and airports, no fee
i.e. merchant overtime fee (MOT) shall be collected in lieu of the services rendered by the customs
officers. Thus, as on date no MOT charges are required to be collected in respect of the services
provided by the customs officers at 24x7 customs ports and airports.
[Refer Circular No.04/2017-Customs dated 16.02.2017]
3. Posting of staff at Customs areas and collection of Cost Recovery Charges
3.1 Applicability
3.1.1 The requirement that the custodian shall bear the cost of Customs staff posted at Customs
area shall apply to all Customs areas such as Seaports, Airports, Air Cargo Complexes,
Courier Terminals, Diamond Plazas, ICDs, and CFSs, notified after 26.06.2002.
3.1.2. The requirement that the custodian shall bear the cost of Customs staff posted at Customs
area shall not apply in the following cases:
a. the facility notified under Section 45 of the Customs Act, 1962, before 26.06.2002 with no change in custodianship or area after 26.06.2002;
b. the facility notified before 26.06.2002 but part or whole of the same premises transferred
(on lease basis or otherwise) to a new custodian, on or after 26.06.2002 (e.g. Airport
Authority of India is custodian for the whole Mumbai Air Cargo Complex upto
26.06.2002, and after 26.06.2002 they have transferred the custodianship for the part
of Air Cargo Complex to Air India); and
c. the facility notified before 26.06.2002, but premises extended after 26.06.2002 under
the same custodianship.
3.1.3 The conditions and obligations already being discharged by the earlier custodian for such
facilities such as Air Cargo Complexes, Courier Terminals or Ports to be retained and
applied to the new custodian. This shall also be applicable in case of transfer of ownerships.
3.2 Staffing Norms
3.2.1 The staffing norms for sanction of posts on cost recovery basis at various Customs facilities
are as discussed below as shown in Table 28.2.
Table 28.2: staffing norms for sanction of posts on cost recovery basis at various Customs
facilities
Customs
Facility
Deputy/Asst.
Commissioner
Appraiser/
Superintendent
Examiner/
Inspector EA Hawaldar Total
Sea Port 2 4 12 2 12 31
Air Cargo
Complex 2 8 12 4 5 31
Courtier
Terminal 4 9 12 4 8 37
Diamond Plaza 1 4 8 2 4 19
ICD (approved
for only
handling
export cargo)
1 1 1 1 2 7
ICD (approved
for handling
both export
and import
cargo)
1 2 2 2 2 13
CFS 0 1 1 1 1 4
Class A
Airport1F
2 4 38 78 0 24 144
Class B
Airport2F
3 4 29 48 0 16 97
Class C
Airport3F
4 0 8 16 0 4 28
3.2.2. In the initial stages of operation of a facility due to less volume of work, full strength of the
officers may not be required. In such cases, if the facility requests, the Principal
Commissioner or Commissioner of Customs may, after his consideration, post less than the
2 Class A Airport is the one which handles more than 12000 international flights / 10 lakhs passengers per annum.
3 Class B Airport is the one which handles 6000 to 12000 international flights/5 to 10 lakhs passengers per annum.
4 Class C Airport is the one which handles less than 6000 international flights/5 lakhs passenger per annum.
sanctioned strength of officers. Gradually, when the business picks up, the full contingent
of staff may be posted.
3.3 Creation of posts on the basis of Cost Recovery Charges
3.3.1 Creation of cost recovery posts is essential before issuance of necessary notifications by
the jurisdictional Commissioners of Customs to operationalize a facility as a customs area.
The jurisdictional Principal Commissioner or Commissioner of Customs shall forward the
proposals for the creation or continuation of posts on cost recovery basis to DGHRD (and
not to the Board directly).
3.3.2 Initially, the validity of posts on cost recovery basis is one year. The jurisdictional Principal
Commissioner or Commissioner of Customs shall send the proposals to DGHRD for
continuation of the posts created on cost recovery basis at least two months before the
expiry of the validity, so that the Department of Expenditure gets sufficient time for
considering the proposals; as the Department of Expenditure takes adverse note of delay in
seeking permission in cases where such proposals are sent after the expiry of the validity
of the posts created.
3.3.3 The proposals for creation/continuation of posts shall be in terms of the Department of
Expenditure’s stipulations from time to time in this regard4F 5 .They shall contain all the relevant
information as per Appendix-I. DGHRD shall process these proposals without delay and
convey the decision thereon to the field formations concerned with a copy marked to the
Board.
3.4 Payment of Cost Recovery Charges 5F 6
3.4.1 The Cost Recovery Charges shall be payable by facilities at the uniform rate of 1.85 times
of the monthly average cost 6F 7 of the post plus other allowances (such as Dearness
Allowance, House Rent Allowance, etc.) For this purpose, the following factors may also be
kept in view for working out the cost regarding all the cost recovery posts:
i. additional dearness allowance as and when sanctioned by the government should be
considered, and arrears shall be recovered; and
ii. if the relevant staff is in possession of government accommodation and do not draw
house rent allowance. Even then, the notional house rent allowance as admissible to
them should be taken into account on cost recovery basis.
3.4.2 The Cost Recovery Charges would be payable in respect of officers actually deployed at the
facility. Where the officers are posted in excess of norms, Cost Recovery Charges for such
excess number of officers shall be payable. However, this situation shall not ordinarily arise.
If a particular officer is given charge of more than one facility, the Cost Recovery Charges
shall be apportioned amongst the facilities concerned.
3.4.3 Cost Recovery Charges shall be payable from the first day of the month in which the facility
commences its operation and it shall be paid in advance for every quarter.
3.4.5 If the facility fails to deposit the Cost Recovery Charges in advance, for any particular
quarter, and in case such charges remain unpaid either wholly or partly, the deployment of
staff at the facility should not be abruptly put on hold. The Principal Commissioner or
Commissioner of Customs concerned may consider the facility operator’s financial
contingencies and on case to case basis may allow a certain period of delay (not more than
three months at a time and not on more than two occasions) in payment with interest. The
interest in such cases shall be at the rate specified for delayed payment of duty under the
5 O.M. No. 7(1)/E.Coord.I./2017 dated 12.4.2017
6 Board’s F.No. A-11018/9/91-Ad.IV dated 1.4.1991
7 The average cost shall be calculated based on the pay matrix for the particular post.
Customs Act, 1962. A public display in this regard shall be made so that the trade can clear
the containers that have already entered the facility. And for non-payment of advance, the
entry of containers would be restricted till pending dues with interest are paid so that the
facility does not have any uncleared containers once it is to be shut down.
3.5 Eligibility for Exemption from Cost Recovery Charges
3.5.1 The cost recovery posts should have the Department of Expenditure's specific permission
for continuation before seeking/claiming exemption in respect of any given Customs facility.
3.5.2 The facilities are eligible to apply for exemption from payment of Cost Recovery Charges
upon fulfilling the performance criteria as given in the table below. The facilities shall claim
exemption if they meet both the criteria (Criterion-I and Criterion-II) in preceding two financial
years or any one of the criteria (Criterion-I or Criterion-II) in preceding four financial years,
which are discussed in Table 28.3.
Table 28.3: Eligibility criterion for various facilities to apply for exemption from
payment of Cost Recovery Charges
Facility Criterion - I
(Volume/Value of
Cargo/flights handled
in a year)
Criterion - II
(Number of
Documents/Passengers
handled in a year)
Sea Port 6 lakh metric tons 3000 Documents
Air Cargo Complex 12,000 metric tons 35,000 Documents
Courier Terminal 1.5 lakh packages 20,000 Documents
Diamond Plaza Rs. 15,000 Cr 12,000 Documents
ICD (both export &
import) 7200 TEUs 7200 Documents
ICD (only export) 3600 3600 Documents
CFS 1200 TEUs 1200 Documents
Airport 3500 flights 3 lakhs Passengers
3.5.2.1 The exemption from the Cost Recovery Charges shall be available only to common
use facilities and not to any facility used exclusively by a private entity, even if they
meet any of these benchmarks.
3.5.2.2 As mentioned earlier, the cost recovery posts that were sanctioned or diverted from
the regular cadre strength to the various Customs facilities before 18.12.2013 (date
of issuance of Cadre Restructuring Notification) were subsumed in the regular cadre
strength of CBIC at that time7F8
. Accordingly, the Chief Commissioners were
authorized to grant exemption from payment of Cost Recovery Charges for the
eligible facilities 8F9
3.5.2.3 In respect of all the cases for which exemption from cost recovery charges have not
yet been granted though applications for the same are received, and all other cases
for which applications would be received hereinafter, the exemption from the
payment of Cost Recovery Charges shall be subject to the following conditions:
a. the facility should have achieved the benchmark performance as prescribed in
para 8.2;
b. the application for the exemption from Cost Recovery Charges is complete in all
respects (in case any deficiency is noticed, the Commissionerate shall issue a
deficiency memo for the applicant to complete the application);
c. the exemption will be effective from the beginning of the fourth month from the
date of issuance of this Circular or the date of receipt of the complete application,
whichever is later;
d. the facility shall not have any other dues to be paid under the Customs Act, 1962;
e. no investigation under the Customs Act, 1962, shall be pending against the
facility;
f. the payment of Cost Recovery Charges would be up-to-date;
g. the exemption shall be prospective from the fourth month onwards; and
h. conditions specified at para 9.1. below.
3.5.2.4 DGHRD shall complete the regularization process and obtain the approval of the
competent authority within a period of three months in order to enable the exemption
to be available from the beginning of the fourth month, as per para 8.5 above.
3.6 Withdrawal of exemption granted
3.6.1. Facilities shall continue to meet the Criterion-I or the Criterion-II or both, as the case
may be, in the years subsequent to grant of exemption. If any facility fails to do so, a
grace period of one year will be given within which it should meet the same. The
exemption will be withdrawn if a facility does not meet the criteria even after the lapse
of one-year grace period. 28.3.6.2. The jurisdictional Principal Commissioner or
Commissioner of Customs shall therefore, monitor the performance of the facilities
under their charge and take immediate measures, including recourse to para 7.1 to 7.4
above, in cases warranting withdrawal of exemption from Cost Recovery Charges.
3.7 Procedure for claiming/grant of exemption
3.7.1 The eligible facility may apply for exemption from Cost Recovery Charges to the
jurisdictional Principal Commissioner or Commissioner of Customs.
3.7.2 The jurisdictional Principal Commissioner or Commissioner of Customs shall forward the
proposal for regularization of posts to DGHRD through the respective Principal Chief
Commissioner or Chief Commissioner of Customs within 15 days. The proposal shall be
sent in the format prescribed under Appendix-II.
3.7.3 DGHRD will process such proposal in a time-bound manner so that the regularization of the
post is in place within three months of application for exemption from payment of cost
recovery charges.
3.8 De-notification and Cost Recovery Charges
3.8.1. If the facility is required to be de-notified for any reason, the Cost Recovery Charges should
be payable until the date of such de-notification. DGHRD may take necessary steps during
this period to surrender the sanctioned/regularized posts.
3.8.2. If a facility is de-notified in the middle of a quarter for which the Cost Recovery Charges are
deposited in advance, the actual Cost Recovery Charges until the de-notification date shall
be calculated on pro-rata basis, and excess deposit if any, shall be refunded to the entity. It
may be noted that such refund shall not be treated as the refund of duty under Section 27
of the Customs Act, 1962. Instead, General Financial Rules (GFRs) shall be applied in such
cases.
[Refer Board’s Circular 02/2021-Customs dated 19.01.2021]
Refer Board’s Circular 02/2021-Customs dated 19.01.2021 for Appendix -I Proposal for
creation/continuation of posts on Cost Recovery basis
Refer Boards Circular 02/2021-Customs dated 19.01.2021 for Appendix -II Proposal for grant of
exemption from Cost Recovery Charges
4. Eligibility norms for exemption from cost recovery charges:
4.1 Cost recovery charges may be waived if the facility fulfils the laid down norms for a consecutive
period of two financial years. Specific orders in individual cases for grant of exemption from the
payment of cost recovery charges are issued by Ad.IV Section of the Board. The cost recovery
posts are also considered for regularization. In each and every case the waiver of cost recovery
charges would be prospective with no claim for past period.
4.2 ICD/CFS: The eligibility performance norms for the grant of exemption from cost recovery charges
in respect of Customs staff posted at ICDs/CFSs are as discussed in Table 28.4.
Table 28.4: Eligibility performance norms for the grant of exemption from cost recovery
charges in respect of Customs staff posted at ICDs/CFSs
(i) No. of containers handled by ICD 7200 TEUs per annum
(ii) No. of containers handled by
CFS
1200 TEUs per annum
(iii) No. of B/E processed by ICDs /
CFSs
7200 per annum for ICDs and 1200
for
CFSs
Note: Benchmark at (i) to (iii) shall be reduced by 50% for these ICDs /
CFSs exclusively dealing with exports as per staffing norms.
[Refer Instruction F.No.434/17/2004-Cus-IV, dated 12-9-2005]
4.3 Sea Ports, Air Cargo Complexes, Courier Terminals and Diamond Plaza: The eligibility
performance norms for the grant of exemption from cost recovery charges in respect of Customs
staff posted at Sea Ports, Air Cargo Complexes, Courier Terminals and Diamond Plaza are
discussed in Table 28.5.
Table 28.5: The eligibility performance norms for the grant of exemption from cost
recovery charges in respect of Customs staff posted at Sea Ports, Air Cargo Complexes,
Courier Terminals and Diamond Plaza
Facility
Minimum Annual
Volume/Value of Import
&
Export Cargo
Minimum Annual
Number of Documents[1]Bills
Entry/Shipping Bills
Sea Port 6 Lakhs MTs 3,000
Air Cargo
Complex 12,000 MTs 35,000
Courier
Terminals 1.5 Lakh Packages 20,000
Diamond Plaza Rs.15,000 Crores 12,000
Note: Both performance norms (cargo and documents) would be reduced by 50% for facilities that
handle only import or export cargo.
Customs Manual, 2023
296
4.4 Airports: Minimum number of international flights is 3500 (both incoming and outgoing) and the
minimum number of passengers is 3 lakhs (both incoming and outgoing) in each of the preceding
two financial years.
4.5 The conditions for grant of exemption from payment of cost recovery charges for all facilities viz.
Sea Ports, Air Cargo Complexes, Courier Terminals, Diamond Plazas and Airports shall be as
follows:
(a) Both performance norms i.e. volume/value and number of documents in case of Sea Ports,
Air Cargo Complexes, Courier Terminals, Diamond Plazas and number of international
flights and number of passengers in case of Airports must be met in each of the preceding
two financial years.
(b) Exemption from cost recovery charges shall be prospective; and
(c) No cost recovery charges should be outstanding.
Based upon the aforementioned norms, jurisdictional Commissioners would review the existing
facilities and send proposals for waiver of cost recovery charges to DG, HRD, CBEC.
Refer Circular No. 02/2021 dated 19.01.2021