KIOCL vs UOI

ILLEGAL IMPOSITON OF CONGESTION SURCHARGE BY THE RAILWAYS WAS QUASHED BY THE ORISSA HIGH COURT THEREBY REVERSING THE JUDGMENT OF THE RAILWAY CLAIM TRIBUNAL

FACTUAL BACKGROUND

• The Appellant entered into an agreement with M/S National Mineral Development Corporation Ltd. (NMDC) for supply of Iron ore fines and lumps from Kirandul loading station to Visakhapatnam Port on Railway rakes provided by East Coast Railway Bhubaneswar.

• The present issue relates to the “Congestion Surcharge” on the freight rate along with other charges which was introduced by the Rates Circulars (RC) no. 19 of 2007 dated 02.03.2007 issued by the Railways. It was introduced at 21% and was hiked to 35%. Further, it was hiked to 60% and then to 100% of charges. However, the Congestion Surcharge was then reduced to 30% and was subsequently abolished.

• It is pertinent to be noted that the Railways were collecting 100% surcharge as per the RC No. 13 of 2008 which was only valid from 01.04.2008 to 14.04.2008 and was subsequently reduced to 30% vide RC No. 15 of 2008 w.e.f., 15.04.2008 and later was abolished from 22.05.2008 vide R.C No. 24 of 2008.

• The claim is limited only for the period from 15.04.2008 to 21.05.2008 where the Railways illegally collected 100% surcharge instead of 30% and collected an excess amount from the Applicant.

• 26 Railway Receipts were issued during the period i.e., from 24.04.2008 to 21.05.2008. They were booked under the rate prescribed for CLASS – 180 (which was applicable for goods exported for domestic and non-domestic purposes). It is to be noted that charges under Class – 180 were applicable from 31.03.2008 to 30.04.2008 and later it came under Class – 170 from 30.04.2008 onwards.

• Therefore, according to the applicable Rate Circular of Railways, the Congestion surcharge for the use of domestic consumption should be levied at 30% instead of 100% which Railways had levied for the railway rakes moved during that period. Therefore, such illegal charge led to losses to the Appellant.

BEFORE THE RAILWAY CLAIMS TRIBUNAL

• In the O.A Case No. 9 of 2014, the Railway Claims Tribunal, Bhubaneswar Bench, vide the order dated 13.11.2017 held that the Appellant had failed to produce the requisite documentary evidence for obtaining the facilities applicable for Domestic consumption, and therefore, the Original Application filed by the Appellant was dismissed.

• At the outset, the Appellant has filed the present appeal against the Order of the Tribunal on the issue of “Congestion Surcharge” levied and collected illegally and arbitrarily during the period from 15.04.2008 to 21.05.2008 from the Appellant.

ARGUMENTS AND FINDINGS OF THE HON’BLE HIGH COURT:

• The counsel for the appellant argued that the iron ores transported were never used for export purposes and were used for domestic consumption only, so the 30% congestion charge should be made applicable for the said period.

• However, after 30.04.2008, the rate under Class-170 was made effective only for domestic consumption, so the appellant's case is not satisfactory for charging at 30% under Class-170 beyond 30.04.2008.

• So far as the period from 24.04.2008 to 30.04.2008 is concerned, admittedly for those 7 days no difference was there between domestic purpose and non-domestic purpose, and both were falling within the same rate under Class – 180. As the Rate Circular No.15 has come into force with effect from 31.03.2008 prescribing Congestion Charges at 30% irrespective of purpose of consumption, the Applicant cannot be charged at 100%, even if the Class – 180 is applicable till 30.04.2008.

JUDGEMENT

Hon’ble High Court of Orissa allowed the appeal and held that as per the Rate Circular No.15 which came into force with effect from 31.03.2008, the prescribed Congestion Charges were at 30% irrespective of the purpose of consumption, hence, the Appellant cannot be charged at 100%, even if for Class – 180 is applicable till 30.04.2008. Therefore, the Court was of the opinion that the refund of 70% of Congestion Charges from the period of 24.04.2008 to 30.04.2008 is found to be justified and further directed the respondent to refund same to the appellant within a period of four months from the date of the Order

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