2008 (5) TMI 86 - AT - Central Excise

Claim for refund of Merchant Over Time charges, being paid by appellant to officer - levy and collection of MOT charges under Circular dated 7/4/03, for normal working hours were contrary to the Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998 - such charges are not leviable under the aforesaid Regulations for supervision during normal office working hours - appellants are entitled to refund of the MOT charges paid for supervision

Summary

Issues:
Claim for refund of Merchant Over Time charges (MOT charges) paid by a 100% Export Oriented Unit (EOU) for supervision of Customs work during normal working hours.

Analysis:
The appeal before the Appellate Tribunal CESTAT, CHENNAI involved a dispute regarding the rejection of a refund claim of Rs.89,291/- towards MOT charges paid by an EOU. The EOU had paid these charges for the supervision of Customs work by Central Excise officers during normal working hours from July 2003 to September 2004. The Asst. Commissioner rejected the refund claim, which was upheld by the Commissioner (Appeals), leading to the present appeal.

Upon examining the submissions, the Tribunal noted that the lower authorities had relied on a circular issued by the Board, directing EOUs to pay MOT charges for Customs/Central Excise related work even during office working hours. However, the appellants argued that this directive was contrary to Regulation (3) of the Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998. The appellants contended that the circular effectively amended the Regulation, which was impermissible in law. Reference was made to previous decisions where similar circulars were deemed to lack legal sanctity.

The Tribunal, after careful consideration, accepted the appellants' plea that the Board's directive in the circular was not enforceable as it was ultra vires Regulation (3) of the Customs Regulations. Citing precedents like Rajasthan Textile Mills and Flair Filtration, the Tribunal held that MOT charges were not leviable under the Regulations for supervision during normal office working hours. Consequently, the Tribunal set aside the impugned order and allowed the appeal, granting the appellants the refund of MOT charges paid for supervision during normal office working hours.

In conclusion, the Tribunal's decision favored the appellants, emphasizing that the Board's circular directing payment of MOT charges for supervision during normal office hours was not legally enforceable. The judgment highlighted the importance of adherence to regulations and previous legal precedents in determining the validity of such directives, ultimately leading to the allowance of the refund claim for the EOU.