2021 (3) TMI 1449 - HC - Customs

Levy of Merchant Overtime Fee - carrying out examination and supervision of loading of export goods at the factory of the manufacturer during office hours on working days the Central Excise Officers - HELD THAT - It is not in dispute that the place of working/ supervision was at the factory of the appellant and it is also not in dispute that supervision was made by the Range Central Excise Officer in whose territory the factory of the appellant is located. Chapter 13 of the C.B.E. C. s Customs Manuals deals with Merchant Overtime Fee wherein it is provided that if services are rendered by the Custom Officer at a place which is not his normal place of work or place beyond the custom area, overtime is levied even during the normal working hours. In the facts of the case, none of the condition for levy of the MOT charges is satisfied and accordingly, the appeal is allowed by answering the questions in negative and in favour of the appellant to the effect that the appellant would not be liable to pay Merchant Overtime Charges for carrying out examination and supervision of loading of export goods at the factory premises of the manufacturer during the office hours on working day by the Central Excise Officers contrary to the instruction of the Central Board of Excise and Customs. Appeal allowed - decided in favour of appellant.

Summary

Issues Involved:
1. Interpretation of provisions under section 35G of the Central Excise Act, 1944 and section 130 of the Customs Act, 1962.
2. Applicability of Merchant Overtime Fee (MOT charges) for examination and supervision of loading of export goods.
3. Consideration of conflicting decisions and adherence to established procedures by the Tribunal.

Summary:
The Tax Appeal before the Gujarat High Court involved the interpretation of provisions under section 35G of the Central Excise Act, 1944 and section 130 of the Customs Act, 1962. The core issue revolved around the applicability of Merchant Overtime Fee (MOT charges) for examination and supervision of loading of export goods by Central Excise Officers at the factory premises of the manufacturer during office hours on working days. The Tribunal's decision was challenged based on conflicting decisions and deviation from established procedures.

The appellant, engaged in manufacturing and exporting excisable goods, faced a show-cause notice from the Central Excise Department proposing to recover MOT charges for the period 2004-05 and 2005-06. The appellant contested the notice, arguing that the examination of export cargo was conducted within the factory premises under the supervision of the Central Excise Officer during working hours. Despite this, the Adjudicating Authority held the appellant liable for MOT charges, leading to penalties and interest.

Subsequently, the Commissioner (Appeals) overturned the decision, stating that no MOT charges were applicable for services rendered during official hours within the territorial jurisdiction of the Central Excise Officers. However, the Tribunal, relying on a previous decision, allowed the Revenue's appeal. The appellant then sought restoration and rectification, which was partially granted by the Tribunal.

In arguments before the High Court, the appellant emphasized the consistent view in similar cases that MOT charges were not payable for services provided within normal working hours and territorial jurisdiction. Legal precedents from the Delhi and Madras High Courts were cited to support this stance. On the contrary, the Revenue contended that MOT charges were justified as officers were discharging duties beyond their normal work scope, as per Regulations, 1998.

The High Court referred to the Delhi High Court's decision, highlighting that MOT charges are applicable only when services are rendered outside the officer's normal place of work. Given that the supervision took place within the factory premises and the officer's jurisdiction, the Court ruled in favor of the appellant, stating that none of the conditions for MOT charges were met. Consequently, the appeal was allowed, and the appellant was not liable to pay MOT charges for the examination and supervision of loading export goods at the manufacturer's factory during office hours.