MERCHANT OVERTIME FEE

[Mr. M. GOVINDARAJAN]

Section 36 of the Customs Act, 1962 (‘Act’ for short) provides the restrictions on loading and unloading of goods on holidays etc., This section allows unloading/loading of imported/export cargo from/on a vessel beyond working hours on a working day or on holidays only on payment of a prescribed fees. The rate for levying of such fee is prescribed in Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998.

The term ‘working hours’ means the duty hours prescribed by the jurisdictional Commissioner of Customs for normal customs work.   Where different working hours have been prescribed by the Commissioner of Customs for different hours of Customs work or for different places within his jurisdiction, such working hours are to be considered as ‘working hours’ for the purposes of levy of overtime fee.

Category of officers	Fee per hour or part thereof on working days (In Rs.)		Fee per hour or part thereof on holidays (in Rs.)
	6 am – 8 pm	8 pm – 6 am	6 am – 8 pm	8 pm – 6 am
(1)	(2)	(3)	(4)	(5)
Appraisers, Superintendent (Customs Preventive) and Superintendent (Central Excise)	85	125	140	180
Air Customs Officers, Examiners, Preventive Officers and Inspectors of Central Excise	75	100	105	145
Class IV Staff.	35	45	55	60

MOT is levied for a minimum of three hours in each case except in cases of overtime postings immediately preceding or immediately following the working hours of the concerned cadre of officers. The period between the 00.00 hours to 06.00 hours is treated as a ‘block’ for calculation of overtime fee whether the services are required for the entire block or for a portion thereof.  If the services of the Customs Officers during working hours at a place beyond customs area, the MOT is charged for the entire block of working hours before lunch or after lunch, whether the request for the services is for the entire block or portion thereof.

Any one who requires availing the services of officers on MOT basis is required to make request for such posting. The Department will scrutinize the application and ascertain the requirement of the job and calculate the MOT fee on the basis of rates prescribed. A separate fee will be charged if either the CHA, vessel, party changes. Once the party pays the MOT fee, the officers will be posted to perform customs work. 

If a CHA has more than one BOE/Shipping bill of an importer/exporter, he need not pay separate set of fee for each such document. Similarly, if an exporter or importer has more than one activity to be supervised by Customs during the same block, he need not pay the overtime fee for each activity separately.

Case laws

In ‘Commissioner of Central Excise, Rajkot V. Reliance Industries Limited’ – 2007 (12) TMI 400 - CESTAT, AHMEDABAD the MOT charges are collected for work of examination of export cargo.   On request by 100%  EOU, not requiring full time officers for examination of containers, jurisdictional Central Excise Officers may do the customs work on condition of payment of MOT. Under this Central Excise Officers is required to be in his office and may visit factory only whenever required but during working hours.   Since the option service was availed of by the appellant prescribed fee for rendering such service by Government authorities is an accepted norm. The recovery of MOT charge is justified.   The Tribunal allowed the appeal of the Revenue.

In ‘Commissioner of Central Excise V. Sigma Corporation India Private Limited’ – 2013 (4) TMI 649 - DELHI HIGH COURT the High Court found that it is an admitted fact that staffing work was done in the factory of the respondent under the supervision of jurisdictional Central Excise Range Officer during working hours only. The place of working/supervision was at the factory of the respondent which is at Mayapuri, the respondent pointed out that as per Notification No. 14/2002-CE (NT), dated 08.03.2002 as amended vide Notification No. 22/2002-CE (NT), dated 04.06.2002 the jurisdiction of Delhi II Range of Central Excise Division V includes Mayapuri industrial area, Phase II where the factory of the respondent is located, the services were rendered by the officer within his range only.   The Customs Manual also provided that if the services are rendered by the Customs Officer at a place which is not his normal place of work or a place beyond the customs area, overtime is levied even during the normal working hours.   In the present case none of the conditions for levy of MOT is satisfied.

In ‘Bnazrum Agro Exports (P) Limited V. Commissioner of Central Excise, Madurai’ – 2014 (3) TMI 195 - CESTAT CHENNAI the issue is as to whether the EOU is required to pay MOT for supervision of exports undertaken by the Central Excise Officers during the office hours.   The Tribunal held that underlying idea of charging MOT is that when the customs Officers have to travel either beyond their normal place of duty or have to work beyond the normal office hours, the assessees requiring their services have to pay a fee for their services. The practice of charging MOT is an age old practice not only under the present Customs Act framed in 1962 but also prevalent under then older Sea Customs Act, 1878.  There appears to be nothing repugnant in the practice of charge MOT.   The assessee should not hesitate to pay for the services which are required to be performed beyond the normal place of work of the Customs Officers and beyond the normal hours of duty.