By CA. Pradeep Jain and Sukhvinder Kaur [LLB (FYIC)]
Merchant overtime fee (MOT charges) are the charges which are required to be paid by the exporter/ assessee who is availing the services of Central Excise Officers, in accordance with any prescribed procedure, beyond office hours or on Sunday, Saturdays or public holidays i.e. is after the official hours. The rates for the same are prescribed under the Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998.The table for the same is as under:-
|Fee per hour or
part thereof on
|Fee per hour or
|6 AM – 8 PM
|8 PM – 6 AM
|6 AM – 8 PM
|8 PM- 6 AM
|1. Appraisers Superintendent
Customs Preventive and
Superintendent Central Excise
|2. Air Customs Officers, Examiners
Preventive Officers and Inspectors
of Central Excise
|3. Class IV Staff||35||45||55||60|
Thus, it prescribes the rates for normal working hours as well as beyond working hours as well as on holiday. As such the department says that the charges to be paid for normal working hours also.
But the provisions for the same have been prescribed in the CBEC’s Supplementary Instructions in Chapter 18, Part-II. The said provisions are reproduced hereunder for ready reference:-
Over time Fee
1.1 Wherever an assessee or exporter is requires the services of Central Excise Officers for supervision in accordance with of any procedure specified in this regard by rules or instructions beyond office hours or on Sundays, Saturdays or public holidays and where there is no specific posting of Officers in shifts by any Office order, he shall be required to pay Merchant Overtime at the rates specified under the Customs Act, 1961 under Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998.
1.2 If a manufacturer or exporter requisitions the services of Central Excise Officers for supervision and examination of export cargo and stuffing in containers at his premises, such Officers also discharges functions of a “Customs Officers”.
Thus, it is clear that an exporter is required to pay Merchant Overtime only if supervision by the Excise Officers is done:-
- beyond office hours, or
- on Sundays, Saturdays or public holidays, or
- where there is no specific posting of Officers in shifts by any Office order.
There are many cases in which it has been held that the MOT fee cannot be charged for services of Central Excise Officers availed during the official hours.
- Transworld Garnet India Pvt. Ltd. vs. Commissioner of Central Excise, Tirunelveli [2008 (229) ELT 0077 (Tri. - Chennai)] – In this case it was held as under:-
The Board’s directive contained in Circular not enforceable in law as it is ultra vires Regulation (3) of Customs (Fees for Rendering Services by Customs Officers) Regulations. Such charges are not leviable under the Regulations for supervision by officers of department during their normal office working hours. Appellants entitled to refund of MOT charges paid for supervision of their stuffing work for normal office working hours of the supervising officers of department. Impugned order set aside. Appeal of the assessee allowed. (Para.3)
- Rajasthan Textile Mills vs Commissioner of Central Excise, Jaipur-I [2007 (216) ELT 0380 (Tri.- Del.)] – In this case it was held as under:-
If the services of stuffing of goods in the container was rendered by the officers within his Range only i.e. within his normal place of work, no MOT charges is payable for stuffing of goods carried out during the working days only. The refund allowed in respect of such charges. Appeal of the assessee is allowed. (Para.4)
- Commissioner of Central Excise, Jaipur-I vs Flair Filtration (P) Ltd. [2007 (209) ELT 0475 (Tri.-Del.)] – In this case it was held as under:-
As the Supervising Officer has worked at his Normal place of work and not beyond the customs Area, during Normal working days, during working hours within their Range, no MOT is payable. There is nothing on record to prove that the services were provided beyond the normal working hours. In absence of which demand of MOT charges is not sustainable in terms of Para 3 of the Chapter 13 of the Customs Manual of Supplementary instructions. The Appellants has deposited the MOT charges in respect of services provided beyond Normal Working Hours. The appeal filed by the Revenue is dismissed. (Paras.6, 7)
- SIGMA CORPORATION (I) LTD. vs COMMISSIONER OF C. EX., NEW DELHI [2004 (165) ELT 168 (Tri. - Del.)] – In this case it was held as under:-
Stuffing of goods had taken place in the appellants’ factory coming within the jurisdiction of the Central Excise Range. The work of stuffing was admittedly a Customs work which, being a part of loading of the goods. The Central Excise Superintendent attending to the Customs work acted as a Customs officer. The service of supervision of stuffing of goods in container was rendered by the officer within his Range only, i.e., within his normal place of work. As regards the time of work, it appears, the work was carried out on working days during working hours only. The pleading has not been rebutted by the lower appellate authority. Hence it has to be held that the stuffing work was carried out during the working hours on working days only. None of the conditions for levy of MOT charges was satisfied in this case. Hence, the demand is set aside and this appeal is allowed. (Para 3).
But the Department is charging MOT fee from the assessees even when the central excise officers are being asked to work within the official hours.
Representations have also been made to the Department to consider the matter at hand and clarify the situation regarding the charging of MOT fees from assessees for work done by the excise officers within official hours. But the department does not hear the same. The Board should consider the representation and help the exporters in such an era of global recession.