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:-
| Category of Officers | Fee per hour or part thereof on Working Days | Fee per hour or part thereof on Holidays | ||
| 6 AM – 8 PM Rs. | 8 PM – 6 AM Rs. | 6 AM – 8 PM Rs. | 8 PM- 6 AM Rs. | |
| 1. Appraisers Superintendent Customs Preventive and Superintendent Central Excise | 85 | 125 | 140 | 180 |
| 2. Air Customs Officers, Examiners Preventive Officers and Inspectors of Central Excise | 75 | 100 | 105 | 145 |
| 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.
IN CASE IF ANY UNITS HAS NOT BEEN REGISTERD WITH CENTRAL EXCISE, BUT THEY HAVE PERMISSION FOR FACTORY STUFFING. THEY ARE LIABLE TO PAY THE mot FOR EACH CONTAINER STUFFED IN FACTORY PERMISSES DURING OFFICE TIME.
on Saturday we have dispatched the export consignment then how much MOT charge we have paid ?
Dear Sir,
I intend to import liquid cargo from various destinations… Could you please tell me that once a ship / vessel is berthed am i liable to pay overtime from morning 0600 to 1800 Hrs also ???
I mean m i supposed to pay MOT on normal working hours too ??? …
Please advise. …
Dear sir
we are exporter under scheme of 100% EOU. We are paying MOT Charges for working hours and beyond working hours due to department says you are 100% EOU so you have to pay MOT Charges for working hours and beyond working hours both. please reply.
Thanks
Vijay
Sir/Madam,
We are paying cost recovery since 2003. but now we want to go in MOT. Please guide me the right procedure to change from Cost recovery to MOT
attention is also drawn to Circular No. 586/23/2001-CX Dated 12th September, 2001 which says “It has been further clarified that if there are any instructions in the Manual, which are contrary to provisions of the Central Excise Act, 1944 and the rules made thereunder (including notifications issued thereunder), the provisions of said Act and the rules (including notifications issued thereunder) shall precede.”
hence Customs (Fees for Rendering Services by Customs officers) Regulations, 1998. will prevail
Your kind attention is drawn to customs (Fee for rendering services by customs officers) regulation 1998 on the subject discussed above.
The definition of “rendering of service by customs officers” given at 2(c) of the above regulation at point (i), it says “performance of Customs work by the Customs officer beyond the working hours but within the Customs area; and”.
In case of factory premises (where the factory stuffing is done) can not be termed as “Customs Area”.
Hence the point No. ( ii ) of the above regulation is applicable and it says “performance of Customs work by the Customs officer beyond the Customs area at any time, and includes ) (B) loading and unloading of the goods whether generally or specifically ”
It is clear from the above para that when the services of Supervision are performed beyond “customs area” then supervision charges need to be paid whether it is office hours or beyond office hours.
Furthermore the para 3(c) of Customs (Fees For Rendering Services By Customs Officers) Regulations, 1998 says “In relation to jobs to be performed by any customs officer during the working hours, there shall be two blocks – one before lunch and the other after lunch respectively and fees shall be charged for the entire block whether the request for the services of such officer relates to the entire block or a portion thereof”.
The entire customs (Fee for rendering services by customs officers) regulation 1998 is reproduced below
In exercise of the powers conferred by section 157 and section 158 of the Customs Act, 1962 (52 of 1962) and in supersession of the Customs (Fees for Rendering Services by Customs Officers) Regulations, 1968, except as respects things done or omitted to be done before such supersession, the Central Board of Excise and Customs hereby makes the following Regulations, namely :-
1. Short title and commencement. – (1) These regulations may be called the Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998.
(2) They shall come into force on the 15th October, 1998.
2. Definitions. – In these Regulations, unless the context otherwise requires –
(a) “Customs Officer” includes such officers as are appointed under section 4 of the Customs Act, 1962 (52 of 1962);
(b) “Customs work” means functions to be performed by Customs officers under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force;
(c) “rendering services by Customs officer” means –
(i) performance of Customs work by the Customs officer beyond the working hours but within the Customs area; and
(ii) performance of Customs work by the Customs officer beyond the Customs area at any time, and includes :-
(A) examination of the goods and related functions,
(B) loading and unloading of the goods whether generally or specifically,
(C) escorting goods from one Customs area to the other, and
(D) any other customs work authorised by the Commissioner of Customs;
(d) “Working hours” means the duty hours prescribed by the Commissioner of Customs in his jurisdiction for normal customs work and where different working hours have been prescribed by the said Commissioner for different items of customs work or for different places within his jurisdiction, such working hours.
3. Levy of fees for rendering of services. – (1) On a request made in that behalf by any person, a fee as given in the Table below shall be levied for rendering of services by the Customs Officers.
TABLE
Category of Officers Fee per hour or part thereof on Working DaysFee per hour or part thereof on Holidays
6 AM – 8 PM
Rs.8 PM – 6 AM
Rs.6 AM – 8 PM
Rs.8 PM- 6 AM
Rs.
1. Appraisers Superintendent
Customs Preventive and
Superintendent Central Excise85125140180
2. Air Customs Officers, Examiners
Preventive Officers and Inspectors
of Central Excise75100105145
3. Class IV Staff35455560
(2) The fees levied under sub-regulation (1) shall be payable by the person requesting for rendering of services or on whose account such services has been requested.
(3) The fees levied under sub-regulation (1) shall be subject to the following conditions, namely :-
(a) The levy of fees as aforesaid shall be for a minimum of 3 hours in each case, except in cases of overtime postings immediately preceding or immediately following the working hours of the concerned cadre of officers.
(b) The period between midnight and 6 A.M. shall be treated as a block whether the services are required for the entire block or for a portion thereof.
(c) In relation to jobs to be performed by any customs officer during the working hours, there shall be two blocks – one before lunch and the other after lunch respectively and fees shall be charged for the entire block whether the request for the services of such officer relates to the entire block or a portion thereof.
Further the judgment cited below may also be gone through
2007 (218) E.L.T. 673 (Tri. – Ahmd.)
IN THE CESTAT, WEST ZONAL BENCH, AHMEDABAD
[COURT NO. II]
Shri M. Veeraiyan, Member (T)
NAVAL OVERSEAS PVT. LTD.
Versus
COMMISSIONER OF C. EX., AHMEDABAD
Final Order Nos. A/2545-2546/2007-WZB/AHD, dated 21-9-2007 in Appeal Nos. E/141/2006 & E/672/2007
Demand (Customs) – Merchant Over Time (MOT) – Services of jurisdictional Central Excise officers for examination/verification of seal of import/export consignments when optional i.e. when required by appellant, a 100% EOU – Merchant Over Time charges (MOT) to be paid even during working hours of Central Excise officers working as Customs officers – Demand sustainable – Section 36 of Customs Act, 1962 read with provisions of Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998. – 100% EOU are free to receive the imported materials duly examined from the gate way port and they are also free to export any consignment without examination at their factory by Central Excise officers and the examination in such cases shall be conducted as prescribed at the gate way ports including ICDs, option has been given to the assessees by Circular No. 31/2003-Cus., dated 7-4-2003, where the Customs work will be done subject to payment of MOT. Since this is not a normally assigned work of jurisdictional Central Excise officers, the condition of payment of MOT has been prescribed even during working hours of the Central Excise officers working as Customs officers. [para 7]
Assessee’s appeal dismissed/Revenue’s appeal allowed
CASES CITED
Commissioner v. Flair Filtration Pvt. Ltd. — 2007 (209) E.L.T. 475 (Tribunal) — Referred[Para 4]
Sigma Corporation (I) Ltd. v. Commissioner — 2004 (165) E.L.T. 168 (Tribunal) — Distinguished[Paras 4, 7]
DEPARTMENTAL CLARIFICATION CITED
C.B.E. & C. Circular No. 31/2003-Cus., dated 7-4-2003[Paras 4, 7]
REPRESENTED BY :Shri Uday Joshi, Advocate for the Appellant.
Shri Sameer Chitkara, SDR, for the Respondent.
[Order]. – These appeals are against the orders of Commissioner (Appeals) No. 166/2006(Ahd-I) dt. 31-7-2006 and No. 39/2007(Ahd-I) dt. 31-1-2007.
2. Heard both sides.
3.1 The relevant facts, in the appeal by the assessees no. E/141/06, in brief, are as follows :-
(a)The appellant is a 100% EOU; they were not having any officer posted on cost recovery basis; they availed the services of jurisdictional Central Excise officers for examination/verification of the seal of the consignments imported though the Gate away ports and also for examining and sealing their export goods in the containers within the factory premises; they were paying Merchant Over Time (MOT) whenever the officers have come to attend to this type of work outside their office hours.
(b)The Original Authority after issuing show cause notice, confirmed demand of a sum of Rs. 41,550/- for the period 1-4-2004 to 31-1-2005. The demand was confirmed in pursuance of Section 36 of the Customs Act, 1962 and the provisions of Customs (Fees for Rendering Services by Customs officers) Regulations, 1998.
(c)Commissioner (Appeals) by his order dated 31-7-2006 confirmed the demand of MOT as above.
3.2 The relevant facts, in brief, in the appeal by the department No. E/672/07 are as follows :
(a)The issue is the same as in the previous appeal and the original authority confirmed the MOT for the subsequent period from 1-2-05 to 15-4-2005.
(b)The Commissioner (Appeals) by his order dated 31-1-07 held that no MOT need be paid.
4. Ld. Advocate for the appellant submits that the circular No. 31/2003-Cus. dt. 7-4-2003 has been wrongly applied and the MOT has been claimed even for work undertaken during normal working hours. The work was being undertaken by the officers who have jurisdiction over the factory which should be treated as their normal place of work; they have also undertaken the work of verification of seal of the imported consignments and work of sealing of export containers during normal working hours, therefore, no MOT should be demanded. He also relies on the decisions of the Tribunal in the case of Sigma Corporation (I) Ltd. v. CCE, New Delhi [2004 (165) E.L.T. 168 (Tri.-Del.)] and in the case of CCE, Jaipur v. Flair Filtration (P) Ltd. [2007 (209) E.L.T. 475 (Tri.-Del.)].
5. Ld. SDR submits that the provisions of Section 36 are applicable normally in the Customs area at the gate way ports where the MOT requires to be paid when the work of examination or other such work is undertaken by the customs officers beyond the normal working hours; in the case of 100% EOU, the units are working under self-clearance procedure and the officers are not normally expected to visit the units; the visit by the officers is to provide only service which is at the option of the units and such services are subject to payment of prescribed fees.
6. I have carefully considered the submissions from both sides. The provisions of Section 36 should be seen in proper perspective. In the port area, as of now, there is no concept of self-examination, self-clearance and the goods are necessarily subject to examination by the officers. Only on out of charge being given by the officers, the imported goods can be cleared out of the port area and in respect of export consignments, after examination of the goods by the officers, let export order has to be given and then only the consignment can be allowed for shipment.
7. Coming to the present case, no such restrictions are placed on the clearances of 100% EOU. They are free to receive the imported materials duly examined from the gate way port and they are also free to export any consignment without examination at their factory by Central Excise officers and the examination in such cases shall be conducted as prescribed at the gate way ports including ICDs. However, only as a facility, examination of export cargo is permitted to be done by the jurisdictional Central Excise officers and when a sealed container examined by the excise officer is received at the gate way port; the customs officers do not open them unless there is any specific intelligence of misdeclaration or fraud etc. This is only at the option of the 100% EOU.or other units in domestic tariff area. In fact in initial periods, the permission to operate a 100% EOU was being given only when the officers were taken by the 100% EOU on cost recovery basis. At the request by the 100% EOUs, who do not require full time officers to render services to them, waiving the requirement of posting officer on cost recovery basis, option has been given to the assessees by Circular No. 31/2003-Cus. dt. 7-4-2003, where the Customs work will be done subject to payment of MOT. Since this is not a normally assigned work of the jurisdictional central excise officers, the condition of payment of MOT has been prescribed even during the working hours of the Central Excise officers working as customs officers. The Central Excise officer as of now is required to be in his office and may visit the factory only whenever it is required. If fact, there are restrictions about Central Excise officers visiting the unit without the specific and written permission of senior officers as in the case of small scale units. The order of the Tribunal in the case of Sigma Corporation (I) Ltd. cited supra has been taken on the grounds that certain pleading has not been rebutted by the lower appellate authority. I find the facts of the present case are distinguishable from the facts in the case cited supra. When the services are only optional, they are free to not to avail services and not to pay the prescribed fees. Therefore, I do not find anything wrong in recovery of MOT for the services which have been rendered at the option of the appellant.
8. Appeal No. E/141/06 by the appellant is therefore dismissed. Appeal No. E/672/07 by the Department is allowed.
(Dictated & Pronounced in Court)
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