2008 (5) TMI 86 - AT - Central Excise

Appellate Tribunal rules in favor of EOU, refunding MOT charges for Customs work supervision.

The Appellate Tribunal CESTAT, CHENNAI allowed the appeal of a 100% Export Oriented Unit (EOU) seeking a refund of Merchant Over Time charges (MOT ... Validity of Board circular - ultra vires - interpretation of Regulation (3) of the Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998 - liability to pay Merchant Over Time charges for supervision during normal working hours - refund of unlawfully collected feesInterpretation of Regulation (3) of the Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998 - validity of Board circular - liability to pay Merchant Over Time charges for supervision during normal working hours - refund of unlawfully collected fees - Whether MOT charges could be levied for supervision by Customs/Central Excise officers during their normal office working hours under Regulation (3) and whether the Board's circular directing payment by EOUs is enforceable; and whether the appellant is entitled to refund of such charges paid. - HELD THAT: - The Tribunal found that the Board's Circular No.31/2003 dated 7.4.2003, insofar as it required EOUs to pay MOT charges for supervision during normal office hours, was contrary to and could not amend Regulation (3) of the Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998. The circular was held to be ultra vires the Regulation and therefore unenforceable. The Tribunal applied its earlier reasoning in Rajasthan Textile Mills and Commissioner v. Flair Filtration (P) Ltd. , which held that MOT charges are not leviable for supervision of container-stuffing carried out at the normal place of work and within the supervising officers' normal working hours. On that basis the Tribunal concluded that supervision by department officers during their normal office hours does not attract MOT under the Regulations and that amounts paid as MOT for such supervision must be refunded to the appellant. The impugned orders rejecting the refund claim were set aside and the appeal allowed.The Board circular is ultra vires Regulation (3); MOT charges are not leviable for supervision during normal working hours; appellant entitled to refund of MOT charges paid for supervision during July 2003 to September 2004; impugned order set aside and appeal allowed.Final Conclusion: The appeal is allowed: the Board's circular of 7.4.2003 is not enforceable to levy MOT for supervision during officers' normal working hours; such MOT payments made for July 2003 to September 2004 must be refunded and the orders rejecting the refund are set aside. 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.