2024 (3) TMI 813 - HC - Customs

Manufacturer not liable for Merchant Overtime Fee when Central Excise Officers supervise export goods loading during office hours at factory

M/s. Naval Overseas Pvt. Ltd. Versus Commissioner of Central Excise Ahmedabad-I

Gujarat HC ruled that appellant was not liable to pay Merchant Overtime Fee for Central Excise Officers' examination and supervision of export goods ... 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. Issues involved:The issues in this case involve the recovery of Merchant Over Time charges for using the services of Central Excise Officers during office hours under section 36 of the Customs Act, 1962, the applicability of Circulars and Regulations, and the violation of Principles of Natural Justice.Summary:Recovery of Merchant Over Time Charges:The appellant, a 100% EOU engaged in manufacturing and exporting excisable goods, challenged the levy of Merchant Overtime charges for using Central Excise Officers' services during office hours. The Tribunal upheld the charges, leading to this appeal. The appellant argued that previous decisions supported their view that such charges were not payable for supervision within the factory premises during normal working hours. The respondent contended that the charges were justified as officers were discharging duties beyond their normal work, attracting overtime. The High Court referred to relevant Regulations and Circulars and held that the conditions for levying Merchant Overtime charges were not met, ruling in favor of the appellant.Applicability of Circulars and Regulations:The appellant challenged the Tribunal's decision based on Circulars and Regulations governing the recovery of Merchant Over Time charges. The appellant cited precedents supporting their position that charges were not applicable for certain services provided within the factory premises during office hours. The respondent argued that the officers' duties went beyond normal work, justifying the charges. The High Court analyzed the Regulations and Circulars, finding that the conditions for imposing the charges were not fulfilled, thereby ruling in favor of the appellant.Violation of Principles of Natural Justice:The appellant contended that the Tribunal's order was violative of Principles of Natural Justice as it did not consider various judicial pronouncements cited by the appellant regarding the demand and recovery of Merchant Over Time charges. The High Court did not find merit in this argument and focused on the substantive issues related to the levy of charges, ultimately ruling in favor of the appellant based on the interpretation of relevant legal provisions and precedents.This summary provides a detailed overview of the judgment, addressing each issue involved in the case and highlighting the key arguments and decisions made by the High Court.