2004 (1) TMI 112 - AT - Central Excise

Tribunal overturns MOT charges on Auto Parts exporters under DEPB Scheme, ruling in favor of appellants

The Tribunal set aside the demand for Merchant Over Time (MOT) charges imposed on exporters of Auto Parts under the DEPB Scheme for the supervision of ... Merchant Over Time charges - supervision by Customs officer - normal place of work - place beyond Customs area - levy of overtime charges where service rendered beyond normal place or beyond Customs areaMerchant Over Time charges - supervision by Customs officer - normal place of work - levy of overtime charges where service rendered beyond normal place or beyond Customs area - Whether MOT charges were payable for stuffing of export consignments carried out in the appellants' factory under supervision of the jurisdictional Central Excise (Customs) officer during the period September, 1997 to September, 2002. - HELD THAT: - The stuffing of goods in containers was a Customs work and was supervised by the Central Excise Superintendent acting as a Customs officer. However, the supervision was rendered within the officer's Range, i.e., at his normal place of work. The CBEC clarification in the Customs Manual (Chapter 13) provides that overtime (MOT) is chargeable where service is rendered at a place which is not the officer's normal place of work or beyond the Customs area, even if during normal working hours. The appellants specifically pleaded that the stuffing was carried out on working days during working hours, and that pleading was not rebutted by the lower appellate authority. Since none of the conditions for levy of MOT charges - service rendered beyond the officer's normal place of work or beyond the Customs area - are satisfied, the statutory prerequisites for imposing MOT charges are absent in this case.Demand for MOT charges set aside and appeal allowed.Final Conclusion: The Tribunal held that MOT charges were not payable because the Customs supervision took place within the officer's normal place of work and during working hours, and accordingly set aside the demand relating to the period September, 1997 to September, 2002. Issues:The issue involved in this case is the levy of Merchant Over Time (MOT) charges u/s 36 of the Customs Act for supervision of stuffing of goods in containers for export under the DEPB Scheme.Summary:The appellants, exporters of Auto Parts under the DEPB Scheme, exported goods during September 1997 to September 2002. The stuffing of goods in containers for export was done in their factory under the supervision of the Central Excise officer. The Dy. Commissioner of Central Excise directed the party to pay MOT charges of over Rs. 7 lakhs without providing an opportunity to be heard. The Commissioner (Appeals) upheld a demand of Rs. 3,37,900/- for MOT charges. The present appeal challenges this demand.The Tribunal noted that the appellants are liable to pay MOT charges if the conditions for levy exist. In this case, the stuffing of goods took place in the factory under the supervision of the Central Excise Range officer. The work of stuffing was considered a Customs work covered by the relevant provisions of law. The officer supervised the work within his normal place of work, and the service was provided during normal working hours. The party confirmed that the work was carried out on working days during working hours, which was not rebutted. Therefore, none of the conditions for levying MOT charges were satisfied.Accordingly, the Tribunal set aside the demand for MOT charges, allowing the appeal.