Commissioner of Central Excise vs Rajasthan Textile Mills

We have heard the learned counsel appearing for the parries. This D.B. Excise Appeal under section 35G of the Central Excise Act, 1944, arising out of the order dated April 12, 2007 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for short, "the Tribunal"), by which it has set aside the order dated January 24, 2005 passed by the Commissioner of Central Excise (Appeals I), Jaipur. The Department has raised the following question of law for consideration of the court, on which the appeal was admitted :

"Whether MOT charges are not legally leviable for the services provided by the Central excise officers during the normal working hours as held by the Customs, Excise and Service Tax Appellate Tribunal when the Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998 clearly warrant the levy of the same ?"

The appellant is engaged in the manufacturing of cotton yarn, synthetic yarn and synthetic blended yarn. They are exporting goods after stuffing in containers at the factory premises under the supervision/examination of Central excise officers. The appellant paid merchant overtime (for short, "MOT") charges to the Department for stuffing of containers for supervision by the Central excise officers. They thereafter filed refund claim for MOT charges paid under protest during normal working hours from September, 2001 to June, 2003. The Deputy Commissioner, Central Excise Division, Kota rejected the refund claim filed by the respondent. The Commissioner (Appeals) upheld the rejection.

The Tribunal relying upon Sigma Corporation (I) Ltd. v. CCE [2004] 165 ELT 168 (Trib.-Delhi) and CCE v. Flair Filtration P. Ltd. vide order dated November 7, 2006, held that when the inspections were made by the officers of the Central Excise Department within the jurisdiction, the supervision charges were not payable.

It is submitted by the learned counsel appearing for the Department that the supervisions and inspections were carried out beyond normal place of work of the officers of the Central Excise Department, and beyond the customs area at Bhawani Mandi, which is 125 k.m. from Kota, and thus the supervision charges were leviable. The contention is not acceptable, inasmuch as paragraph 5(c) of the Board circular dated September 7, 1998 says that "rendering services by customs officers" means that performances of customs work by the customs officers beyond the customs area at any time.

In Sigma Corporation (I) Ltd. v. CCE [2004] 165 ELT 168 (Trib.-Delhi) , it was held that where the supervision of stuffing of goods in containers was rendered by the officer within their range only, i.e., within his normal place of working, the MOT charges are not payable. Similar view was taken in CCE v. Flair Filtration P. Ltd. vide order dated November 7, 2006.

The judgment in Sigma Corporation (I) Ltd. v. CCE [2004] 165 ELT 168 (Trib.-Delhi) , rendered by the Tribunal, was upheld by the High Court, at Delhi in Commissioner of Central Excise Vs. M/s. Sigma Corporation India Pvt. Ltd., (2013) 293 ELT 649 : (2014) 43 GST 557 : (2013) 20 GSTR 435 .

We have examined the facts of the case and the judgment of the Delhi High Court, and find that the overtime fee is collected under section 36 of the Customs Act read with the Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998. Section 36 of the Customs Act allows loading/unloading of imported/export cargo from any vessel beyond any working hours or any working day or on holiday only on payment of prescribed fees. The rate and the manner of collection of such fee is given in the Regulations of 1998.

In the present case, the stuffing was done in the factory of the respondents under the supervision of jurisdictional Central Range Officers during the working hours. In the circumstances, the MOT charges were not payable. The question of law on the facts of the case is thus decided against the Department and in favour of the respondent-assessee. The Central excise appeal is dismissed.