Social Welfare Surcharge (SWS) On Imports Using Scrips – Is Exemption An Exception?

January 08,2020
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Mr. Sriram Balakrishnan (Partner EY)
Mr. Ramani NVS (Manager EY)

The below article is on the recent judgment by the High Court of Madras in the case of Gemini Edibles and Fats India Pvt Ltd [TS-3-HC-2020(MAD)-CUST], rendered in the context of applicability of Social Welfare Surcharge (hereinafter referred to ‘SWS’) in the case of imports using duty credit scrips.

Facts of the Case

In this case the Petitioner, being an importer of goods, has filed two writ petitions challenging the debit of SWS in the duty credit scrips for imports as well as challenging the denial of refund of such debits.

SWS was introduced as a levy under Section 110 of the Finance Act, 2018 to meet the Government's obligations to finance education, health and social security. The said surcharge was levied at the rate of 10% of the aggregate of duties of Customs levied and collected by the Government under Section 12 of the Customs Act, 1962. The said surcharge was levied as duty of customs.

Notifications 24/ 2015 (MEIS) and 25/2015 (SEIS) (Customs - Tariff) dated 08 April 2015 provides for exemption from Basic Customs duty and Basic Customs Duty and Additional Customs Duty on goods imported subject to condition that the Duty Credit Scrips are debited.

While considering the above writ petitions, the High Court had framed the following questions for its consideration:

  1. Whether the process of import of goods under scrips is to be treated as exemption or payment of Customs Duty?
  2. Whether SWS is an independent levy or it also takes the colour of the parental levy viz., the customs duty?
  3. If the customs duty is totally exempted and not paid, whether the Revenue is justified in making deduction towards SWS out of the value of the scrips?
  4. Whether Notification Nos.24/2015
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