CESTAT Rules No SWS when Basic Customs Duty is Zero after Duty
Exemption under MEIS
CESTAT
rules in favor of Tata Motors, confirming no Social Welfare
Surcharge on imported goods under MEIS when Basic Customs Duty is exempt
·
CESTAT No to Dept Stand MEIS does not Exempt SWS
·
The
tribunal set aside the Commissioner’s order, ruling that SWS cannot be charged
when BCD is nil. The tribunal granted the refund of the SWS paid in cash.
The Mumbai Bench of the Customs, Excise,
and Service Tax Appellate Tribunal (CESTAT) ruled that Social Welfare Surcharge
(SWS) is not payable when Basic Customs Duty (BCD) is zero.
Tata Motors Ltd., the appellant, had
imported goods under the Merchandise Exports from India Scheme (MEIS) and
claimed exemption from BCD as per Notification No. 24/2015-Customs dated
08.04.2015. The Commissioner of Customs (Appeals), Mumbai-II upheld the
assessment order, directing Tata Motors to pay SWS separately in cash, even
though BCD was fully exempted.
Tata Motors paid the SWS under protest
and challenged the assessment, arguing that SWS is calculated as a percentage
of BCD. Since BCD was nil, SWS should also be nil, in line with the Bombay High
Court‘s ruling in LA TIM Metal & Industries Ltd.
v. Union of India (2022). The appellant also relied on CBIC Circular No.
3/2022-Cus. (01.02.2022), which clarified that if aggregate customs duty is
zero, the SWS payable should also be nil.
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The revenue countered that SWS is not
explicitly exempted under the law and that even if BCD is paid through duty
credit scrips, SWS must still be paid separately in cash. The department’s
counsel argued that the exemption under MEIS did not cover SWS and relied on
previous assessments where SWS had been collected.
The two-member bench comprising S.K.
Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) agreed with
Tata Motors, holding that the issue was already settled by the Bombay High
Court. The tribunal observed that the customs department’s review petition
against the High Court ruling had been dismissed, making the matter final and
binding.
The tribunal set aside the
Commissioner’s order, ruling that SWS cannot be charged when BCD is nil. The
tribunal granted the refund of the SWS paid in cash. The appeal was allowed,
along with any consequential benefits as per law.