2025 (3) TMI 788 - AT - Customs

Liability to pay Social Welfare Surcharge (SWS) in case Basic Customs Duty is exempted in terms of N/N. 24/2015-Cus 25/2015-Cus both dated 08.04.2015 - HELD THAT - The said issue has already been decided by this Tribunal in their own case vide Final Order No.77304-77500/2024 dated 14.11.2024 2024 (11) TMI 746 - CESTAT KOLKATA wherein this Tribunal has held that SWS is payable at 10% on BCD but where the BCD is Nil. SWS shall also be computed Nil. Conclusion - The appellants are not liable to pay Social Welfare Surcharge (SWS) when Basic Customs Duty is exempted in terms of N/N. 24/2015-Cus 25/2015-Cus both dated 08.04.2015 issued under the MEIS and SEIS Scheme. The impugned order is set aside and the appeals are allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issue considered by the Tribunal was whether the appellant, M/s Emami Agrotech Limited, is liable to pay Social Welfare Surcharge (SWS) when the Basic Customs Duty (BCD) is exempted under Notification Nos. 24/2015-Cus and 25/2015-Cus, both dated 08.04.2015, which are issued under the MEIS and SEIS export promotion schemes.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework revolves around the exemption of BCD under the MEIS and SEIS schemes as per Notification Nos. 24/2015-Cus and 25/2015-Cus. The Social Welfare Surcharge is levied under Section 110 of the Finance Act, 2018, calculated at 10% on the aggregate of duties, taxes, and cesses levied by the Central Government as customs duty on imported goods. The Tribunal referenced Circular No. 3/2022-Cus dated 01.02.2022, which clarified that SWS is "Nil" when the aggregate customs duties are zero.

Court's Interpretation and Reasoning

The Tribunal relied on its previous decision in the appellant's own case, which had established that if the BCD is exempted, resulting in zero aggregate customs duties, the SWS should also be computed as "Nil." The Tribunal emphasized that the law does not require SWS to be computed on a notional BCD. The Tribunal also considered similar judgments, such as the Bombay High Court's decision and the case of Dalmia Cement (Bharat) Limited, which supported the appellant's position.

Key Evidence and Findings

The key evidence included the appellant's previous case decisions, Circular No. 3/2022-Cus, and the judgments from the Bombay High Court and other cases like La Tim Metal & Industries Ltd. These documents collectively supported the interpretation that SWS should be "Nil" when BCD is exempted.

Application of Law to Facts

The Tribunal applied the legal principles established in the referenced cases to the facts of the current case. Given that the BCD was exempted under the relevant notifications, the Tribunal concluded that the SWS should also be "Nil," aligning with the precedent and the circular's clarification.

Treatment of Competing Arguments

The Tribunal acknowledged the Revenue's support for the impugned order but found the appellant's arguments more compelling. The Tribunal's decision was heavily influenced by the established precedents and the clear guidance from Circular No. 3/2022-Cus.

Conclusions

The Tribunal concluded that the appellant is not liable to pay SWS when the BCD is exempted under the specified notifications. Consequently, any SWS debited to the MEIS/SEIS or paid in cash should be refunded to the appellant.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning

The Tribunal quoted, "As the issue has already been settled that since in terms of the Circular No.3/2022-Cus dated 01.02.2022, wherein it has been clarified that the amount of Social Welfare Surcharge (SWS) payable would be 'Nil' in cases where the aggregate of Customs duties (which form the base for computation of SWS) is zero even though SWS is exempted as SWS payable is zero."

Core Principles Established

The core principle established is that SWS is not payable when BCD is exempted, resulting in zero aggregate customs duties. This principle aligns with the circular and judicial precedents indicating that SWS should not be calculated on a notional BCD.

Final Determinations on Each Issue

The Tribunal set aside the impugned order and allowed the appeals with consequential relief, including the refund of any SWS debited or paid in cash by the appellant.