SWS Was Not Payable on Imported Goods Cleared After Availing Full Exemption From BCD

By Centax

April 1, 2025

• 2 min. read

Case Details: LA TIM Metal & industries Ltd. Versus Union of India (2025) 28 Centax 349 (Bom.)

Judiciary and Counsel Details

K.R. Sriram & Arif S. Doctor, JJ
Ms Madhura Khandekar, Adv., for the Appellant.
Shri Sunil Jain, Authorized Representative, for the Respondent.

Facts of the Case

The petitioner, an importer, cleared imported goods after availing full exemption from Basic Customs Duty (BCD) and Additional Customs Duty (ACD) under Notification No. 24/2015-Customs, dated 08-04-2015, as amended. The Revenue contended that BCD was chargeable at 7.5%, and although the petitioner utilized Merchandise Export from India Scheme (MEIS) Scrips to discharge the duty, the Social Welfare Surcharge (SWS), levied at 10% on BCD, was still payable in cash. The petitioner maintained that since the effective BCD payable was nil, the corresponding SWS should also be computed as nil. The case was brought before the Hon’ble High Court, which examined Sections 25 and 28 of the Customs Act, 1962, along with the applicability of Notification No. 24/2015-Customs, dated 08-04-2015.

High Court Held

The Hon’ble High Court held that since the imported goods were cleared at nil BCD, the SWS liability would also be nil, as SWS is a percentage of BCD. The court rejected the Revenue’s contention that SWS should be paid in cash when the duty was discharged using MEIS Scrips, emphasizing that no notional levy of SWS could arise when the primary duty itself was exempted. Accordingly, the court directed the Revenue to refund the amount paid towards notional SWS within eight weeks. The petition was disposed of in favour of the assessee.

List of Cases Cited

Gemini Edibles and Fats India Pvt. Ltd. v. Union of India — Writ Petition No. 24490 and 27452 of 2019, decided on 3-1-2020 by Madras High Court — Referred [Para 4]
LA TIM Metal & Industries Limited v. Union of India — Writ Petition No. 8677 of 2019, decided on 10-8- 2022 by Bombay High Court — Referred [Para 3]
Unicorn Industries vs. Union of India — 2019 (370) E.L.T. 3 (S.C.) — Referred [Para 4]