Levy and Collection of Social Welfare Surcharge(SWS) on imports under various schemes

To

All Pr. Chief Commissioners/Chief Commissioners of Customs/Customs(Preventive)/Customs and Central Tax

All Principal Director General/Director General under CBIC

Madam/Sir,

Subject: Levy and Collection of Social Welfare Surcharge(SWS) on imports under various schemes such as Merchandise Exports from India Scheme(MEIS) and Service Exports from India Scheme(SEIS) etc.

The undersigned is directed to invite your attention to the levy of Social Welfare Surcharge(SWS) on imports made and present practices regarding its debit through duty credit scrips such as MEIS, SEIS, etc. of the Foreign Trade Policy(FTP).

2. C&AG at Chennai has pointed out that SWS should be paid in cash in respect of imports where duty is debited under MEIS scrips as the relevant Customs exemption notification exempts only Customs duty leviable under First Schedule of Customs Tariff Act, 1975. Further, representations have been received from the trade that as the goods cleared against the MEIS scrips are exempted from Basic and Additional Duty of Customs, therefore SWS should also be zero. The levy of SWS has also been challenged in various High Courts by the trade on the said ground.

2. The matter has been examined. As per Section 110 of the Finance Act,2018, SWS is levied and collected, on the goods imported into India, as a duty of Customs on the goods specified in the First Schedule to the Customs Tariff Act,1975. The SWS is calculated at the rate of ten percent on the aggregate of duties, taxes, and cesses which are levied and collected under Section 12 of the Customs Act,1962. This surcharge is in addition to any other duties of Customs or tax or cess chargeable on imported goods.

3. The duty credit scrips issued under schemes such as MEIS, SEIS, etc. are granted as rewards/incentives for exporters under the respective FTP. As per Para 3.02 of the Foreign Trade Policy 2015-20, these scrips can be used for payment of Basic Customs Duty and Additional Customs Duty specified under Section 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 for import of inputs or goods and for payment of Central Excise duties on domestic procurement of inputs or goods. The relevant Customs exemption notifications also allow debit of Basic Customs duty and Additional Duties of Customs in the duty credit scrips.

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