The Madras High Court in the case of M/s Gemini Edibles and Fats India Pvt. Ltd. v Union of India while making liable the petitioner to pay appropriate social welfare surcharge held that the recovery of SWS cannot be done by making debit from the value of the scrips produced by the petitioner.
The petitioner is engaged in the manufacture and marketing of edible oils and fats for which the petitioner imports goods attracting Customs Duties. The petitioner offset such Customs Duties by procuring scrips under the MEIS and SEIS and utilizing such scrips which he had procured from various exporters who had obtained the same under Chapter 3 of FTP. Customs Duty on Import against MEIS and SEIS scrips has been exempted by way of relevant notifications.
On assessment of an import undertaken by the petitioner, his MEIS and SEIS licenses were debited by the amounts pertaining to SWS for which the petitioner seeked methodology adopted by the authority in deducting such an amount.
The order of the Commissioner of Customs has been challenged wherein and whereby the petitioner was informed that 49.5% (including SWS and BCD) of the goods imported is being debited from Scrips and no excess duty is being collected and thus, the question of refund does not arise.
The petitioner submits that the respondents have instead of debiting only the amount of BCD from the scrips obtained, the respondents have also debited the Social Welfare Surcharge from the scrips which is illegal and arbitrary. Further, in absence of machinery provisions for debiting SWS from the scrips, the revenue ought not to have debited the same from the scrips.
The respondent submits that SWS is not an independent levy but takes the nature and color of the parent levy i.e. BCD. If BCD is exempt, SWS is also exempt. If BCD is a debitable duty credit scrip, SWS shall also be debitable.
The Bench constituting of Justice K. Ravichandrabaabu while referring to the decision of the Apex Court in M/s Unicorn Industries held that SWS levied under Section 110(3) of the Finance Act, 2018 is an independent levy imposed and collected under different enactment i.e. Finance Act, 2018. Further, SWS is intended totally for the different purpose in not taking the color of parent levy i.e. customs duty.
The scope of exemption to such scrips has been held to not be against the payment of duty in toto but against the payment of duty in cash, so as to enable the petitioner to use those scrips for debiting the quantum of duty. Also, the SC in the case of M/s Unicorn has held that when a particular kind of duty is exempted, other types of duty or cess imposed by legislation for a different purpose cannot be said to have been exempted.To Read the full text of the Judgment CLICK HERE