No Notional SWS on Duty-Free Imports Under MEIS: Supreme Court Upholds Bombay HC Ruling Allowing Re-credit [Read Order]
The Supreme Court upheld the Bombay High Court’s ruling allowing importers to re-credit notional Social Welfare Surcharge wrongly debited on duty-free imports under MEIS
![No Notional SWS on Duty-Free Imports Under MEIS: Supreme Court Upholds Bombay HC Ruling Allowing Re-credit [Read Order]](https://images.taxscan.in/h-upload/2025/08/04/2073020-notional-sws-notional-sws-on-duty-free-imports-duty-free-imports-taxscan.webp "No Notional SWS on Duty-Free Imports Under MEIS: Supreme Court Upholds Bombay HC Ruling Allowing Re-credit [Read Order]")
In a recent judgment, the Supreme Court of India upheld a decision of the Bombay High Court, confirming that importers are entitled to re-credit of notional Social Welfare Surcharge (SWS) debited on duty-free imports made under the Merchandise Export from India Scheme (MEIS). The ruling effectively affirms that SWS cannot be levied where the underlying customs duties are...
In a recent judgment, the Supreme Court of India upheld a decision of the Bombay High Court, confirming that importers are entitled to re-credit of notional Social Welfare Surcharge (SWS) debited on duty-free imports made under the Merchandise Export from India Scheme (MEIS).
The ruling effectively affirms that SWS cannot be levied where the underlying customs duties are fully exempted, as clarified by a government circular.
LA TIM Sourcing (India) Pvt. Ltd. had filed a writ petition before the Bombay High Court challenging the practice of customs authorities debiting notional SWS from MEIS duty credit scrips, despite there being no actual customs duty payable.
During the hearing, the petitioner submitted Circular No. 3/2022-Customs, issued on 01.02.2022 by the Department of Revenue, which explicitly stated that SWS should not be levied where the aggregate customs duties are nil, even if SWS is not expressly exempted.
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The High Court, in its order dated 10.08.2022, observed that the grievance of the petitioner was fully addressed by the circular and held that LA TIM was entitled to re-credit or refund of the notional SWS wrongly debited. The court directed the authorities to take necessary action within eight weeks and clarified that the benefit of the order would extend to similarly placed importers, even if they had not filed writ petitions.
Despite this, the Union of India filed a Special Leave Petition before the Supreme Court, seeking to challenge the High Court’s ruling.
On 10.02.2025, a bench of the Supreme Court, led by the Chief Justice and Justice Sanjay Kumar, declined to interfere with the High Court's order. While the Court condoned the delay in filing, it dismissed the petition on merits, upholding the Bombay High Court’s ruling and thereby reinforcing the entitlement of importers to reclaim notional SWS in such cases.
The Supreme Court’s endorsement of the High Court’s interpretation ensures that importers using MEIS duty credit scrips for exempted imports are not burdened with fictitious levies and can seek re-credit of SWS that was debited without statutory backing.
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