Recredit and refund of notional social welfare surcharge in MEIS duty credit scrip upheld under Customs circular

A challenge concerning debit of notional social welfare surcharge in a Merchandise Export from India Scheme duty credit scrip was resolved by reference to Circular No. 3/2022-Customs dated 01.02.2022. The circular accepted the grievance and recognised entitlement to recredit and/or refund of the amount debited. The respondents were therefore required to give effect to the circular and extend the consequential relief sought.

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Issues: Whether Social Welfare Surcharge could be debited on a notional customs duty basis in respect of goods imported against duty credit scrips under the Merchandise Export from India Scheme, and whether the petitioner was entitled to recredit or refund.

Analysis: The Circular clarified that Social Welfare Surcharge is levied as a duty of customs under Section 110 of the Finance Act, 2018 and is computed at 10% of the aggregate customs duties actually payable. Where the aggregate customs duty payable is nil because of an exemption, the surcharge is also to be computed as nil and is not to be calculated on a notional customs duty at tariff rate.

Conclusion: The petitioner was held entitled to recredit and/or refund of the notional Social Welfare Surcharge debited on imports made under the scheme.

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