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The appellants imported 'Pet Coke' and utilized MEIS scrips as per customs Notification No. 24/2015-Customs dated 08.04.2015. They were required to debit BCD of Rs. 36,06,500/- towards SWS in MEIS Scrip. The appellants contended that since the BCD was nil, they should not be liable to pay SWS. The Commissioner (Appeals) dismissed their appeal, prompting the appellants to approach the Tribunal.
The Tribunal noted that the issue had been settled in previous cases, including Emami Agro Tech Ltd. vs CC, Vijayawada, and CC, Visakhapatnam [2024 (3) TMI 86 - CESTAT-Hyd], which held that SWS is not payable when goods are cleared using MEIS scrips. The Tribunal observed that when there is no liability to pay BCD, there cannot be any provision to calculate SWS based on the percentage of BCD.
The Tribunal further referred to the case of La Tim Metal & Industries Ltd., where the Hon'ble Bombay High Court held that if BCD is nil, SWS shall also be computed as nil. The Tribunal also considered the Circular No. 3/2022 dated 01.02.2022, which clarified that if the aggregate customs duty payable is zero, the SWS shall also be zero.
In conclusion, the Tribunal set aside the impugned order and allowed the appeal, granting consequential benefits, including recredit/refund of SWS paid along with interest as per law.
2. Interpretation of Notification No. 24/2015-Customs Dated 08.04.2015 Regarding the Use of MEIS Scrips:The Authorized Representative for the Respondent argued that Notification No. 24/2015-Customs is not an exemption notification and that BCD is payable and debited in the MEIS scrip. However, the Tribunal found that the conditions cited by the AR were already considered in the Emami Agro Tech Ltd. case. The Tribunal held that the debit of BCD to the scrip is an alternate method of payment and not an exemption per se. The statutory provision under Section 25 of the Customs Act makes it clear that once BCD is exempted, it would tantamount to exemption from duty, and no other interpretation is possible.
The Tribunal also referred to various High Court rulings, including those of the Hon'ble Gujarat High Court and the Hon'ble Bombay High Court, which supported the view that the condition of debit of exempted duties to the scrips is merely procedural and does not change the nature of the benefit from being an exemption.
In light of these findings, the Tribunal concluded that goods imported under the relevant notifications were exempted from BCD and Additional Duty of Customs in full, and there was no liability to pay BCD by the importer. Consequently, there cannot be any collection of SWS on such goods cleared under the exemption notifications.
Conclusion:The Tribunal set aside the impugned order and allowed the appeal with consequential benefits, including recredit/refund of SWS paid along with interest as per law.
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