Limitation and Unjust Enrichment in case of Social Welfare Surcharge collected at the time of provisional assessment of Bill of Entry

[haribabu koduri]

Customs department has collected Social Welfare Surchage (SWS) on imports in case of some of the bill of entries. The BOEs were assessed provisionally. At the time of final assessment SWS was withdrawn in view of the clarification given by CBIC vide Circular No. 3/2022-Customs Dt.01-02-2022. 

Whether limitation is applicable for refund claims filed in such cases, since levy itself is held to be not as per law in the Circular itself.

Whether unjust enrichment is applicable in such cases. Particularly, when the sale price of the finished products is determined by market forces, but not by cost of production. Whether the SWS is included in cost or not, the sale price is determined by market forces. There is no question of collecting SWS from the customer, whether expensed or kept as receivable in the books of accounts, since sale price is not determined by cost of production.

AI Summary

SWS refund claims face limitation periods and unjust enrichment tests under Section 27 Customs Act A customs query addressed refund claims for Social Welfare Surcharge (SWS) collected during provisional assessment of Bill of Entry, later withdrawn at final assessment per CBIC Circular No. 3/2022-Customs dated 01-02-2022. The discussion focused on limitation periods and unjust enrichment applicability.Legal responses clarified that refund arises as statutory consequence under Section 18(2)(b) of Customs Act, 1962. Limitation under Section 27 is computed from final assessment date, not original payment date, citing Supreme Court precedent in Allied Photographics India Ltd. v. Union of India. For unjust enrichment under Section 27(2), burden lies on importer to prove SWS incidence wasn't passed to customers. Where pricing is market-driven rather than cost-based, and no specific duty component is recovered from customers, unjust enrichment may not apply, supported by tribunal decisions. Documentary evidence including Chartered Accountant certificates and pricing policy details can rebut unjust enrichment claims. One response noted Section 27(1B)(c) provides specific limitation calculation method for provisional duty payments.