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 At the time of final assessment SWS was withdrawn in view of the clarification given by CBIC vide Circular No. 3/2022-Customs Dt.01-02-2022.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

Refund of provisional surcharge arises on final assessment; limitation runs from finalisation and unjust enrichment is rebuttable with accounting evidence.
Refund claims for Social Welfare Surcharge charged provisionally and withdrawn on finalisation arise upon final assessment; limitation is computed from the date of final assessment rather than the provisional levy. Unjust enrichment is a defence that the importer must rebut by showing the surcharge was not passed on; evidence may include accounting treatment, pricing policy, and a Chartered Accountant's certificate.