𝐒 𝐉 𝐄𝐗𝐈𝐌 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬

“Indirect Tax I Indirect Tax Litigation I Customs & FTP I Central Licensing I Arbitration I Advisory”

Dated: 09.02.2025

CESTAT Mumbai confirmed that social welfare surcharge (SWS) is not payable when basic customs duty (BCD) is nil

Tata Motors Ltd. filed multiple Customs Appeals before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, challenging the levy of Social Welfare Surcharge (SWS) on imported goods when Basic Customs Duty (BCD) was fully exempt under Notification No. 24/2015-Customs. The Commissioner of Customs (Appeals), Mumbai-II, upheld the assessment, stating that SWS must be paid even when BCD is NIL. Tata Motors had paid SWS under protest and sought a refund.

Key Points:

1. Appeal Context:

• Tata Motors Ltd. challenged the imposition of Social Welfare Surcharge (SWS) on imported goods where the Basic Customs Duty (BCD) was NIL due to an exemption.
• The appeals were filed against the Order-in-Appeal No. 315-346/2022, passed by the Commissioner of Customs (Appeals), Mumbai-II.
• The company had paid the SWS in cash under protest.

2. Legal Precedent and Arguments:

• Tata Motors argued that SWS is computed as a percentage of BCD, and since BCD was exempted (NIL), the SWS should also be NIL.
• The tribunal noted that the issue was already settled by the Hon’ble Bombay High Court in LA TIM Metal & Industries Limited vs. Union of India (W.P. No. 12183 of 2022).
• The High Court had ruled that if BCD is zero, then SWS is also zero, following Circular No. 3/2022-Cus. issued by CBIC.

3. Tribunal’s Decision:

• The Tribunal ruled in favor of Tata Motors Ltd. and held that SWS is not payable when BCD is exempted.
• The Commissioner of Customs (Appeals) order was set aside.
• Tata Motors was granted consequential benefits as per the law.

4. Finality of the Matter:

• The Bombay High Court had dismissed the Customs Department’s Review Petition (21.06.2024), confirming the previous ruling.
• Since similar appeals by Tata Motors for different periods had been allowed earlier, the Tribunal followed the same reasoning to rule in Tata Motors’ favor.

Conclusion: The CESTAT, Mumbai, allowed Tata Motors’ appeal, setting aside the earlier Customs order. The Tribunal held that if BCD is NIL, SWS must also be NIL, providing relief to Tata Motors and reinforcing the precedent set by the Bombay High Court. This ruling has significant implications for importers using duty exemption schemes, as it confirms that SWS cannot be levied when the underlying customs duty is NIL.

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Source: CESTAT Mumbai

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