Circular No. ES/233/2021-22 2nd February, 2022
To: Members of the Council
Sub: Clarification regarding applicability of Social Welfare Surcharge on goods exempted from basic and other customs duties/cesses
This is to inform you that CBIC has issued Circular No. 3/2022-Customs dated 1st February, 2022 clarifying about applicability of Social Welfare Surcharge (SWS) on goods exempted from basic and other customs duties/cesses.
References have been received seeking clarification on the issue of applicability of SWS on goods that are exempted from basic customs duty or taxes or cesses which are levied as a duty of customs. In absence of any specific exemption on SWS, certain field formations have taken a view that Social Welfare Surcharge shall be payable on notional customs duty as determined on Tariff rate.
Now, the matter has been examined.
SWS is levied and collected, as a duty of customs, vide Section 110 of the Finance Act, 2018 (13 of 2018) and is calculated at the rate of 10% on the aggregate of duties, taxes and cesses which are levied and collected by the Central Govt. as a duty of customs on goods imported into India.
In this regard, it may be noted that at present SWS applies at the rate of 10% of the aggregate of customs duties payable on import of goods and not on the value of imported goods. If aggregate customs duty payable is zero on account of an exemption, the SWS shall be computed as 10% of value equal to ‘Nil’ (as aggregate amount of customs duties payable is zero). Law does not require computation of SWS on a notional customs duty calculated at tariff rate where applicable aggregate of duties of customs is zero.
Thus, it is clarified that the amount of SWS payable would be ‘Nil’ in cases where the aggregate of customs duties (which form the base for computation of SWS) is zero even though SWS has not been exempted.
Members may kindly make a note of the above.