Whether Social Welfare Surcharge is payable by EOU: 1. On import of goods, Capital Goods and Services? 2. On DTA Sale of goods or capital goods so imported under EOU Scheme.

ANSWER

Facts of the case:

Leviability of Social welfare surcharge on import and supplies to DTA by EOU.

Law applicable:

Notification No. 59/2017-Customs Dated 30/06/2017 -Amendment to Notification no. 52/2003-Custom dated 31.03.2003

'3. Notwithstanding anything contained in this notification, the exemption from the whole of duty of Customs leviable thereon under First Schedule to the Customs Tariff Act, 1975 (51 of 1975), shall not apply to inputs which on importation into India or procurement, are used for the purpose of manufacture of finished goods [ other than falling under Fourth Schedule of Central Excise Act, 1944 (1 of 1944) ] or services and such finished goods and services, (including by-products, rejects, waste and scrap arising in the course of production, manufacture, processing or packaging of such goods ) are supplied in Domestic Tariff Area in accordance with the Foreign Trade Policy, on payment of applicable Goods and Service Tax leviable thereon, or are in stock at the time of exit from the scheme in accordance with the Foreign Trade Policy and in case of waste and scrap within SION or within norms fixed by the Norms Committee or norms as approved by the Board of Approval the exemption in respect of goods imported or procured under this notification would continue to be admissible:

Foreign Trade Policy 2015-20 CHAPTER-6
(v) The DTA sale by EOU/EHTP/STP/BTP units shall be subject to payment of excise duty, if applicable, and/or payment of GST and compensation cess along with reversal of duties of Custom leviable under First Schedule to the Customs Tariff Act, 1975 availed as exemption, if any on the inputs utilized for the purpose of manufacturing of such finished goods (including by-products, rejects, waste and scraps arising in the course of production, manufacture, processing or packaging of such goods). This reversal of Customs Duty would be as per prevailing SION norms or norms fixed by Norms Committee (where no SION norms are fixed).

Interpretation:
Chapter VI of the Finance Bill, 2018 clause No. 108 levy Social Welfare Surcharge on the goods imported into India. It is calculated @ of 10% on the aggregate of duties, taxes and cesses which are levied and collected under section 12 of the Customs Act, 1962 but not included safeguard duty u/s 8B and 8C, countervailing duty u/s 9 and anti-dumping duty u/s 9A of Custom tariff act.

But vide Notification No. 13/2018-Customs Dated 02/02/2018 Govt. exempted Social Welfare Surcharge leviable on Integrated tax and compensation cess part in the custom duty u/s 3 of custom tariff act.

It means that Social Welfare Surcharge applicable on all other aggregate of duties, taxes and cesses under custom acts other than Integrated tax and GST compensation cess.

As per Notification No. 59/2017-Customs Dated 30/06/2017 the exemption from the whole of duty of Customs leviable thereon shall not apply to inputs which on importation into India or procurement, are used for the purpose of manufacture of finished goods are supplied in Domestic Tariff Area.
Therefore if Custom duty is payable then SWS will also be payable on import of goods used for manufacture of goods to be supplied to DTA Further as per Para 6.08 of FTP the DTA sale by EOU/EHTP/STP/BTP units shall be subject to payment of excise duty, if applicable, and/or payment of GST and compensation cess along with reversal of duties of Custom leviable under First Schedule to the Customs Tariff Act, 1975 availed as exemption.

Conclusion:
You are suggested to manually upload invoices, CN/DN not appearing in GSTR-1 to reconcile the same with actual supplies during the relevant period. (Reply dt. 18/10/2021)