“The circular has gone ahead to clarify that surcharge becomes payable through cash and this is a serious concern for exporters, especially when the constitutional challenge is to be decided on the applicability of the surcharge,” said Abhishek Rastogi, counsel for the petitioners. Rastogi, partner at Khaitan & Co., said the circular has been challenged so that both the problems are addressed simultaneously and the exporters get the much -desired relief in this environment of slow down.
The cess and the surcharge are imposed at the time of imports, where duties are paid through the Merchandise Exports from India Scheme (MEIS) scrips.
is a scrip-based incentives provided to exporters under the foreign trade policy 2015-20. These scrips could be used for payment of duties.
However, basic Customs duty has been subsumed in GST. Now, cess and surcharge are imposed on basic Customs duty. Petitioners argued overhow cess and surcharge can be imposed on the basic Customs duty which is zero.
“As the cess is imposed on the aggregate Customs duty, ideally they are not payable as anything multiplied by zero is zero,” Rastogi said. The scheme is being replaced by the WTO-compliant Remission of Duties or Taxes on Export Product (RoDTEP) scheme. MEIS
was to expire from this month, but was later extended till the end of this financial year.