CESTAT Allows MEIS Scrip Usage for Education Cess, SHE Cess Payments

The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has dismissed a batch of appeals filed by the Revenue and upheld the validity of payment of Education Cess and Secondary & Higher Education Cess (SHE Cess) through debit in Merchandise Exports from India Scheme (MEIS) duty credit scrips. The bench of Justice Ajay Sharma (Judicial Member), and Rajeev Tandon (Technical Member), ruled that recovery of such amounts in cash would amount to impermissible double recovery when the importers had already discharged the duty liability through MEIS scrips. The dispute arose after the Customs Department issued show cause notices to several importers alleging short levy or non-payment of customs duty on the ground that Education Cess, SHE Cess, and Social Welfare Surcharge (SWS) had been paid through MEIS scrips, which according to the department was not permissible under the Foreign Trade Policy and Notification No. 24/2015-Cus dated 08.04.2015. The appeals covered major companies including Cadila Healthcare, Bharat Forge, Cipla, Reliance Industries, Tata Motors, Siemens, Sun Pharmaceutical Industries, Lupin, Larsen & Toubro, SKF India, Bajaj Auto and others. The differential duty demands in the matters ranged from lakhs to several crores of rupees. The Adjudicating Authority had earlier dropped the demands by relying upon CBIC Circular No. 02/2020-Customs dated 10.01.2020, which clarified that past cases involving debit of Social Welfare Surcharge through duty credit scrips should not be disturbed and such payments should be treated as revenue duly collected. The department argued that while the Circular regularized payment of SWS through MEIS scrips, no similar relaxation existed for Education Cess and SHE Cess. Therefore, according to the department, such payments constituted non-payment of duty recoverable under Section 28 of the Customs Act, 1962. The Tribunal observed that the underlying principle of the CBIC Circular was administrative certainty and ease of doing business, namely that past payments made through MEIS scrips should not be reopened. The Bench further noted that there was no allegation of suppression, fraud, or mis-declaration against the importers and that the duty liability had in fact been discharged, though through MEIS duty credit scrips. The High Court had held that Education Cess and SHE Cess on imported goods are to be treated as duties of customs under the Finance Acts of 2004 and 2007 respectively, and therefore benefit of the CBIC Circular could not be denied merely because the levies were termed “cess.” The Tribunal also referred to its earlier decision in Wellknown Polyester Ltd. v. Commissioner of Customs, Mumbai , wherein it had already ruled that cash recovery cannot be insisted upon for Education Cess and SHE Cess where such amounts had been debited through MEIS or SEIS scrips. CESTAT observed that no material had been produced by the Revenue to show that the decisions relied upon had been stayed or reversed by any superior forum. The Tribunal held that payments made through MEIS duty credit scrips towards Education Cess and SHE Cess constituted valid discharge of duty liability for the relevant past period. The recovery of the same amounts again in cash would amount to double recovery, which is impermissible in law. Case Details Case Title: Commissioner of Customs, Mumbai (Air Cargo Import) Versus C J Shah Citation: JURISHOUR-1254-CES-2026(MUM) Case No.: Customs Appeal No. 85948 of 2020 Date: 13.05.2026 Counsel For Appellant: Ram Kumar, Authorised Representative Counsel For Respondent: Shamita Patel, Advocate Click Here To Read Order Read More: DGFT Relaxes UIN Compliance Norms for Export Credit Interest Subvention Claims Under EPM Scheme

CESTAT Allows MEIS Scrip Usage for Education Cess, SHE Cess Payments

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