Yes, it is disallowed in PayPal's Terms of Service, but perhaps they negotiated a special deal with PayPal. It would be a good idea to ask them about it, as if they didn't arrange special terms, it is not allowed.
PayPal's merchant terms vary from country to country. For example, in Australia it's actually permitted under federal legislation to charge a surcharge for any payment method other than cash at the merchant's discretion.
I have seen many sites charge for using paypal, it makes sense really, in an industry where the profit per sale is usually quite low, they need to charge these fees.