CESTAT Annual Digest 2024: Indirect Tax Cases [Part 20]

This annual round-up analytically summarizes all the Customs, Excise and Service Tax Orders of the CESTAT Benches of India reported at Taxscan.in during 2024.

CHA Not Obliged to Verify Genuineness Of IE Code For Each Import/Export Transaction: CESTAT M/s. Akansha Logistics vs Commissioner of Customs Airport & General CITATION: 2024 TAXSCAN (CESTAT) 874

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that CHA is not obliged to verify genuineness of Import Export ( IE ) Code for each import/export transaction. The bench held that there was no need for any proceedings under CBLR to have been initiated against the appellant and set aside the order confirming violation.

The tribunal noted that there is nothing or record to show that the appellant/CHA had prior knowledge about the exporters mentioned in the IE code to be non-existing persons.The two member bench of Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that irrespective the exporters are found non-existent but since the IE code is issued after the background check of the importer/exporter had been undertaken by the customs authorities there can be no reason to doubt the identity of the importer or exporter. While allowing the appeal, the CESTAT held that there was no need for any proceedings under CBLR to have been initiated against the appellant and set aside the order confirming violation. It was found that the department could not produce any evidence proving violation of 11(d) and 11(n) of CBLR, 2013.

LCD Panels Imported as Liquid Crystal Device Panels, Attracts Nil Customs Duty: CESTAT Rules in Favour of Micromax Informatics M/s Micromax Informatics Limited VS Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 875

In the case of Micromax Informatics, the Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that liquid crystal display ( LCD ) Panels Imported as Liquid Crystal Device Panels and attracts nill Customs Duty. Further, allowed the appeal to raise alternative classification of LED/LCD TV Panels and Accessories.

The two member bench of Justice Dilip Gupta ( President ) and C.J. Mathew ( Technical Member ) observed that the appellant had self-assessed the Bills of Entry under CTI 8529 90 90, but at the appellate stage they are seeking classification under CTI 9013 80 00, which would amount to re-assessment of the self-assessment done. This has been done without getting the original assessment order modified or getting the Bills of Entry amended under section 149 of the Customs Act or modified under section 154 of the Customs Act. While allowing the appeal, the Tribunal held that the appellant is permitted to raise the alternative classification of the goods under CTI 9013 80 10 by adding a ground.

No Provision under Central Excise Act, 1944 & Rules to enable Assessee to Pay Central Excise Duty under protest: CESTAT rejects Refund Claim M/s Yadu Sugar Ltd vs Commissioner of Central Goods & Service Tax CITATION: 2024 TAXSCAN (CESTAT) 876

The Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that there is no provision under the Central Excise Act, 1944 & Rules made thereunder for the relevant period to enable them to pay Central Excise duty under protest. It had rejected the refund claims barred by limitation under the Cenvat Credit Scheme.

The single bench of Sanjiv Srivastava (Technical Member) has observed that the amounts were paid by the appellant/assessee, they deposited these amounts for the closure of the proceedings that would have been initiated against them for recovery of these amounts in response to the audit objection raised. Taking note of such deposits these proceedings were initiated against the appellants.The claim that the amounts were paid in protest also do not have any merits and needs to be rejected.The tribunal has held that the petitioner not only paid the duty unquestioningly and without any protest, he did not even challenge it by way of an appeal or otherwise, and has preferred this claim more than four years after the payment of duty. The tribunal dismissed the appeal. Aalok Arora appeared for the Appellant and Santosh Kumar appeared for the respondent

Relief to Coca Cola India, Service Tax Not Applicable On Reimbursable Expenses Towards Advisory Services to Group Companies: CESTAT Coca Cola India Inc vs Commissioner of Service Tax CITATION: 2024 TAXSCAN (CESTAT) 877

In a ruling in favor of Coca Cola India, the Chandigarh Bench of Customs, Excise, Service Tax Appellate Tribunal ( CESTAT ) has held that no service tax on reimbursable expenses towards advisory services to group companies is applicable.

The tribunal  held that as long as the expenses reimbursed are not shown to be a consideration towards the provisions of service, the same cannot be included for the purposes of arriving at the taxable value.  It was noted that the department has not brought out anything on record to show that the said expenses are indeed a consideration but were shown artificially as expenses.

No Evidence of TV Assembly at Warehouse in alleged Clandestine Manufacture and Duty Evasion: CESTAT nullifies Excise Duty Demand SUNDER INTERNATIONAL vs COMMISSIONER OF CGST & CENTRAL EXCISE CITATION: 2024 TAXSCAN (CESTAT) 878

The Mumbai Bench Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) nullified an excise duty demand citing a lack of concrete evidence for the alleged assembly of television sets at their Bhiwandi warehouse and duty evasion.

The two-member bench comprising  C J Mathew (Technical Member) and Ajay Sharma ( Judicial Member) perused all the records and highlighted that in cases of clandestine manufacture, the department must present solid evidence such as raw material acquisition, sales, transportation, or other corroborative proof. The tribunal found that the statements of employees were questioned due to the language barrier and the lack of voluntary nature. Cross-examination showed inconsistencies, casting doubt on their credibility.Therefore, the tribunal concluded that the department failed to establish clandestine manufacture or removal beyond a reasonable doubt. Thus, the show cause notice was not sustainable. The appellant’s appeal was allowed with consequential relief

CESTAT Reduces Redemption Fine and Penalty 10% & 5% on Unlicensed Import of Used Clothing Citing Sufficiency in Meeting Justice Commissioner of Customs (Port) vs M/s Ess Ess Overseas CITATION: 2024 TAXSCAN (CESTAT) 879

The Kolkata Bench Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) reduced the redemption fine and penalty to 10% and 5%, respectively, for the unlicensed import of used clothing. The Tribunal deemed these reduced penalties sufficient to uphold justice.

The two-member bench comprising Ashok Jindal ( Judicial Member ) and Mr.K.Anpazhakan ( Technical Member ) observed arguments from both the revenue and the importer. The Tribunal referenced a similar case in Venus Traders vs. Commissioner of Customs (Import), Mumbai, which held the confiscation of goods due to the lack of an import license but reduced the redemption fine to 10% and the penalty to 5% of the assessed value, citing procedural irregularities in the customs valuation process. Therefore, the tribunal concluded that the reduced fines were reasonable and upheld the Commissioner of Customs (Appeals)’ decision to set the redemption fine at 10% and the penalty at 5%.

Customs Dept. claimed Imported Cashews as “Raw”: CESTAT Remands Classification Dispute Citing Ambiguous Test Report Olam Agro India Pvt Ltd vs Commissioner of Customs Guntur CITATION: 2024 TAXSCAN (CESTAT) 880

The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) remanded a classification dispute, citing ambiguities in the test report used by the Customs Department to classify imported cashew kernels as “Raw”.

The two-member bench comprising R. Muralidhar (Judicial Member) and A.K. Jyotishi (Technical Member) observed that the core issue was whether the goods should fall under Chapter 8 or Chapter 20 and the absence of clear statutory definitions distinguishing between “raw” and “roasted” cashews. The tribunal found that the CEPCI Laboratory’s test report used ambiguous language, with terms like “normally” and “may” to describe critical attributes such as moisture content and the presence of Cardanol. This lack of precision made the findings unreliable as a basis for definitive classification.

No New Evidence Justifies Invoking Extended Limitation for alleged Short Service Tax Paid: CESTAT quashes Order Skyline Web Solutions Private Limited vs Commissioner of C.G.S.T. and Central Excise CITATION: 2024 TAXSCAN (CESTAT) 881

The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) quashed a Service Tax demand citing that there was no new evidence justifying the use of an extended limitation period for the alleged short payment of Service Tax.

The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) noted that the appellant had voluntarily provided all the data that the tax demands were based on, indicating no intent to evade taxes.The tribunal observed that the Show Cause Notice issued beyond the permissible period was considered time-barred. The tribunal found that the Department had not brought any evidence on record to establish the intention to evade payment of tax. The Tribunal cited a previous ruling in Maa Kalika Transport Pvt. Ltd. where a similar situation led to a decision favoring the taxpayer, stating that unclear classifications within the department do not warrant extended periods. Therefore, the tribunal quashed the Service Tax demand notice and the appeal of the appellant was allowed.

CENVAT Credit Cannot Be Denied When Duty is accepted by Department for Manufactured Product: CESTAT M/s. Mangal Singh Bros. Pvt. Ltd vs Commissioner of CGST & Central Excise CITATION: 2024 TAXSCAN (CESTAT) 882

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that if the Department accepted duty on a manufactured product, CENVAT Credit cannot be denied.

The tribunal noted that the appellant had paid excise duties exceeding the disputed CENVAT Credit. Referencing the Bombay High Court in the case of Ajinkya Enterprise, the tribunal held that once excise duty is accepted, CENVAT Credit should not be denied. Therefore, the tribunal ordered the Department to refund the reversed credit with interest, to be paid within two months. The appellant’s appeal was allowed.

Central Sales Tax not applicable on Mere Stock Transferring of Beer from Manufacturing Units to depots situated in other State: CESTAT rules Carlsberg India Pvt. Ltd M/s Carlsberg India Pvt. Ltd. vs The State of Rajasthan CITATION: 2024 TAXSCAN (CESTAT) 883

In a ruling in favor of Carlsberg India Pvt. Ltd, the Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that Central Sales Tax is not applicable on mere stock transferring of beer from manufacturing units to depots situated in other States.

A two member bench of Justice Dilip Gupta, President and P.V. Subba Rao, Member (Technical) held that the movement of goods cannot also be considered incidental to the Master Agreement. Further held that reliance on clause 2 of the Master Agreement to justify that the movement of goods occurred incidental to the Master Agreement, is not correct. The CESTAT set aside the order and allowed all the fourteen appeals filed by Carlsberg, United Breweries and Mount Shivalik.

CESTAT Confirms ACC Limited Eligibility for 2% Concession on RMC as CENVAT Credit Linked to Cement Unit, Not RMC ACC Limited vs Principal Commissioner of Central GST & Central Excise CITATION: 2024 TAXSCAN (CESTAT) 884

The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) confirmed that ACC Limited is eligible for a 2% concessional duty rate on Ready-Mix Concrete ( RMC ), citing that the CENVAT credit in question was related to the cement manufacturing unit and not the RMC division.

The two-member bench comprising Mohanty ( JudicialMember ) and M.M. Parthiban ( Technical Member ) reviewed the technical know-how agreement ACC had with Holcim Technologies. The tribunal found that the technical services were specifically related to cement production, with no clear link to RMC, as evidenced by the agreement’s wording and ACC’s separate accounting practices for Cement and RMC. The tribunal noted that the appellant had reversed any incorrect credits before the official notice, aligning with legal precedents that permit such corrective actions. Therefore, the tribunal held that the appellant complied with the conditions for the concessional duty and dismissed the Department’s demand for ₹104.01 crore in additional duty, penalties, and interest.

Assessee paid Excess Amount against Demand of Rs.4,20,162/- on Account of Short Payment: CESTAT quashes Service Tax Demand, Penalty M/s Saila Shipping & Clearing Agency Private Limited vs Commissioner of Service Tax, Kolkata CITATION: 2024 TAXSCAN (CESTAT) 885

Recently the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in Kolkata has quashed a service tax demand of Rs. 4,20,162/- against an assessee, M/s Saila Shipping & Clearing Agency Private Limited, after it was revealed that the company had paid an excess amount against the alleged shortfall.

After reviewing the evidence, the tribunal bench of Mr Ashok Jindal and Mr K Anpazhakan found that the assessee had indeed paid an excess amount of Rs. 4.62 lakh, surpassing the amount in question. As a result, the Rs. 4.20 lakh demand was ruled unsustainable, and the tribunal dismissed the penalty and demand imposed by the tax authorities. The CESTAT also rejected the appeal by the Revenue Department, upholding the assessee’s stance that no service tax was due on reimbursable expenses.

Extension of Import Restrictions by Dept amidst Suffering Detention and Demurrage Charges: CESTAT reduces Redemption Fine and Penalty to Rs. 25 Lakhs Commissioner of Customs (Port), Kolkata vs M/s. Rahul Agro Industries CITATION: 2024 TAXSCAN (CESTAT) 886

In a ruling recently, the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) in Kolkata reduced the redemption fine and penalty imposed on an assessee, M/s Rahul Agro Industries, to Rs. 25 lakhs each, as extension of import restrictions by the Customs department was observed to be excessive amidst the assessee’s suffering of detention and demurrage charges.

In light of these circumstances, CESTAT further reduced the redemption fine and penalty to Rs. 25 lakhs each, providing some relief to the assessee while maintaining the authority’s stance on the restricted status of the imported goods.  In result, the revenue’s appeal was dismissed.

CESTAT quashes Rs.1 Crore CENVAT Credit Recovery against BHEL citing Lack Of Recovery Mechanism during 2006 – 2009 Bharat Heavy Electricals Limited vs The Commissioner of Central Excise CITATION: 2024 TAXSCAN (CESTAT) 887

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Bangalore recently set aside an Order-in-Original passed by the Commissioner of Central Excise, Bangalore against Bharat Heavy Electricals Limited ( BHEL ) warranting recovery of credit of Rs.1,14,03,656/- for the period during 2006-07 to 2008-09, in light of lack of statutory recovery mechanism in effect during the concerned period.

The two-member Bench of CESTAT constituted by D.M. Misra, Judicial Member and R Bhagya Devi, Technical Member referenced the findings of the same Tribunal in Hewlett Packard India Sales Pvt. Ltd. Vs. CST, LTU, Bengaluru (2024) to affirm that there was no recovery mechanism under Rule 3(5B) of the Cenvat Credit Rules, 2004 during the subject period and the explanation permitting recovery of CENVAT Credit under Rule 3(5B) was introduced by Notification No. 3/2013 dated 01.03.2013. In light of the findings, CESTAT set aside the impugned order citing inability to retrospectively apply the provisions of the updated Rule 3(5B) of the Cenvat Credit Rules, 2004 for recovery of credit during the period from 2006-07 to 2008-09.

Royalty, Technical/Professional Fees to Bosch Automotive: CESTAT Rebukes Denial of CENVAT Credit using S. 142(8) of GST Ac Bosch Automotive Electronics India Private Limited vs Commissioner of GST and Central Excise CITATION: 2024 TAXSCAN (CESTAT) 888

The Chennai Bench of the Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) recently rebuked the Revenue for illicitly invoking the provisions of Section 142(8) of the Central Goods and Services Tax Act, 2017 ( CGST Act ) to deny Central Value Added Tax ( CENVAT ) to Bosch Automotive.

The CESTAT Bench presided over by Vasa Seshagiri Rao, Technical Member referred to the case of Terex India Pvt. Ltd. Vs. Commissioner of GST & C.E., Salem (2022) wherein the Chennai CESTAT held that Section 142(3), being a transitional provision for claim of refund after the introduction of the GST Regime requires refund claims of any amount paid under the erstwhile law to be disposed in cash according to the provisions of the erstwhile law. In light of the judicial precedents, CESTAT observed that invocation of Section 142(8) of the GST Act is warranted only when amounts are recoverable from an Assessee in pursuance of an assessment or adjudication proceedings initiated before, on or after the appointed date.

Service Tax Leviable on Publicity Charges Received by Media Company Received from Intermediary Agencies: CESTAT Selvel Media Services Private Limited vs Commissioner of Central Excise CITATION: 2024 TAXSCAN (CESTAT) 889

In a recent case, the Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the service tax leviable on publicity charges received by media companies from intermediary agencies. It was bserved that a sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract.

The two-member bench of Binu Tamta ( Judicial Member ) and Hemambika R. Priya ( Technical Member ) has observed that a sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract. While dismissing the appeal, the tribunal upheld the demand along with interest on the ‘Publicity Charges’ received by the appellant for the normal period only. Further set aside the penalties under Section 77 & 78 of the Finance Act, 1944.

Statements Retracted at Cross Examination have No Evidentiary Value Cannot be Relied Upon to Demand Duty: CESTAT M/s. Ramgarh Sponge Iron Private Limited vs Principal Commissioner CITATION: 2024 TAXSCAN (CESTAT) 890

In a recent ruling, the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) of Kolkata  held that statements retracted during cross-examination have no evidentiary value and cannot be relied upon for demanding excise duty.

The bench of Mr Ashok Jindal and Mr Anpazhakan further highlighted that under Section 9D of the Central Excise Act, statements used as evidence must be tested through cross-examination to establish their credibility. Since this process was not properly followed in this case, the tribunal ruled that the retracted statements could not be relied upon to substantiate the excise duty demand. In light of these findings, the CESTAT quashed the demand for Rs. 12.69 crore in excise duties and the accompanying penalties, including those imposed on Singh and Director of the assessee company, stating that without credible evidence, the claims could not be sustained.

Softwares/Websites Development Service cannot be Categorized as OIDAR Service: CESTAT TRIVEDILLC MARKETING PVT LTD vs COMMISSIONER OF CGST & CENTRAL EXCISE BHOPAL CITATION: 2024 TAXSCAN (CESTAT) 891

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that softwares / Websites Development service or consultancy on the internet requires human intervention and cannot be categorized as Online Information and Data Based Access or Retrieval Services ( OIDAR Service ).

The two member bench of Rachna Gupta ( Judicial Member ) and Hemambika R. Priya ( Technical Member ) has observed that the online database access/retrival is firstly available through Internet Service Providers ( ISP ).  It was held that the appellant’s activity is wrongly hold as OIDAR. The confirmation of demand is held to be based on wrong presumption ( as elaborated above ) is denied to be called OIDAR. Rule 6(A) of Service Tax Rules is also held to have been wrongly invoked.

Writing Down Inputs for Income Tax Purposes not same as Writing-Off Inputs under Rule 3 (5B) of CCR: CESTAT rules in favour of SAIL M/s. Steel Authority of India Limited vs Commissioner of Central GST & Central Excise (Audit) CITATION: 2024 TAXSCAN (CESTAT) 892

In a ruling in favour of Steel Authority of India ( SAIL ), the Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that writing down the inputs for Income-tax purposes cannot be equated with writing-off the inputs under Rule 3 (5B) of CCR ( Cenvat Credit Rules, 2004 ).

The single bench of Rachna Gupta ( Judicial Member ) has observed that there is no denial to the fact that the non/slow moving inventory has at a certain stage being used by the appellant in its manufacturing process. Hence the inventory which had not become obsolete cannot be called as the entry written off. As already observed above Rule 3(5B) CCR is invokable in relation to written off entry only. The tribunal held that provisions of rule 3 (5B) CCR are applicable only when the value of asset and or inventory is written off fully or partially, or wherein any specific provision to write-off fully or partially has been made in the books of accounts.

Failure to Consider BoE Duly Explained by CA Certificate: CESTAT quashes Customs Refund Rejection Order Shriram Impex India Pvt. Ltd. vs Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 894

Recently, the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) in Chennai overturned a Customs department order that had rejected a refund claim by one assessee/ appellant, Shriram Impex India Pvt. Ltd. for the Special Additional Duty ( SAD ) on goods imported into India, observing that there was a failure to consider BoE duly explained by CA certificate before rejecting the refund claim.

Additionally, the Tribunal referenced the precedent set by the Madras High Court in P.P. Products Ltd. v. Commissioner (2019), where the importance of documentary evidence in refund claims and limited the scope for Customs authorities to question the accuracy of CA certifications unless fraud or misrepresentation was proven, was discussed. In line with this judgment, the Tribunal affirmed that the assessee had met all documentary requirements to substantiate its refund claim. In conclusion, the CESTAT set aside the Commissioner’s rejection of the refund claim, upholding the sufficiency of the CA certificate and supporting documents to validate the refund request.

Subordinate Authorities Cannot Issue Qualifications not Prescribed by Law: CESTAT M/s Tikkan Lal Khatri & Sons vs Commissioner of Central Excise & Service Tax CITATION: 2024 TAXSCAN (CESTAT) 895

The Allahabad Bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) recently in a ruling held that subordinate authorities cannot impose qualifications not prescribed by law.

The Tribunal further referenced the Supreme Court’s ruling in Dilip Kumar & Co. (2018), which clarified that statutory interpretation, especially in fiscal laws, must adhere to the plain language of the statute. Strict adherence to the statute is required, ensuring neither interpretation nor additional qualifications alter legislative intent. Therefore, since the amended Section 35FF categorically provides for interest on pre-deposit refunds from the date of deposit, the Tribunal deemed the Assistant Commissioner’s order legally sound. In conclusion, CESTAT annulled the Commissioner’s order and upheld the assessee’s entitlement to both the principal refund and interest, confirming that subordinate authorities cannot impose additional, unauthorized requirements.

Document Name being ‘Debit Note is no Reason to Deny CENVAT Credit to Vodafone: CESTAT Vodafone Mobile Services Ltd vs Principal Commissioner of Customs, Central Excise & Service Tax CITATION: 2024 TAXSCAN (CESTAT) 896

In a significant judgment, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in Allahabad ruled in favor of the assessee/appellant, Vodafone Mobile Services Ltd., now merged into Vodafone Idea Ltd., allowing the telecom giant to claim CENVAT credit based on debit notes rather than invoices.  The tribunal held that a document name being ‘ Debit Note’ is no reason to deny CENVAT credit to Vodafone.

The Tribunal dismissed the tax authority’s reliance on the Gujarat High Court ruling in CCE vs. Cadila Healthcare Ltd., noting that it involved different circumstances that did not apply to the assessee’s case. The tribunal observed that the Cadila case involved commission agents whose activities did not relate to the sale or promotion of goods in the manner claimed by the assessee. The Tribunal noted that Cadila’s circumstances were not applicable to the assessee’s situation, which involved CENVAT credit claims for input services utilized directly in telecom service provision.

Cenvat Credit not Recoverable after Obtaining Occupancy Certificate of Unsold Carpet Area was Taxable: CESTAT Pioneer Housing vs Commissioner of CGST & CE CITATION: 2024 TAXSCAN (CESTAT) 897

The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) in a recent case has held that after obtaining Occupancy Certificate in respect of unsold carpet area for which no service tax will be leviable, cenvat credit already availed when the activity was taxable, the cenvat credit need not be recovered.

The single bench of Anil G. Shakkarwar (Technical Member) has observed that Service Tax Law does not provide for levy of service tax on the flats or buildings constructed for which Occupancy Certificate is obtained. Therefore, carpet area of 21,010 square feet constructed by the appellant was not liable to levy of service tax. Revenue has invoked Rule 6 of Cenvat Credit Rules which provides for circumstances where cenvat credit is admissible or not admissible depending on taxability or otherwise of output service. While allowing the appeal, the tribunal  held that the appellant had availed cenvat credit of service tax paid on input services when the output service was subjected to levy of service tax.

Once VAT Liability is Discharged, Service Tax cannot be Demanded on same Transaction: CESTAT Sai Infraaequipments Pvt. Ltd vs The Commissioner of GST & Central Excise CITATION: 2024 TAXSCAN (CESTAT) 898

The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) ruled that once the VAT liability is discharged, service tax cannot be demanded.

The two-member bench comprising Vasa Seshagiri Rao (Technical Member) And P. Dinesha (Judicial Member) referenced the Supreme Court ruling in Imagic Creative Pvt. Ltd., (2008) which held that service tax cannot be demanded on transactions where VAT is discharged. The tribunal agreed that VAT and service tax cannot be applied simultaneously on the same transaction due to their mutual exclusivity. It noted that since the appellant had already paid VAT on the JCB leasing transactions, imposing service tax on the same transaction was unjustified. In addition to this, the tribunal recognized the appellant’s adherence to VAT requirements, supporting their classification of the JCB leasing as a “deemed sale.” Therefore, the tribunal set aside the impugned orders related to the service tax demand, allowing the appeals with any applicable benefits as per the law. To Read the full text of the Order CLICK HERE

Minor Procedural Lapses not grounds for Rejecting Special Additional Duty Refund when Taxes are Fully Paid: CESTAT Noritsu India Pvt. Ltd vs Principal Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 899

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chennai has ruled in favor of Noritsu India Pvt. Ltd., holding that minor procedural lapses should not prevent taxpayers from receiving a refund of the 4% Special Additional Duty ( SAD ) when taxes are fully paid and compliance is evident.

In light of these findings, the single-member bench of the CESTAT comprising Shri M. Ajit Kumar (Technical Member) concluded that the appellant’s claim should be accepted. The bench stressed the importance of distinguishing between substantive tax compliance and procedural lapses, particularly when minor errors can be easily cured. Boost Your Business with SME IPO Funding Strategies – Enroll Now The bench highlighted that strict procedural adherence should not overshadow compliance with core tax obligations. Consequently, the bench set aside the order rejecting the appellant’s refund and directed the Customs Department to issue the refund with applicable relief. The decision affirmed that procedural deficiencies alone cannot negate legitimate refund claims when tax payments are demonstrably made.

No Penalty Leviable under Section 11AC of Central Excise Act for SCN Issued Subsequent to Payment of Duty: CESTAT CnF Automotive India Pvt. Ltd vs Commissioner of GST and Central Excise CITATION: 2024 TAXSCAN (CESTAT) 900

In a recent ruling of The Customs Excise and Service Tax Appellate Tribunal, Chennai it was decided that no penalty should be imposed under Section 11AC of Central Excise Act for Show Cause Notice ( SCN ) issued after the payment of duty.

Judicial member P Dinesha and Technical member Vasa Seshagiri Rao observed that the appellant had accepted the need to include the amortized cost of capital goods supplied free of cost of the capital goods supplied free of cost in the value of finished products supplied to M/s. Hanil. It was also observed that the impugned order cannot be sustained only on the issue of imposition of penalty under 11AC of Central Excise 1944. Therefore the appeal was allowed.

No Customs Duty on ELISA Kits used only for Food Testing: CESTAT Ilishan Biotech (P) Ltd vs Principal Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 901

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that food testing ELISA kits are not for diagnostic purposes on humans and animals, therefore no customs duty exemption is applicable on ELISA kits.

The two member bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that ELISA kits imported by the appellant were not used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans, and as a result, they were not diagnostic reagent/kits rather they were meant to be used for food testing and, therefore, did not fulfill the criteria to avail the benefit of expression as per the notification.While dismissing the appeal, the tribunal held that appellant is not entitled to the benefit of the exemption notification in respect of the kits imported by him for food testing in terms of the expression used in the notification and also keeping in view the intention under which the notification has been issued, i.e., to grant exemption to the goods related to medical treatment and diagnosis.

CESTAT slams Excise Dept for useless Exercise Of Adjudication & Appellate Process for more than 10 Years at Different Forum Commissioner of Central Excise & Service Tax vs Hitkari Hitech Fibres (P) Ltd CITATION: 2024 TAXSCAN (CESTAT) 902

The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has slamed excise dept for useless exercise of adjudication & appellate process for more than 10 years at different forum. It was observed that it would be an useless exercise to further deal with the matter when both parties/adversaries are not in variance with each other stand.

The bench of Suvendu Kumar Pati (Judicial Member) and Anil G. Shakkarwar (Technical Member) has observed that it would be an useless exercise to further deal with the matter when both parties/adversaries are not in variance with each other stand. While allowing the appeal, the CESTAT set aside the order passed by the Commissioner of Central Excise, Customs & Service Tax. Vinod S. Chettiparambil appeared on behalf of the Appellant and Rajesh Ostwal appeared on behalf of the respondent.

Mere Non-Payment of Service Tax not Suppression of fact: CESTAT quashes Order under Extended Limitation M/s. Synergy Computer Education vs Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 903

In a recent decision, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT BB) in Bangalore quashed an order issued under extended limitation for the recovery of service tax from one assessee, Synergy Computer Education, a training institute operated by Vasundhara A.G.K, observing that mere non-payment of service tax is not “suppression of fact” to justify the invocation of an extended limitation period for tax recovery.

CESTAT thus quashed the extended limitation order, invalidating the demand for tax recovery for periods beyond the standard limitation. The Tribunal directed the adjudication authority to reassess and compute any potential liability only for the normal limitation period. Additionally, penalties levied under Sections 76 and 78 of the Finance Act were dismissed. The case was remanded to the adjudication authority to determine the service tax due within the standard period, with the assessee receiving consequential relief as permitted by law.

Excise Duty not Applicable on Branded Readymade Garments Manufactured before 01.03.2011: CESTAT Ginza Industries Ltd. vs Commissioner of Central Excise, Mumbai-V Respondent CITATION: 2024 TAXSCAN (CESTAT) 904

In a recent ruling, the Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that  excise duty not applicable on branded readymade garments manufactured before 01.03.2011.

The two member bench of Suvendu Kumar Pati (Judicial Member) and Anil G. Shakkarwar (Technical Member) has observed that the goods were manufactured before 28.02.2011 and the branded readymade garments were brought into central excise levy with effect from 01.03.2011. Central excise duty is on manufacture and the collection of duty is deferred from the point of incidence till the goods are cleared from the factory for the purpose of administrative convenience. Become PF & ESIC Pro: Basic to Advance Course – Enroll Today While allowing the appeal, the Tribunal  held that the goods were not leviable to central excise duty in terms of exemption Notification No.30/2004-CE dated 09.07.2004.

CESTAT Reduces High-Pitched Redemption Fine against Goods Confiscated u/s 111(d) of Customs Act M/s Tinna Rubber & Infrastructure Ltd. vs Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 905

Recently in a judgment,  the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) of Allahabad reduced the high-pitched redemption fine imposed on an assessee, Tinna Rubber & Infrastructure Ltd., against goods confiscated under Section 111(d) of the Customs Act.

Upon reviewing the case, the Tribunal, led by members Mr. P.K. Choudhary and Mr. Sanjiv Srivastava, acknowledged the oversight and clarified that while the goods were indeed subject to confiscation under Section 111(d), the fines were excessive considering the nature of the violation. Thus, it reduced the redemption fine to Rs. 3 lakhs and the penalty to Rs. 2 lakhs, providing partial relief to the assessee.

Reassessing Imported Goods Value using Existing Imports Value as per NIDB Data Justified:  CESTAT M/s. Albany Molecular Research Hyderabad Research Centre Pvt. Ltd. vs Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 906

In a recent case before Customs, Excise and Service Tax Appellate Tribunal (CESTAT) it was ruled that re-valuing the imported goods by adopting contemporary value of imports as per NIDB data is justified.

The tribunal comprising Judicial member P Dinesha and Technical member Vasa Seshagiri Rao observed that there is no justification for enhancement of the transaction value based solely on the NIDA Data, that too without determining how the imported goods are comparable and contemporaneous in terms of quality, quantity, etc which affects the transaction value. Therefore the impugned order was set aside and appeal was allowed.

Reimbursements collected by Customs House Agents do not qualify as Taxable Service Income: CESTAT A K BISWAS LOGISTICS PVT LTD vs COMMISSIONER OF SERVICE TAX-SERVICE TAX CITATION: 2024 TAXSCAN (CESTAT) 907

In a recent judgment the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in Ahmedabad ruled that reimbursements collected by customs house agents (CHAs) do not qualify as taxable service income.

However, the tribunal bench of Mr Ramesh Nair and Mr CL Malhar  found that these mark-ups were minimal and did not alter the fundamental nature of the transactions as reimbursements. Following its review, the CESTAT held that such reimbursements did not constitute taxable revenue under the Business Auxiliary Services category, in line with established judicial precedent. The Tribunal observed that the CHA acted as a “pure agent,” merely passing along the cost of services arranged on behalf of its clients. Thus, CESTAT observed that the appellant was not liable to pay service tax on reimbursed expenses since they were operating as a pure agent, and the charges collected merely covered the actual expenses paid to third-party service providers. Thus, the tribunal set aside the service tax demand on these reimbursements and ruled in favor of the CHA.

CESTAT Directs Excise Duty Refund to Supplier,  Notes Compliance with Mega Project Exemption Conditions BRADY AND MORRIES ENGINEERING CO LTD vs COMMISSIONER OF CENTRAL EXCISE-AHMEDABAD-III CITATION: 2024 TAXSCAN (CESTAT) 908

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) recently directed a refund of excise duty to an engineering company that supplied equipment for a mega power project, noting the supplier’s compliance with exemption requirements under central excise regulations.

The tribunal highlighted that the notification stipulates specific criteria for excise duty exemption, including certification of necessity for the mega power project and assurances against the goods’ use for other purposes. Upon examining the records, the tribunal concluded that the appellant had provided all required documents, fulfilling Condition No. 28. In support of this decision, CESTAT referenced a prior Supreme Court judgment in the case of Bonanzo Engineering Chemicals Pvt Ltd vs. Commissioner of Central Excise, which established that paying duty on exempt goods by mistake does not negate eligibility for a refund. After considering the appellant’s compliance and relevant legal precedent, CESTAT set aside the prior decisions, declaring that the appellant was indeed entitled to the refund.

CESTAT quashes CENVAT Credit Reversal Demand, Cites Lack of Revenue Loss COVESTRO INDIA PVT LTD vs C.C.E. & S.T.-VADODARA-II CITATION: 2024 TAXSCAN (CESTAT) 909

In a recent judgment, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) of Ahmedabad quashed the demand for reversal of CENVAT credit distributed by the head office of a manufacturing company, citing the lack of any revenue loss to the government.

Additionally, CESTAT referenced judicial precedents supporting that recovery demands cannot be levied on recipient units under similar circumstances, unless there is demonstrable involvement or intent by the recipient in misallocating credits. CESTAT observed that the head office’s allocation practices were consistent with regulatory standards and did not constitute grounds for disallowance. Thus, the tribunal set aside the earlier demand for reversal and to provide full relief to the appellant.

CESTAT allows Proportionate Credit Reversal, Questions Additional Tax on Trading Emerson Process Management India Private Ltd vs Commissioner of Central Excise CITATION: 2024 TAXSCAN (CESTAT) 910

In a decision, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) West Zonal Bench at Ahmedabad permitted the reversal of proportionate Cenvat credit to address a tax demand linked to trading activities.

CESTAT drew upon prior judgments in similar cases, observing that courts and tribunals had previously held that the reversal of proportionate credit linked to exempted goods or services negates the need for a fixed percentage payment. This basis allowed the tribunal to set aside the initial demand and remit the case for re-evaluation by the adjudicating authority, which would verify the calculations and issue a revised order.

No Allegation indicating CENVAT Credit Availment w/o Service Tax Payment under RCM: CESTAT relieves Hyundai of Rs. 63 Lakh Penalty M/s. Hyundai Engineering India Pvt. Ltd. vs Commissioner of GST and Central Excise CITATION: 2024 TAXSCAN (CESTAT) 911

The Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ), Chennai recently quashed a penalty of Rs.63 Lakhs against Hyundai Engineering, levied on the availment of Central Value Added Tax ( CENVAT ) credit without due payment of the service tax under Reverse Charge Basis.

CESTAT acceded to the claims of the Assessee and held that there is no allegation of fraud or suppression leveled against the Assessee, and in such event set aside the imposition of mandatory penalty under Rule 15(4) of CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 while upholding the payment of the tax and interest by the Assessee.

CESTAT Overturns Rs. 36 Lakh Service Tax Demand against HCL observing Adherence to Rule 6(3A) of CENVAT Credit Rules, 2004 HCL Technologies Ltd vs Commissioner, Central Goods & Service Tax, Meerut CITATION: 2024 TAXSCAN (CESTAT) 912

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Allahabad recently quashed a Service Tax Demand of Rs.36 Lakh against HCL Technologies in light of the observation that the HCL had rightly availed CENVAT Credit as per the formula prescribed under Rule 6(3A) of CENVAT Credit Rules, 2004 (CCR).

The two-member Bench of CESTAT, Allahabad constituted by P. K. Choudhary, Judicial Member and Sanjiv Srivastava, Technical  Member observed that the objective of Rule 6(3A) of the CCR is to consider only common input services and not total input service credit, for the purpose of computing the amount of reversal. In light of such observation, CESTAT quashed the impugned order proposing the Service Tax Demand of Rs.36 Lakh citing the same to be erroneous and unsustainable.

Relief to RAMCO Cements: CESTAT remands CENVAT Credit Matter to determine Place of Removal on Outward GTA Services The Ramco Cements Limited vs Commissioner of GST and Central Excise CITATION: 2024 TAXSCAN (CESTAT) 913

The Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ), Chennai granted relief to RAMCO Cements in a case surrounding eligibility to avail Central Value Added Tax ( CENVAT ) Credit. The matter was remanded for ‘determination of place of removal’ on outward Goods Transport Agency ( GTA ) services.

Given the lack of clarity in the ‘place of removal’, CESTAT remanded the matter to the lower adjudicating authority to verify the contractual terms, affirming that the Appellant would be eligible for CENVAT Credit if the Buyer’s place is indeed the place of removal.

No Customs Duty Demand on Materials Intended for Manufacturing when Destroyed by Fire Accident: CESTAT Sennar Paper and Boards Ltd vs Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 914

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that customs duty cannot be demanded on imported materials intended for manufacturing if they are destroyed by an uncontrollable incident like a fire.

The two-member bench comprising P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical  Member) referenced the Supreme Court ruling in the case of State of Haryana v. Dalmia Dadri Cement Ltd., where “for use” was deemed synonymous with “intended for use.” The tribunal concluded that the appellant met this requirement since the waste paper was intended for manufacturing kraft paper before it was destroyed by fire. Master GST Notice Replies – Drafting 20 Notices, Including Appeals – Register Now The tribunal referred Bangalore tribunal ruling in the case of Vamsadhara Paper Mills Ltd. v. Commissioner of Customs which held that if goods intended for use in manufacturing were destroyed by an uncontrollable incident, the exemption should still apply. Therefore, the tribunal set aside the duty demand order and penalty. The appeal was allowed with consequential relief.

Non-Compliance with GST Transition Provisions: CESTAT denies Cash Refund for Service Tax Paid under RCM Citing Absence of Legal Provision Bajaj Carpet Industries Ltd vs Commissioner of Central Excise CITATION: 2024 TAXSCAN (CESTAT) 915

The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) denied the claim for a cash refund of service tax paid under the Reverse Charge Mechanism ( RCM ) stating that the appellant’s failure to comply with the GST transition provisions as well as the absence of a legal basis for cash refunds of unutilized service tax credits post-GST implementation.

The tribunal noted that with the shift to GST, the Cenvat Credit scheme ended on June 30, 2017. As such, any unused credit could only be transitioned through the specific mechanism established under GST law, and there was no statutory entitlement for cash refund claims after this date. The tribunal found that the appellant’s cash refund claim did not align with the legal provisions and existing judicial interpretations. Therefore, the tribunal ruled that the appellant was not entitled to a cash refund of service tax paid under RCM as it failed to comply with transition provisions under the GST framework​.

CESTAT allows Anti Dumping Duty Exemption for Imported Resin Previously Denied Over Discrepancy in Manufacturer’s Name COMMISSIONER of CUSTOMS-MUNDRA vs CASTOR GIRNAR INDUSTRIES PVT LTD CITATION: 2024 TAXSCAN (CESTAT) 916

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) of Ahmedabad recently ruled in favor of an assessee/ appellant, allowing an exemption from anti-dumping duty on imported PVC resin, despite discrepancies in the manufacturer’s name on shipping documents and packaging.

Following these arguments, the tribunal bench of Mr Raju and Mr Somesh Arora reviewed the previous ruling, and found that documentary evidence should prevail over minor inconsistencies on packaging labels. The tribunal observed that such small variances do not imply misrepresentation or fraud, especially when extensive documentation supports the declared manufacturer. Consequently, CESTAT set aside the customs authority’s earlier denial of exemption for the assessee, and ruled that the assessee-company was eligible for the lower anti-dumping duty rate, in line with the precedent established in the Vinayak Trading case.

CESTAT Rules Assembling Imported TV Parts Qualifies as ‘’Manufacture”, allows Concessional Duty C.C.E.-Ahmedabad-i vs Bossh Technology India Limited CITATION: 2024 TAXSCAN (CESTAT) 917

In a recent decision, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) ruled that assembling imported television parts constitutes “manufacture,” entitling the applicant to reduced customs duty rates under the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017.

CESTAT ultimately agreed with the Commissioner (Appeals), affirming that these assembly steps sufficiently transformed the imported parts into a new product with distinct features and functionality—a fully operational television. The tribunal held that the assembly process met the definition of manufacturing under the customs rules, thereby qualifying the manufacturer for the concessional duty rate. Become a PF & ESIC expert with our comprehensive course – Enroll Now In its decision, CESTAT dismissed the customs department’s appeal, finding no merit in the argument that the imported parts were in a semi-knockdown state.

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