This weekly round-up analytically summarizes the key stories of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reported at taxscan.in, from November 3, 2024 to November 9, 2024.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
The Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ), Kolkata Bench, ruled in favour of the Jharkhand State Cricket Association ( JSCA ) in a service tax dispute.
The tribunal concurred with JSCA’s argument that it was not involved in a franchise agreement per the Finance Act, 1994, as the association’s revenue related to cricket promotion and did not constitute franchise activities. The tribunal ruled that corporate and hospitality boxes leased during cricket events did not qualify as mandap keeper services, since they were not exclusively let out as traditional “mandaps.” Dismissing the tax on subsidies from BCCI for event management, the tribunal accepted JSCA’s position that these subsidies were not taxable as they were grants-in-aid rather than fees for services. The Future of Tax and Finance: Upskill with Us In its final order, CESTAT fully set aside the service tax demands confirmed by the Commissioner and upheld the dropped demands totaling ₹17.12 crore. Consequently, the appeal by JSCA was allowed, the revenue’s appeal was dismissed, and all associated penalties were annulled.
The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that transitional credit as a vested right cannot be denied based on procedural or technical grounds and approved an appellant’s claim for a service tax refund under the reverse charge mechanism (RCM).
The tribunal emphasized that this decision upheld by the Supreme Court in Union of India & Others vs. Adfert Technologies Pvt. Ltd. [2020 (34) GSTL J138 (S.C.)], supporting the principle that procedural errors or technicalities cannot override a taxpayer’s right to transitional credit if they are eligible. Therefore, the tribunal set aside the order to deny the refund and dismissed the penalty under Section 78 of the CGST Act. The appellant’s appeal was allowed with consequential relief as per the law.
The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) set aside extended service tax demand on bed roll supply to Indian Railway Catering and Tourism Corporation (IRCTC) due to lack of suppression of fact by the appellant.
The two-member bench comprising P.A. Augustian (Judicial Member) and Pullela Nageswara Rao (Technical Member ) observed that the service indeed fell under “business auxiliary service” making the appellant liable for service tax. However, the tribunal found no evidence of suppression or fraud that justified the extended limitation. The tribunal highlighted that the issue was raised from an interpretation of complex legal provisions rather than intentional evasion. Therefore, the tribunal set aside the service tax demand and penalty imposed for the extended period due to a lack of justifiable grounds. The tribunal remanded the matter to the adjudication authority to reassess the tax demand for the regular period only (up to one year before the show-cause notice issued on 04.01.2010) within three months.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Bangalore has remanded a case regarding CENVAT credit eligibility on construction-related input services claimed by Philips Carbon Black Ltd.
In result, the two-member bench of the CESTAT comprising Dr. D.M. Misra (Judicial Member) and Mrs. R. Bhagya Devi (Technical Member) set aside the impugned order and remand the case to the adjudicating authority for a fresh examination. The bench directed the authority to thoroughly review all relevant documents to determine whether the appellant’s civil construction work was completed before the amendment to Rule 2(l) of the CENVAT Credit Rules on 01.04.2011. The adjudicating authority is instructed to address all issues raised, including those related to the Point of Taxation Rules while observing principles of natural justice. To Read the full text of the Order CLICK HERE
The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Bangalore has directed a reassessment of a CENVAT credit refund claim filed by Goodrich Aerospace Service Private Limited.
The two-member bench of the CESTAT comprising Dr. D.M. Misra (Judicial Member) and Mrs. R. Bhagya Devi (Technical Member) determined that a remand was necessary to allow a thorough examination of the documentary evidence submitted by the appellant. The bench noted that similar refund claims had been partially approved in prior and subsequent periods after departmental verification of the appellant’s records. Accordingly, CESTAT directed the adjudicating authority to reassess the case with a focus on verifying the non-overlapping claims between the two units.
The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT)has held that no Customs Duty on Manufacturing of Stainless Steel Coils Under Advance Authorisation Scheme. The tribunal held that the appellant is entitled to refund the claim of CVD amounting to Rs. 16,31,373/- along with interest as prescribed by law.
A single bench of S S Garg observed that the Government of India vide Notification No. 1/2017-Customs dated 07.09.2017 imposed 18.95% CVD under Section 9 of Customs Tariff Act, but thereafter, trade associations made various representations and thereafter, the government vide Notification No. 79/2017-Cus dated 13.10.2017 exempted the CVD. DGFT also issued Notification No. 33/2015-2020 dated 13.10.2017 to exempt CVD under Advance Authorization Scheme. While allowing the appeal , the tribunal held that the appellant is entitled to refund the claim of CVD amounting to Rs. 16,31,373/- along with interest as prescribed by law.
In a recent case, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) Cenvat Credit on refund to exporter of Cricket Match broadcasting service cannot be denied merely on procedural infraction.
It is settled law that substantive benefit cannot be denied for procedural infractions. We note that procedure has been prescribed to facilitate verification of substantive requirement. As long as a fundamental requirement is met, other procedural deviation can be condoned. The Tribunal held that there is no reason for denying the refund on minor procedural infractions and the appellant cannot be denied the refund of what is allowed to them statutorily, merely on the grounds that they have submitted a letter to the Department for not pressing the same. While allowing the appeal, the Tribunal set aside the impugned order.
In a significant case, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) of New Delhi bench held that service tax is not payable on ‘Construction Of Residential Complexes’. It was observed that since the appellant had rendered the service of construction of residential complexes as ‘works contracts’, the demand of service tax under section 65(105)(zzzh) of the Act towards ‘construction of residential complexes’ cannot be sustained.
While allowing the appeal, the two member bench of Justice Dilip Gupta, President and P. V. Subba Rao, Member ( Technical ) held that “Since the appellant had rendered the service of construction of residential complexes as ‘works contracts’, the demand of service tax under section 65(105)(zzzh) of the Act towards ‘construction of residential complexes’ cannot be sustained.” The Tribunal set aside the demand, interest and penalties on the appellant along with the impugned order.
The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chennai has reduced the penalty imposed on M/s. Natesan Synchrocones Pvt. Ltd. for wrongful availing of Central Value Added Tax ( CENVAT ) credit. The decision was based on the finding that the appellant had reversed the incorrectly availed credit along with interest before the issuance of the Show Cause Notice ( SCN ), indicating no intention to evade duty.
In result, the single-member bench of Shri M. Ajit Kumar ( Technical Member ) reduced the penalty to that prescribed under Section 11A(6) of the Central Excise Act, 1944, which allows for a penalty calculated at 1% of the duty per month, subject to the condition that the duty was paid along with interest before the issue of the SCN. Transform Your GST Knowledge: Comprehensive Course – Enroll Now The ruling highlights the principle that penalties should be proportional to the violation, and in cases where no intent to evade tax is proved, the penalty should not be excessive. The appeal was thus partly allowed, with the appellant receiving a reduced penalty and consequential relief, if any, as per law.
The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) clarified that interest on the refund of pre-deposit for customs duty should be calculated from the date of the deposit, rather than the date an appeal is filed.
The two-member bench comprising P.K. Choudhary, Member (Judicial Member), and Sanjiv Srivastava (Technical Member) noted that funds held by the department are subject to interest regardless of when an appeal was filed. The tribunal referenced past rulings and explained that funds retained by the department for a period especially if later refunded, must include interest from the deposit date to ensure fairness. Therefore, the tribunal dismissed the revenue’s appeal.
The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) dismissed the department’s appeal stating that appeals filed by the revenue department are exempt from the monetary threshold limit only in cases involving constitutional validity or ultra vires issues.
The tribunal clarified that an interpretation of statutory provisions, such as interest calculation under Sections 35FF and 11BB of the Central Excise Act, does not equate to a constitutional validity challenge. The Tribunal noted that the revenue’s argument lacked a constitutional or ultra vires basis and thus could not be exempted from the monetary threshold limit. The Tribunal ruled that the appeal was not maintainable, as the revenue department’s arguments did not fall under the specified exceptions for exemption from the monetary limit. The revenue’s appeal was dismissed.
The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) Chennai emphasized the limitations of using National Import Database (NIDB) data as the sole basis for rejecting declared import values.
In result, the two-member bench of the CESTAT comprising Mr. P. Dinesha (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member) found that the rejection of the declared transaction value by the customs authorities was legally unsound, as it did not meet the transparency and procedural fairness mandated by Rule 12(1). The bench set aside the order issued by the Commissioner of Customs and restored the declared value submitted by M/s. MBM (India) Pvt. Limited. The ruling stressed the importance of procedural compliance in customs valuation and the rights of importers to receive clear, evidence-based justifications for any valuation rejections. The CESTAT clarified that data sources like NIDB cannot override an importer’s declared value without due procedural justification.
The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Chennai, has allowed the set off of excess excise duty payments against any shortfalls within the same assessment period without attracting interest charges. The decision came in response to the appeal filed by M/s. Jonas Woodhead & Sons (India) Ltd. The CESTAT ruled in favour of the appellant by setting aside the revenue’s demand for interest on shortfall amounts, which had been covered by the appellant’s excess duty payments.
The bench cited Rule 7 of the Central Excise Rules, 2002, which governs the adjustment of duty payments. The CESTAT held that the aggregate duty liability should be calculated based on the total clearances within a specified period. The bench also referenced the judgment by the Karnataka High Court in Toyota Kirloskar Motor Pvt. Ltd. v. Commissioner of Central Excise to stress that any excess payment made by an assessee should logically offset shortfalls within the same assessment period. The ruling protects taxpayers from being penalised with interest charges on technical shortfalls. The CESTAT clarified that unless there is a net shortfall in duty payments after adjustments, interest cannot be levied, as this would contradict the principle underlying excise duty regulations.
The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that Nokia India was exempted from paying service tax on its sponsorship of the Kolkata Knight Riders ( KKR ) citing Indian Premier League ( IPL ) qualifies as a sports event.
The two-member bench comprising Binu Tamta (Judicial Member) and Hemambika R. Priya, (Technical Member) referenced the Hero Motocorp Limited case where sponsorship of sports events with commercial elements such as the IPL was deemed non-taxable under the “sponsorship of sports events” exclusionary clause. Raise Funds Smarter – Your Guide to SME IPO Success- Click here to enroll The tribunal highlighted that the Supreme Court upheld this interpretation supporting that IPL sponsorships are immune from service tax obligations. Thus, the tribunal upheld the Commissioner’s original decision to drop the demand, finding no merit in the Department’s appeal. The appeal by the Revenue Department was dismissed.
The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that if a principal manufacturer fails to discharge the excise duty liability, the burden shifts to the job worker.
The two member bench comprising Binu Tamta ( Judicial Member ) and P.V.Subba Rao ( Technical Member ) upheld the lower authorities’ decision, confirming that the assessee was liable for the excise duty, along with applicable interest and penalties. The appeal was dismissed, solidifying the ruling that a job worker cannot claim exemption if the principal manufacturer does not meet the specific conditions required to transfer this benefit.
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