CESTAT Weekly Round Up

This weekly round-up analytically summarizes the key stories related to the Customs Excise and Service Tax Appellate Tribunal (CESTAT) reported at Taxscan from 28 December 2024 to 4 January  2025.

Relief to Vodafone: CESTAT Clarifies CENVAT Credit on Debit Notes Valid Under Rule 9 if Essential Details Are Present, Sets Aside Demand Order M/s Vodafone Mobile Services Ltd. VS Commissioner of Customs, Central Excise CITATION: 2024 TAXSCAN (CESTAT) 1025

The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that CENVAT credit on debit notes is allowable under Rule 9 of the CENVAT Credit Rules, 2004, if essential details are present. It set aside a demand order against Vodafone Mobile Services Ltd.

The tribunal observed that the appellant had reversed certain credits like Rs. 1,700 for health check-ups and Rs. 78,000 for club memberships along with interest further showing good faith. The CESTAT set aside the demand order and penalties, providing relief to the appellant. The appellant’s appeal was allowed.

Company Admitted Short-Paid Service Tax Liability During Audit: CESTAT Rejects CA’s Certificate, Cites it as ‘No Value Against Audit Report’ Cords Cable Industries Ltd vs Commissioner of CGST & Service Tax CITATION: 2024 TAXSCAN (CESTAT) 1027

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that service tax liability under the Reverse Charge Mechanism which was admitted during an audit cannot be challenged based on a Chartered Accountant’s certificate. The tribunal held such a certificate as having “no value against the audit report.”

The tribunal held that the appellant suppressed material facts and did not provide evidence to disprove the findings. The tribunal rejected the appellant’s claim of no suppression of facts. The tribunal ruled that the appellant should pay the short-paid service tax under the reverse charge mechanism for manpower services.

No Service Tax is Applicable on Free Supply Material to CISF: CESTAT NMDC Ltd vs Commissioner of Central Tax and Central Excise CITATION: 2024 TAXSCAN (CESTAT) 1031

The Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that service tax does not apply to free supply material to CISF. It was observed that no value is attributable to the infrastructure/arms/ammunitions made available to CISF.

They believe that the CISF’s provided weapons, ammo, and infrastructure are worthless. Therefore, it was impossible for the appellant to disclose anything different than what they had already disclosed. It is decided that the prolonged term based on these accusations was incorrectly invoked. When facts were known to both parties, it was believed that suppressing facts could only mean that the right information was not purposefully withheld in order to avoid paying a duty. Therefore, we maintain that the extended period has been incorrectly triggered.

Mifex Oral Suspension, Sancal Vert Forete are Classifiable under Head of ‘products of a kind used in animal feeding’: CESTAT Emil Pharmaceutical Industries Pvt. Ltd vs Commissioner of Central Excise CITATION: 2024 TAXSCAN (CESTAT) 1032

The Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that Mifex Oral Suspension, Sancal Vert Forete are classifiable under head of products of a kind used in animal feeding.

It was noted that the subject goods have nutrient supplements, which do not find any mention in British Pharmacopoeia or Indian Pharmacopoeia and which are not prescribed by veterinary doctors for cure of any ailment and that though the doses are prescribed, that does not mean that they are medicaments.  The Tribunal observed that Supreme Court in the case of Puma Ayurvedic Herbal (P) Ltd. had held that the burden to show correct classification lies on Revenue and here the Revenue has not discharged such burden.

CENVAT Credit not allowed on Duty Paid for Diesel, But allowed for Service Tax on Diesel Delivery and DG Set Operations: CESTAT in Vodafone Idea’s Matter M/s Vodafone Idea Ltd vs Commissioner of Central Excise & CGST CITATION: 2024 TAXSCAN (CESTAT) 1033

The Allahabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) clarified that CENVAT credit cannot be availed on the duty paid for diesel, but can be claimed for service tax paid on services related to diesel delivery and the operation of diesel generator ( DG ) sets.

In light of the above observation, the CESTAT set aside the demand for the recovery of CENVAT credit on diesel duty and clarified that the appellant was eligible to claim credit only for the service tax on services related to diesel delivery and DG set operations, excluding diesel duty itself. The appellant’s appeal was allowed.

Excise Valuation Rule 11 Applies When Goods are Partly Captively Consumed and Partly Sold to a Sister Concern: CESTAT M/s Allied Resins and Chemicals Limited vs Commissioner of Central Excise CITATION: 2024 TAXSCAN (CESTAT) 1028

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that Rule 11 of the Central Excise Valuation Rules applies when goods are partly captively consumed and partly sold to a sister concern.

The tribunal rejected the department’s allegations of undervaluation citing that the appellant’s Chartered Accountant-certified cost construction method was reliable and consistent. So, the tribunal upheld the appellant’s Rule 11 valuation.

CBLR violation in handling Shipping Bill: CESTAT relieves Charges against Customs Broker considering Forfeiture of Security Deposit Daroowala Bros & Co VS Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 1024

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) relieved all charges against the customs broker for the misdeclaration of goods in shipping bills, considering the forfeiture of the Security Deposit.

Given the ongoing proceedings in which the appellant was ultimately cleared by the adjudication process, the appellant in this case requested that the proceedings, which are now under dispute, be postponed until the adjudication’s outcome was known. The licensing authority declined to do so to the detriment of the appellant. Given the appellant’s changed circumstances and the fact the bench of  C J Mathew, Member (Technical), and Ajay Sharma, Member (Judicial), released the appellant from all charges related to the Customs Act, 1962 proceedings. The bench set aside the contested order and returned the case to the licensing authority for a new ruling.

Spent Catalyst removed as by-product from factory not a manufactured product, Excise duty not Demandable: CESTAT Glaxo Smith Kline Pharmaceuticals Limited VS Commissioner of Central Excise CITATION: 2024 TAXSCAN (CESTAT) 1029

The Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that excise duty is not demandable as spent catalyst removed as a by-product from the factory is not a manufactured product.

Since the identical issue involved in the case of self-same appellants for the earlier period was decided by the Tribunal in favour of the appellants, A two member bench of  Mr. S.K. Mohanty, Member (Judicial) and  Mr. M.M. Parthiban, Member (Technical) held that the present demands confirmed against the appellants on the similar set of facts cannot be decided differently.

The bench set aside the impugned order confirming the adjudged demands on the appellants and allowed the appeal.

CESTAT Condones Delay in Filing Appeal Before Commissioner as Neither Party Conclusively Proves Date of Service M/s. A.S. Enterprise vs Commissioner of Customs (Port) CITATION: 2024 TAXSCAN (CESTAT) 1026

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) condoned the delay in filing the appeal before the Commissioner (Appeals) citing that neither party could conclusively prove the date of service.

The tribunal set aside the Commissioner (Appeals)’s rejection order and remanded the matter for a decision on merits. The tribunal directed adherence to the principles of natural justice.

The tribunal clarified that the Commissioner (Appeals) must resolve the matter within three months from the receipt of the order. The appellant’s appeal was disposed of by remanding the matter.

Interest on Delayed Refund Payable Three Months from Refund Application Date, Not from Commissioner (Appeals) Order: CESTAT Amrapali Industries Ltd vs Commissioner of Customs-Ahmedabad CITATION: 2024 TAXSCAN (CESTAT) 1034

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that interest on sanctioned refunds under customs laws is payable from three months after the application date, not from the date of an appellate order remanding the matter for reconsideration.

The tribunal reviewed the legal provisions and prior judgments, including Ranbaxy Laboratories Ltd. vs. UOI, which clarified that interest liability begins three months after the refund application is filed, regardless of delays in appellate decisions. The tribunal explained that the explanation in Section 27A does not alter the timeline for calculating interest.

CESTAT Upholds Penalty of Rs. 44.15 Lakh for Anti-Dumping Duty Evasion by Misdeclaration of Printing Plates M/s. R I Trading Co vs Commissioner of Customs (Import) inland Container Depot CITATION: 2024 TAXSCAN (CESTAT) 1035

The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has upheld the imposition of a Rs. 44.15 lakh penalty on the assessee for evading anti-dumping duty by misdeclaration of goods.

The CESTAT comprising Binu Tamta ( Judicial member ) and P.V. Subba Rao ( Technical Member )upheld the confiscation of the goods under Section 111(m) of the Customs Act, along with the imposition of a penalty equivalent to the anti-dumping duty under Section 114A of the Act.

TN to Kerala Transfers Deemed Inter-State Sales, Not Branch Transfers: CESTAT Confirms CST Liability as D7 Records Reveal Pre-Arranged Orders for Sales M/s Ansa Cosmochems vs Commissioner of State Tax CITATION: 2024 TAXSCAN (CESTAT) 1036

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) upheld the central sales tax liability, confirming that goods transfers from Tamil Nadu to Kerala were inter-state sales and not branch transfers citing D7 records revealing pre-arranged orders for sales

The tribunal observed that the evidence including dispatch instructions and payments, clearly linked the goods’ movement to sales to Argus Cosmetics. The tribunal held that the appellant failed to discharge its burden under Section 6A of the CST Act to prove that the transfers were not sales. The tribunal dismissed the appellant’s appeal.

Refund for 4% SAD on Imports Claimed After New Evidence Emerges: CESTAT Orders Verification Despite Initial Voluntary Withdrawal Anand Tradelink P Ltd vs Commissioner of C.-Ahmedabad CITATION: 2024 TAXSCAN (CESTAT) 1037

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) directed verification of newly discovered evidence for a Rs. 1,57,818 refund claim of 4% SAD, despite its initial withdrawal during scrutiny.

The tribunal remanded the matter to the adjudicating authority directing it to reassess the refund claim of Rs. 1,57,818 based on the documents presented or to be presented by the appellant. The appellant’s appeal was allowed.

Discounts/Incentives from Honda Linked to Sale and Purchase of Goods not subject to Service Tax: CESTAT M/s. Capital Cars Pvt.Ltd vs Commissioner of Central Goods & Service CITATION: 2024 TAXSCAN (CESTAT) 1039

The New Delhi Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that discounts and incentives related to the sale of goods cannot be subjected to service tax under the Finance Act, 1994.

The tribunal observed that the amounts reimbursed were directly related to the sale and purchase of goods and were not linked to the provision of any service. The tribunal ruled that the reimbursements for discounts and incentives were part of trading activity and could not be classified as taxable services. The tribunal set aside the impugned order and allowed the appellant’s appeal.

Royalty for Transfer of Technical Know-How Cannot Be Treated as Payment for Consulting Engineer Services: CESTAT Expeditors International India Private Limited vs Commissioner of Service Tax CITATION: 2024 TAXSCAN (CESTAT) 1040

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that consideration made to a holding company for the use of business know-how was not taxable under the category of management consultancy service.

The tribunal ruled that royalty payments for business know-how are not taxable under the management consultancy service category. The tribunal set aside the service tax demand on royalty payments and allowed the appellant’s appeal on this issue.

Global Account Manager’s Activities Classified as Business Support Service not Business Auxiliary Service due to Operational Support Role: CESTAT Expeditors International India Private Limited vs Commissioner of Service Tax CITATION: 2024 TAXSCAN (CESTAT) 1040

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that the activities performed by Global Account Managers ( GAM ) for international logistics management were not classifiable under “Business Auxiliary Services” ( BAS ) s these activities fell more appropriately under “Business Support Services” ( BSS ).

The tribunal ruled that BSS only became taxable from May 1, 2011, the period in question was between 2003 and 2009. Therefore, no service tax could be levied on GAM activities during this earlier timeframe. The appellant’s appeal was allowed

Construction Services under Collaboration Agreements Fall under Works Contract: CESTAT quashes Rs. 1.59 Crore Service Tax Demand M/s. New Heights Buildcon Pvt. Ltd. vs The Additional Director General CITATION: 2024 TAXSCAN (CESTAT) 1041

In a recent ruling, the Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) quashed the Rs. 1.59 crore service tax demand levied against the assessee and held that construction services carried out under collaboration agreements with landowners are not taxable under the category of “commercial or industrial construction services” but instead qualify as “works contracts.”

Thus, by relying on the above-mentioned decision, the CESTAT noted that the adjudicating authority failed to follow the judicial protocol. The bench observed that no service tax could be levied before June 1, 2007, and that subsequent demands under an incorrect tax category were not maintainable.

TATA Steel Took Over Bhushan Steel: CESTAT Clarifies Appeals Are Abated Post RP Approval By NCLT Under IBC, It Becomes Functus Officio Commissioner of Central Tax vs Tata Steel Limited CITATION: 2024 TAXSCAN (CESTAT) 1044

The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) clarified that appeals abate and the tribunal becomes functus officio ( devoid of authority ) once a resolution plan is approved under the Insolvency and Bankruptcy Code ( IBC ).

The tribunal explained that any orders passed beyond its vested powers would be non-est in law (invalid) and that these appeals had become infructuous due to the resolution plan’s approval, with no further issues for adjudication. The Commissioner’s appeals were deemed abated with effect from May 15, 2018, and the tribunal dismissed the matter accordingly.

Relief To Maruti Suzuki: CESTAT Clarifies CENVAT Credit on Accessories Can Be Availed If Included In Assessable Value of Final Products Commissioner of Central Excise, Goods & Service Tax, Gurugram vs M/s Maruti Suzuki India Ltd. CITATION: 2024 TAXSCAN (CESTAT) 1043

The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that CENVAT credit is admissible on accessories such as bolts, screws, and washers if their value is included in the assessable value of the final product.

The tribunal explained that the admissibility of CENVAT credit for such items was already settled in law and the department could not retrospectively challenge the findings. The appeal by the revenue was dismissed and upheld the respondent’s entitlement to CENVAT credit on the disputed items.

SAIL Mistakenly Availed CENVAT Credit on Same Invoices, Voluntarily Reversed Credit Before SCN: CESTAT Quashes Penalty Citing Absence of Fraud M/s. Steel Authority of India Ltd vs Commissioner of GST & Central Excise CITATION: 2024 TAXSCAN (CESTAT) 1046

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) quashed the penalty imposed on Steel Authority of India Ltd. ( SAIL ), which had mistakenly availed CENVAT credit on the same invoices. It observed voluntarily reversed the credit even before the issuance of a Show Cause Notice and absence of fraudulent intent.

The tribunal observed there was no evidence of suppression, fraud, or willful misstatement to justify the imposition of penalties under Section 11AC of the Central Excise Act, 1944. The tribunal explained that penalties require an intent to evade duties which was absent in this case. The tribunal quashed the interest demand and penalties and allowed the appeal of the appellant.

CESTAT sets aside Penalty as Amnesty Scheme does not Prescribe Penalties for Settled Cases, Citing Closure Letter issued after Compliance M/s.Makwuds India Private Limited vs The Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 102

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) overturned the penalties ruling that the Amnesty Scheme does not provide for penalties in cases that have been settled when authorities have issued a closure letter confirming compliance.

The revenue counsel argued that the appellant had discharged the duty and interest obligations as per the adjudication order and the Amnesty Scheme but the penalty imposed under Section 112(a) of the Customs Act was still valid.

The two-member bench comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that the scheme was to resolve defaults in export obligations without treating them as irregularities or implying malafide intent. The bench observed that the closure letter issued by the authorities showed full compliance with the scheme and no penalty was prescribed in the Amnesty Scheme.

So, the tribunal ruled that the penalty under Section 112(a) was unsustainable. The impugned order was set aside and the appellant’s appeal was allowed.

Loading Activities in Mining Area does not Qualify as Cargo Handling Services: CESTAT M/s. Shree Mohangarh Sharmik Theka Sahkari Samiti Ltd. vs Commissioner of Central GST CITATION: 2025 TAXSCAN (CESTAT) 101

In a recent ruling, the New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that loading and unloading activities conducted in a mining area do not fall under the category of ‘cargo handling services.’

The CESTAT observed that the Supreme Court in the case of Chowgule and Co. Pvt. Ltd. vs. Union of India, held that process of extraction of ores from mines washing, screening, crushing in the crushing plant and stacking at the mining site all are covered under the Mines Act, 1952,and cannot be called as ‘Cargo Handling Service

The bench accepted the contention raised by the counsel of assessee that the SCN was time- barred.

Service Tax not applicable on extraction of Iron Ore from leased mines: CESTAT M/s. BMM Ispat Limited vs Commissioner of Central Excise CITATION: 2024 TAXSCAN (CESTAT) 1047

In an important ruling, the Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that extracting ore, operating mine and otherwise exercising all the powers and rights of the lessee under mining licence No. ML No.2552,are not taxable service under the category of “Mining of Mineral, Oil or Gas Services” in terms of Section 65(105)(zzzy) of the Finance Act, 1994.

A two member bench of Dr. D.M. Misra, Member ( Judicial ) And Mrs. R. Bhagya Devi, Member ( Technical ) viewed that the appellant being the Managing Partner received 64% of the extracted Ore as share of his profit in the partners firm. Also, it is absurd to say that for extraction of 36% of the Ore for the partners, the consideration for such service was equivalent to the value of 64% of the Iron Ore extracted and retained by the Managing Partner, the appellant. The bench set aside the impugned order and allowed the appeal.

CESTAT restores Suspended License of CHA in absence of Proof for Violation of CBLR M/s.V.J.P. Shipping India Pvt. Limited vs The Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 108

In a recent case, the Chennai bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) set aside the order suspending Customs House Agent ( CHA )‘s license in absence of proof for violation of Customs Broker Licensing Regulations ( CBLR ), 2018 and directed to restore the suspended license.

It was viewed that the balance of inconvenience is clearly with the appellants and hence, the Revenue would not in any way be affected if the order of suspension of their license set aside, thereby permitting them to continue with their business.

 Accordingly, a two member bench of  P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) set aside the order suspending the license of the appellants. The authority below can always go ahead since there has been an initiation of a proceedings, and conclude the same in accordance with law thereafter.

AO Insisting Importer Opting for Classification proposed by  investigating agency is contrary to prescription of self-assessment S. 17 of Customs Act: CESTAT Daikin Airconditioning India Pvt Ltd vs Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 105

In a ruling by Mumbai bench of the Customs, Excise And Service Tax Appellate Tribunal (CESTAT), has held that Assesssing Officer (AO) insisting importer opting for classification proposed by  investigating agency is contrary to prescription of self-assessment Section 17 of Customs Act, 1962.

It was the first appellate authority’s responsibility to ensure that the “proper officer” complied with the law in these circumstances. If this was not done, the orders that are now being contested before us have the same stain of illegality. In view of the circumstances above, affirmation of the impugned order would be tantamount to participation in breach of law.  That suffices to merit setting aside the impugned order and to restore the bills of entry before the original authority for compliance with the procedure set out in section 17 of Customs Act, 1962 and, in particular, section 17(5) therein.

Mis-declaration to DGFT does not fall within the purview of S. 114AA of the Customs Act: CESTAT S.B. AGARWAL vs COMMISSIONER OF CUSTOMS CITATION: 2025 TAXSCAN (CESTAT) 104

In a recent ruling, the Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that the alleged misdeclaration by the appellant to the Directorate General of Foreign Trade ( DGFT ) did not fall within the purview of Section 114AA of the Customs Act, 1962.

The CESTAT observed that Section 114AA of the Customs Act, 1962  penalizes false declarations made knowingly or intentionally in proceedings under the Customs Act. It held that the alleged misdeclaration by the appellant to DGFT was not a declaration in a proceeding under the Customs Act but instead under the Foreign Trade Policy and thus, the  the section was inapplicable.

Dept must Automatically Return EDD upon Finalizing Provisional Assessment without Requiring Refund Application: CESTAT Herrenknecht India Pvt. Ltd. Vs Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 106

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that the refund of Extra Duty Deposit ( EDD ) is not subject to the limitation under Section 27 of the Customs Act, 1962, and should be returned upon finalization of provisional assessments without requiring a formal refund claim.

The tribunal ruled that the department was obligated to refund the EDD after the final assessment and rejected the impugned order. For the BOE missing the TR6 challan, the tribunal directed the department to process the refund upon submission of an indemnity bond, as per departmental procedure. The appeal was allowed with consequential relief.

Appeal cannot be rejected stating non-compliance u/s 129E of Customs Act: CESTAT Sets aside Commissioner Order M/s. Varman Aviation Private Limited vs The Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 1049

In a recent case, the Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that an appeal cannot be rejected stating non-compliance under Section 129E of the Customs Act, 1961.The Tribunal set aside the impugned order to the extent of holding that computation of penalty under Section 114A would include both demand and interest.

 The  Commissioner (A) had observed that the penalty under Section 114A should be equivalent to the total differential duty demanded and interest. The advocate submitted that it is contrary to the principles of law laid down by the High Court of Karnataka in the case of Commissioner of Central Excise vs. Sony Sales Corporation which has been consistently followed by the Tribunal in a series of cases.

The Tribunal set aside the impugned order to the extent of holding that computation of penalty under Section 114A would include both demand and interest. The Tribunal allowed the appeal by way of remand to the Commissioner (A).

Refund for Unutilized CENVAT Credit Rejected Over Lack of Input-output Nexus: CESTAT  Partially Remands Matter for Further Document Submission M/s AMD Research & Development Vs Pr. Commissioner of Central Tax & Customs CITATION: 2025 TAXSCAN (CESTAT) 107

The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) partially remanded the matter concerning refund claims for unutilized CENVAT credit which had been rejected on grounds of lack of input-output nexus and procedural lapses, directing the appellant to produce further documentation for reassessment.

The tribunal found that input services except for a few had sufficient nexus with the appellant’s output services and were eligible for refund. It also found the denial of refunds due to incorrect formula application citing precedent in Commissioner of CGST & C.Ex, Mumbai v. Morgan Stanley Investment Management Pvt Ltd which required re-examination.

No Service Tax Payable on expenses incurred by Branch office at Foreign Country in Absence of  Occurance of Taxable Activity: CESTAT The Commissioner of Central Tax VS M/s. Indo US MIM Tec Private Limited CITATION: 2024 TAXSCAN (CESTAT) 1048

The Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that service tax not payable on expenses incurred by a branch office in foreign country in the absence of occurrence of taxable activity.

Revenue contended that the branch office of the respondent in the USA and Germany had rendered certain services like meeting the customers, scheduling orders, follow-up of payments, deliveries, marketing, etc., which is nothing but Business Support Service by the branch office to the main office of the respondent, since the expenditure had been paid in foreign exchange, service tax under Section 66A of the Finance Act, 1994 is required to be paid by the Respondent.

CESTAT sets aside Appeal against Air Asia on Issue of Customs Duty Refund citing Payment of Duty under Protest M/s. Air Asia (India) Private Limited vs Commissioner of Customs (Appeals) CITATION: 2025 TAXSCAN (CESTAT) 112

In a recent ruling, the Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) sets aside the customs appeal on issue of refund duty paid by Air Asia based on re-classification of Aircraft parts, as the duty was already paid under protest.

In contrast to the current case, where the appellant paid the full duty under protest during the Bills of Entry assessment, the Commissioner (Appeals) has not decided the matter on merit and has dismissed the appeals based solely on the failure to make a pre-deposit of 7.5% of the duty, according to a two-member bench consisting of Mrs. R. Bhagya Devi, Member (Technical), and Dr. D.M. Misra, Member (Judicial).

Customs duty cannot be demanded jointly and severally: CESTAT quashes penalty u/s 114A RVS Petrochemicals Limited VS Commissioner of CUSTOMS - Kandla Customs CITATION: 2025 TAXSCAN (CESTAT) 111

Recently, the Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held that the customs duty could not be demanded jointly and severally and quashed the penalty that was levied against the appellant, RVS Petrochemicals Limited, under Section 114 A of the Customs Act, 1962.

It is to be noted that BGH settled its case with the Settlement Commission by agreeing to pay a differential duty of Rs. 1,05,23,322, along with interest and a penalty of Rs. 4,00,000. However, a penalty under Section 114A of the Customs Act was imposed, while the penalty under Section 112 was dropped. The appellants have now filed appeals seeking to set aside the Section 114A penalty. The appellant’s counsel contended that M/s BGH Exim Ltd. had paid the customs duty and its case was settled by the Settlement Commission. As no demand is payable by the appellants, joint and several liability cannot apply, and the penalty under Section 114A is not sustainable.

Determination of Assessable value as per Rule 9 of Central Excise (Valuation) Rules not Applicable on Independent seller: CESTAT Commissioner of Central Goods And Service Tax VS Fie Spherotech CITATION: 2025 TAXSCAN (CESTAT) 114

The Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that determination of assessable value as per Rule 9 of the Central Excise ( Valuation ) Rules, 2000 is  not applicable to independent sellers.

The Tribunal vide Final Order had disposed of three numbers of appeals. Against the said order passed by the Tribunal, the respondent herein had filed the Miscellaneous Application for rectification of mistake  was allowed by the Tribunal, by way of recalling the Final Order dated 14.07.2022.  Since, the Final Order in its entirety was recalled, Registry was confused about relisting of the matter for fresh hearing and accordingly, listed all the three appeals for hearing on 12.12.2024. However, on careful reading of both the Final Order dated 14.07.2022 and the Miscellaneous Order dated 25.07.2024, it was evident that appeals  have already been disposed of by the Tribunal, in rejecting the said appeals filed by Revenue.

Demanding Tax which has already been paid by Service Recipient would lead to Double Taxation: CESTAT Shri Ballar Singh VS Commissioner, Central GST & Central Excise, Lucknow CITATION: 2025 TAXSCAN (CESTAT) 117

The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that demanding tax which has already been paid by service recipient would lead to double taxation. The bench found  that the appellant assesee was under the bonafide belief that no service tax was payable as same is being paid by the service recipient UPRNN.

A single bench of P.K. Choudhary, Member (Judicial) observed that at the relevant time there were conflicting decisions of the Tribunal regarding payment of service tax by a sub-contractor or a sub-consultant and it is only when the Larger Bench decided the issue on May 23, 2019 that it was settled that a sub-contractor would have to discharge the service tax liability even if the main contractor had discharged the service tax liability.

Dept Empowered to Recover Escaped Customs Duty for Non-Compliance with Post-Importation Conditions in Exemption Notification: CESTAT M/s. Pentafour Solec Technologies Ltd. vs Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 118

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that the Customs Department has the authority to recover escaped duty when post-importation conditions of an exemption notification are not fulfilled.

The tribunal upheld the confiscation of goods under Section 125 of the Customs Act, explaining that the physical availability of goods is not necessary for imposing redemption fines. Penalties were deemed reasonable considering the company’s violations and the involvement of its officials. The appeal was dismissed.

Value of material supplied for providing Taxable Services cannot be included in Value of Taxable services: CESTAT M/s Vividh Landscape Consultants (P) Ltd. vs Commissioner of Central Excise & Service Tax CITATION: 2025 TAXSCAN (CESTAT) 115

The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the value of material supplied for providing taxable services cannot be included in the value of taxable services. The tribunal set aside the demand of service tax along with the penalties.

The said deduction of 70% was denied by the Commissioner and demand of service tax was confirmed on the assessee along with interest and penalty. The appeal preferred by the assessee was considered and decided by a three-member Special Bench of the Tribunal reported as Safety Retreading Company (P) Ltd. v. Commissioner of Central Excise, Salem, (2012) wherein coupled with the Notification No. 12/2003-S.T., dated 20-62003 a similar issue was considered by the Larger Bench of the Tribunal: “whether in a contract for retreading of tyres, service tax is leviable on the total amount charged for retreading including the value of the materials/goods that have been used and sold in the execution of the contract or exemption to material component therein can be granted”.

Difference in balance sheet and in  ST-3 returns during same period: CESTAT remands to Decide on Payment of Service Tax due to difference M/s Vividh Landscape Consultants (P) Ltd vs Commissioner of Central Excise & Service Tax CITATION: 2025 TAXSCAN (CESTAT) 115

The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the value of material supplied for providing taxable services cannot be included in the value of taxable services. The tribunal set aside the demand for service tax along with the penalties.

The Tribunal remanded the matter for ascertaining the factum of payment of service tax on account of the difference in the manner of the figures in the balance sheet which were higher than those in the ST-3 returns during the same period.

Duty Exemption certificate cannot be invalidated as delay occurred in applying before Ministry: CESTAT upholds Amendment of Bill of Entry u/s 149 of Cutoms Act Commissioner of Customs, Noida vs s Industrial Foams Pvt. Ltd CITATION: 2025 TAXSCAN (CESTAT) 116

In a recent case, the Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) upheld the amendment of the bill of entry under Section 149 of the Customs Act, 1962, and held that duty exemption certificates cannot be invalidated as delay occurred in applying before the concerned ministry. The bench found that the respondent had taken all the necessary steps to obtain the said certificate well in advance which was being delayed in the concerned ministry,  even the submission of that application and receipt thereof can be considered as a valid document.

Since Section 149 of the Act is sufficiently broad to address such exigencies, the denial of the modification for the reasons outlined in the appeal cannot be upheld, and as a result, the revenue’s appeal is without merit.

CENVAT Credit cannot be Denied for procedural lapses if substantial compliance is met: CESTAT Sets aside Reversal of Rs. 16.12 Lakhs National Engineering Industries Limited vs Commissioner, CGST And Central Excise CITATION: 2025 TAXSCAN (CESTAT) 119

The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held CENVAT credit cannot be denied for procedural lapses if substantial compliance is met and set aside the reversal of Rs. 16.12 lakhs against the appellant, National Engineering Industries Limited.

 The Tribunal after relying on several judgements, held that such procedural errors should not undermine a taxpayer’s rights, especially when there was no doubt about the actual receipt of services or the payment of taxes.

Rule 9(1)(e) applicable for Reverse Charge Mechanism: CESTAT sets aside Cenvat Credit denial of Rs. 32.95 lakh National Engineering Industries Limited VS Commissioner, CGST And Central Excise CITATION: 2025 TAXSCAN (CESTAT) 119

In a recent judgement, the New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held that Rule 9( 1 )( e ) of the Cenvat Credit Rules, ( CCR ), 2004 is applicable to Reverse Charge Mechanism ( RCM ) and set aside the denial of Cenvat credit amounting to Rs. 32.95 lakh against the appellant, National Engineering Industries Limited.

The CESTAT noted that Rule 9 ( 1 )( e ) of the Cenvat Credit Rules allows credit based on challans evidencing service tax payments under the Reverse Charge Mechanism. The bench noted that the department was wrong in applying Rule 9 ( 1 )( bb ) as this provision relates to supplementary invoices issued due to tax recoveries involving fraud or suppression.

Refund for Unutilized CENVAT Credit Rejected without Proper Notice: CESTAT Orders Re-Examination Citing Violation of Natural Justice M/s. Mylan Laboratories Limited vs Commissioner of GST & Central Excise CITATION: 2025 TAXSCAN (CESTAT) 121

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that refund claims cannot be dismissed without issuing a proper show-cause notice or allowing the appellant an opportunity to present alleged deficiencies.

The tribunal set aside the orders of the adjudicating and appellate authorities, remanding the matter back to the original authority for fresh adjudication. The appeal was allowed.

CESTAT remands Issue on Exclusions made for Determining ‘Export Turnover on the Services’ applying Formula A, Rules in favour of HSBC Electronic HSBC Electronic Data Processing vs Commissioner of Central Tax Rangareddy - GST CITATION: 2025 TAXSCAN (CESTAT) 125

The Hyderabad bench of the Customs, Excise And Service Tax Appellate Tribunal (CESTAT) in a recent ruling in favour of HSBC Electronic Data processing (India ) Ltd. remanded the  issue on Exclusions made for Determining ‘export turnover on the services’ applying Formula A as per notification. The order was remanded back to the Original Sanctioning Authority, who shall take into account the observations and the Order passed by the Tribunal vide Final Order dt.17.01.2024 and thereafter, make necessary corrections in their record.

While allowing the appeal by way of remand, the tribunal also made clear that as a consequence of this exercise, there will not be any additional payment of refund.

Service Recipient Liable for 100% Tax on Imports from Non-Taxable Territory: CESTAT quashes Demand, cites Recipient’s Paid Tax already M/s. UTStarcom Inc. vs Commissioner of Service Tax – Delhi IV CITATION: 2025 TAXSCAN (CESTAT) 120

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that service recipients are liable for 100% tax on services imported from a non-taxable territory under the Reverse Charge Mechanism (RCM). As the Service Recipient (Reliance) already paid the tax, the tribunal quashed the demand order.

The tribunal held that the demand against the appellant was invalid as service tax liability had already been discharged and the SCN was time-barred. The appeal was allowed and the demand was set aside. To Read the full text of the Order CLICK HERE

Teflon Coating, Mat Fixing and Accessory fitting before 01.07.2012 not liable to Service Tax: CESTAT AVG Motors Ltd VS Commissioner of Central Excise CITATION: 2025 TAXSCAN (CESTAT) 122

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Bangalore in a recent matter held that Teflon Coating, Mat Fixing and Accessory fitting done before 01.07.2012 may not be liable to Service Tax.

Concludingly, the Bench attested to the Appellant’s submissions that the Adjudicating Authority had not considered the submissions raised by the assessee and confirmed the demand prejudicially. The appeal was allowed in part and remanded to reconsider the demand of service tax after due consideration of the details furnished by the Appellant.

Proceedings must be initiated on ISD in allegation of wrong distribution of Cenvat credit by ISD: CESTAT rules in favour of Berger Paints M/s Berger Paints India Ltd VS Commissioner of Central Excise, Noida-II CITATION: 2025 TAXSCAN (CESTAT) 123

In a ruling in favour of Berger Paints India ltd, the Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that proceedings must be initiated on Input Service Distributer ( ISD ) in the allegation of wrong distribution of Cenvat credit by ISD.

It is settled law that in such cases of alleged wrong distribution of Cenvat credit by ISD, the proceeding should have been initiated at the end of ISD, it is not the case that the credit was wrongly availed by ISD. It is only alleged that the credit has been wrongly distributed to the appellant’s unit, if credit could not have been wrongly distributed to the appellant’s unit at Sikandrabad, the same would have been available to the unit of the ISD elsewhere.

Dept Denies CENVAT Credit u/r 4 of CCR: CESTAT Confirms Eligibility Citing Complete Details Available in Bills/Invoices u/r 9(2) Saraf Services Private Limited vs Commissioner of Service Tax CITATION: 2025 TAXSCAN (CESTAT) 128

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) confirmed the appellant’s eligibility for CENVAT Credit stating that complete details were available in bills/invoices as mandated under rule 9(2) of the CENVAT credit rules ( CCR ), 2004.

The tribunal verified the bills/ invoices and held that they contained details in terms of Rule 9(2) of CCR, 2004. Therefore, the tribunal held that there was no contravention of Rule 4(7) of CCR, 2004. The tribunal held that the appellant has rightly availed the CENVAT Credit. The appeal of the appellant was allowed.

Motor Vehicle Registration by Dealer not ‘Business Auxiliary Service’: CESTAT revokes Service Tax Levy AVG Motors Ltd. vs Commissioner of Central Excise CITATION: 2025 TAXSCAN (CESTAT) 122

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore, while hearing a Service Tax Appeal held that motor vehicle registration conducted by the automobile dealer is not a ‘Business Auxiliary Service’, vitiating any service tax levy on the same.

In light of such observations, the Customs, Excise & Service Tax Appellate Tribunal, Bangalore proceeded to allow the prayer in the present two-fold Appeal, holding that no service tax is payable for registration of the vehicle as held by the previous Adjudicating Authority.

Burden of Proof Lies on Customs Dept to prove Allegation of Country of Origin for ADD: CESTAT drops ADD Demand on Unmarked Pallets C.C.-Ahmedabad VS Vinayak Steel Impex CITATION: 2025 TAXSCAN (CESTAT) 126

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that the burden of proof lies on the Customs Department to establish allegations of the country of origin for imposing anti-dumping duty ( ADD ). The tribunal upheld the rejection of ADD demands on unmarked pallets of stainless-steel sheets.

The tribunal also clarified that the principle of “the one who asserts must prove” applied in such cases and the department could not sustain ADD on the unmarked pallets without concrete evidence. The tribunal upheld the Commissioner’s order and the department’s appeal was dismissed as devoid of merit.

Lack of Evidence and Section 11A(4) Misuse: CESTAT quashes ₹2.81 Cr Rule 6(3) Demand over Alleged Common Input Service Usage M/s Shree Radhey Radhey Ispat (P) Ltd. vs Commissioner of Central Excise & CGST CITATION: 2025 TAXSCAN (CESTAT) 132

The Allahabad bench of  Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) struck down a demand of ₹2.81 Crore against the appellant ruling that the show cause notice ( SCN ) and the order produced by the commissioner of Central Excise and CGST as it was made without evidence and legal merit.

The two-member bench consisting of P.K Choudhary (Judicial Member) and Sanjiv Srivastava (Technical Member) asserted that the absence of evidence to support allegations of suppression or intent to evade tax shows that there is a lack of legal merit in the case. The tribunal, therefore, set aside the commissioner’s order and reversed the penalties and interest.

No Additional Customs Duty on High Speed Diesel Importers under DEEC Scheme: CESTAT Flexi Tuff International Limited vs Commissioner of Customs, Kandla CITATION: 2025 TAXSCAN (CESTAT) 130

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench recently granted relief to a High Speed Diesel Importer, affirming that no additional customs duty may be levied if they are functioning under the Duty Entitlement Exemption Certificate (DEEC) scheme.

The Tribunal set aside the impugned order passed by the Commissioner of Customs – Kandla, and ruled in favor of Flexi Tuff, reaffirming that exemptions granted under Notification No. 43/2002-Cus shall include additional customs duties levied by Section 116 of the Finance Act, 1999.

Penalty u/s 114AA imposed alleging Aircraft Imported for Directors’ private use: CESTAT deletes Penalty finding No False Declaration Commissioner of Customs VS Shri Sarang Wadhawan CITATION: 2025 TAXSCAN (CESTAT) 131

In a recent judgement, the Principal Bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT )  in New Delhi deleted the penalty imposed on the assessee under Section 114AA of the Customs Act 1962.

The tax department, aggrieved by the order of the Commissioner of Customs (Preventive), proceeded with an appeal to the CESTAT, where the tribunal observed that as the assessee had not filed any false undertaking and that the Commissioner of Customs (Preventive) was correct to refrain from imposing penalty under section 114AA of the Customs Act.

Failure to File Transshipment Bill Deemed a Technical Lapse: CESTAT overturns Duty Demand and Penalties as unjustified Anshu Sahay vs Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 133

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that failure to file a transshipment bill was deemed a technical lapse and does not justify imposing duty demands or penalties.

The tribunal further observed that the goods were used for salvaging a vessel in distress, and their classification as “stores” was consistent with the legislative intent of the Customs Act. The tribunal held that imposing duty demands and penalties in this matter lacked merit and legal basis. The tribunal set aside the orders imposing duties and penalties. The appeal was allowed.

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