CESTAT Weekly Round-up [Apr 01 to Apr 15, 2025]

This weekly round-up analytically summarizes the key stories related to the Customs Excise and Service Tax Appellate Tribunal (CESTAT) reported at Taxscan from 01 April 2025 to   April 15 2025.

Excise Duty not leviable by Student Almanac and Teacher Planner: CESTAT

M/s Sona Printers Pvt. Ltd. vs The Commissioner of Central Tax CITATION: 2025 TAXSCAN (CESTAT) 366

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that no excise duty is required for teacher planners or student almanacs. The assessee’s argument that the Student Almanac is a product of the printing industry because it is only used by students at a specific school is rejected by the two-member bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member).

Sona Printers Pvt. Ltd., the appellant/assessee, printed these items and removed them at no duty, classified them under Chapter 49 of the Central Excise Tariff Act, 1985 Schedule, which covers printed books, newspapers, photographs, and other printing-related products.  According to the Department, these products are subject to duty at a rate of 12.5% ad valorem under Chapter 48 as “Articles of Paper or of Paper Board.”  Additionally, the department claims that the assessee failed to pay duty, which made the extended term of limitation applicable. As a result, the assessee’s director was subject to a penalty under Rule 26 of the Central Excise Rules, 2002.

The Tribunal agreed with the finding of the Commissioner (Appeals) in the impugned order that there was no evidence of intention to evade payment of duty and suppression of facts because it was possible for the assessee to have entertained the belief that the Student Almanac and teacher planner were not exigible to duty and, therefore, to have NOT declared them in their excise returns.

“Pendants” Labeled as Jewelry Not Exempted from Excise Duty as it Cannot be Distinguished on Purity of Gold: CESTAT

M/S. P.P. JEWELLERS PVT. LTD. vs PRINCIPAL COMMISSIONER CITATION: 2025 TAXSCAN (CESTAT) 367

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that pendants” labeled as jewelry are not exempted from excise duty as it cannot be distinguished on purity of gold.

Articles of jewelry or both falling under Heading 7113 of the Tariff Act are defined as “articles” in Rule 3(f) of the Articles of Jewellery (Collection of Duty) Rules, 2016; the term “articles of jewelry” will have the meaning assigned to it under Chapter Note 9 of Chapter 71 of the Tariff Act.

CESTAT Grants Interest on Pre-Deposit Refund Under Pre-Amended Provisions of Excise Act

M/s Amkap Marketing Pvt. Ltd vs Commissioner of Central Excise & CGST CITATION: 2025 TAXSCAN (CESTAT) 368

The Allahabad Bench of Customs,Excise and Service Tax Appellate Tribunal(CESTAT) granted interest on a pre-deposit refund under the pre-amended provisions of the Central Excise Act, 1944.

The tribunal reviewed the Parle Agro Pvt. Ltd. case, which had ruled that Section 11B did not apply to revenue deposits, and concluded that an interest rate of 12% per annum was fair for revenue deposit refunds. In the Continental Engines Pvt. Ltd. case, the tribunal ruled that the appellant was entitled to a full refund with interest, following the Supreme Court’s Sandvik Asia Ltd. decision. It found an adjustment of Rs. 38,79,769 to be unjustified and ordered interest at 12%.

Win for Kalyan Jewellers: CESTAT rules Non-Studded Silver Articles Classifiable as ‘Articles of Jewellery’ with Nil Duty

Kalyan Jewellers India Pvt Ltd vs Commissioner of Central Tax CITATION: 2025 TAXSCAN (CESTAT) 369

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that non-studded silver articles manufactured by Kalyan Jewellers are classifiable under ‘Articles of Jewellery’ (CETH 7113) and are eligible for a nil rate of excise duty, provided the exemption conditions are satisfied.

The appellant’s counsel argued that the classification dispute was interpretational and not driven by any intent to evade duty, and all transactions were properly accounted for in audited records. The appellant’s counsel argued that it had sold only non-studded silver jewellery eligible for nil duty under Notification No. 12/2012-CE (as amended), and had duly reversed proportionate CENVAT credit after the introduction of stricter conditions in Notification No. 6/2017-CE.

CESTAT Lacks Jurisdiction on  Appeal Over Goods Imported or Exported as Domestic Baggage as per S. 129A(1) of Customs Act

Noorul Ayin vs Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 375

Recently, the Chennai Customs, Excise and Service Tax Appellate Tribunal (CESTAT) clarified that there cannot be a presumption that the baggage that is carried by a person arriving from a domestic airport in India during the aircraft’s domestic run is covered by the Customs Act, 1962, to which the Baggage Rules, 2016 can automatically apply.

According to the two-member bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member), imported consumer goods are freely accessible within the nation and cannot be assumed to be illegally imported or smuggled if they are discovered on the person or in the luggage of people arriving at domestic airports while the flight is operating domestically.

CESTAT Bars Recovery u/s 73 Without Prior Revision of Refund Orders u/s 84

Commissioner of Service Tax, Delhi vs M/s Colt Technologies Services India Pvt. Ltd. CITATION: 2025 TAXSCAN (CESTAT) 374

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has dismissed an appeal filed by the Commissioner of Service Tax, Delhi, and held that recovery proceedings under Section 73 of the Finance Act, 1994, cannot be initiated without first revising the original refund orders under Section 84 of the same Act.

The Tribunal referred to several decisions including Topcem India v. Union of India and RNB Carbides & Ferro Alloys Pvt. Ltd., and also relied on the judgment of the Delhi High Court in BT (India) Private Limited, reinforcing that quasi-judicial refund orders cannot be revisited or set aside through collateral proceedings. The Bench also stated that the alleged absence of nexus between input and output services should be determined in the course of credit eligibility proceedings, not during refund grant.

No Penalty for Indian Oil: CESTAT Finds No Mens Rea in Duty Payment Case

Indian Oil Corporation Ltd vs Commissioner of Central Goods & Service Tax CITATION: 2025 TAXSCAN (CESTAT) 372

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has set aside the penalty imposed on Indian Oil Corporation Ltd ( IOCL ), Panipat Refinery, in a Central Excise dispute involving the clearance of Superior Kerosene Oil ( SKO ) during the period February 2009 to March 2012. CESTAT held that there was no intention to evade duty on part of the public sector undertaking and thus, the imposition of penalty under Section 11AC of the Central Excise Act, 1944 was not justified.

CESTAT, after considering the arguments and material on record, observed that there was no evidence of deliberate suppression or intention to evade duty by the appellant. The Bench noted that similar views had been taken in earlier decisions, including in the appellant’s own case, where it was held that disputes involving classification or interpretation do not warrant penalty.

CESTAT Rules Food Sales at PVR Cinemas Counters Not Taxable as Services, Except in Gold Class Category

M/s. PVR Limited vs Principal Commissioner of Goods & Service Tax & Central Excise CITATION: 2025 TAXSCAN (CESTAT) 376

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that no service tax is leviable on food and beverages sold at cinema counters within PVR multiplexes, except in the Gold Class category where table service is provided.

The tribunal held that such services attract service tax, but regular counters serving pre-packaged or reheated food for takeaway within the cinema premises do not involve any service element and are not open to the general public but only to ticket-holders, thereby classifying the activity as the sale of goods. The tribunal allowed the appeal.

CESTAT Rules in Favor of Maruti Suzuki: Allows Cenvat Credit on Catering for Business Events, Denies for Factory Workers Post-2011 Amendment

M/s Maruti Suzuki India Limited vs Principal Commissioner of CGST CITATION: 2025 TAXSCAN (CESTAT) 373

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has partly allowed appeals filed by Maruti Suzuki concerning the admissibility of Cenvat credit on outdoor catering services. The Tribunal upheld the company’s eligibility to claim Cenvat credit on catering expenses related to business events such as Auto Expos and product launches. However, it denied the benefit for outdoor catering services availed for employees or factory workers after the 2011 amendment to Rule 2(l) of the Cenvat Credit Rules.

The Tribunal also took note of the findings in the Toyota Kirloskar Motors Pvt. Ltd. case, upheld by the Supreme Court, which held that outdoor catering services primarily for personal use are not eligible for credit. However, it drew a distinction for business events, recognizing that catering at exhibitions and launches supports sales promotion and business activity.

CESTAT Allows CENVAT Credit for SEZ Developer Supplies, Citing High Court Rulings & Export Treatment

M/s Keselec Schreder Pvt Ltd vs Commissioner of Central Goods & Service CITATION: 2025 TAXSCAN (CESTAT) 377

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chandigarh Bench, has allowed the appeal filed by the appellant, holding that CENVAT credit is not required to be reversed in respect of goods supplied to Special Economic Zone ( SEZ ) developers. The Tribunal found that such supplies are to be treated as exports and thus fall outside the purview of the reversal provisions under Rule 6(6)(i) of the CENVAT Credit Rules, 2004.

After hearing both sides, the Tribunal observed that there was no stay on the cited High Court rulings and found merit in the appellant’s arguments. It held that the law, as interpreted by the Kerala and Karnataka High Courts, should be followed and allowed the appeal with consequential relief to the appellant.

CESTAT Sets aside Penalty imposed on IOCL,  Excise duty Evasion cannot be Alleged against a PSU

Indian Oil Corporation Ltd vs Commissioner of Central Goods & Service Tax CITATION: 2025 TAXSCAN (CESTAT) 379

According to a ruling by the Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Indian Oil Corporation Ltd. (IOCL) is a Public Sector Undertaking (PSU) and cannot be accused of having the purpose to evade paying taxes.

The two member bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that nothing has been brought on record to indicate any mens rea on the part of the appellants as the applicable duty as well as interest have been paid before issuance of the show cause notice. It has been held in a number of cases under identical circumstances, that penalty cannot be imposed.

CESTAT Favors Berger Paints: Ethyl Benzene Recognized as Xylene Isomer in Customs Classification Dispute

M/s.Berger Paints India Limited vs Commissioner of Customs (Port) CITATION: 2025 TAXSCAN (CESTAT) 378

In a significant ruling made by the Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), the tribunal held that Ethyl Benzene qualifies as a Xylene isomer for the purpose of classification under CTH 29024400.

The tribunal accepted the appellant’s argument that Ethylbenzene is a Xylene isomer, sharing the same molecular formula (C₈H₁₀). Including it, the isomer content exceeded 95%, meeting the HSN criteria for CTH 29024400. Hence, the original classification was upheld.

Crushing Chillies into Powder Not ‘Manufacture’, Exempt from Excise Duty: CESTAT

M/s. Sara Spices vs Commissioner of Central Excise and Customs CITATION: 2025 TAXSCAN (CESTAT) 382

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that crushing chillies into powder does not amount to “manufacture” under excise law and is exempt from excise duty.

The tribunal ruled that clearances of such spice powders could not be included in the turnover for the purpose of SSI exemption under Notification No. 8/2003-CE. The tribunal allowed the appeals and extended consequential relief to the appellant under the law.

Setback for Infosys: CESTAT Rules Updates and Upgrades Not Goods, Service Tax Payable on Full ATS Invoice Value

Infosys Technologies Limited vs Commissioner of Service Tax CITATION: 2025 TAXSCAN (CESTAT) 381

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that Infosys Technologies Ltd. is liable to pay service tax on the full value of its Annual Technical Support (ATS) invoices, ruling that software updates and upgrades provided under ATS do not qualify as “goods”.

The two-member bench comprising Dr. D.M. Misra (Judicial Member) and R. Bhagya Devi (Technical Member) examined the ATS agreement and found that the nature of updates and upgrades provided did not support the claim of sale or transfer of goods. The bench rejected the appellant’s claim for abatement under Notification No. 12/2003-ST, finding no evidence of a separate value for goods as required under the notification.

Win for BSNL: CESTAT Rules Materials used in Mobile Tower Installation Qualify as ‘Inputs’ u/r 2(k) of Cenvat Credit Rules

M/s. Bharat Sanchar Nigam Limited vs The Commissioner of Service Tax CITATION: 2025 TAXSCAN (CESTAT) 384

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that materials used in the installation of mobile towers and Base Transceiver Stations (BTS) by Bharat Sanchar Nigam Limited (BSNL) qualify as ‘inputs’ under Rule 2(k) of the CENVAT Credit Rules, 2004.

The Apex Court had clarified that telecom towers and prefabricated buildings, being movable and essential for the delivery of telecom services, meet the definition of inputs under Rule 2(k) of the CENVAT Credit Rules. The Tribunal held that BSNL was entitled to avail the CENVAT credit on the said items. The appeal was allowed with consequential relief as per law.

Service Tax Refund Denied Over Address Mismatch: CESTAT Quashes Order, Finds Change Was Duly Informed to Dept

M/s. Cipsa-Tec India Pvt. Ltd vs The Commissioner of Central CITATION:   2025 TAXSCAN (CESTAT) 380

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that a service tax refund claim cannot be denied merely on the ground of an address mismatch when the change of address has already been duly informed to the department.

The tribunal observed that the appellant had indeed informed the department about the change of address well in advance and that there was no dispute regarding the eligibility or fulfillment of the conditions under the refund notification. The tribunal ruled that the rejection of the refund on such a minor procedural ground was unwarranted. The tribunal set aside the order of the Commissioner (Appeals) and granted the refund to the appellant with consequential relief as per law.

No Reverse Charge Liability on Tour Operator When Taxi Operators Have Paid Service Tax: CESTAT

M/s. Incredible Indian Moments P. Ltd vs Commissioner of CGST and Central Excise CITATION: 2025 TAXSCAN (CESTAT) 383

The New Delhi Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that a tour operator is not liable to pay service tax under the Reverse Charge Mechanism (RCM) when the taxi operators providing input services have already charged and paid service tax on their invoices.

The two-member bench comprising Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that the tribunal had already adjudicated the same issue in the appellant’s favor. The tribunal ruled that the services of taxi operators were input services for the appellant’s tour operations, and the invoices clearly showed that the taxi operators had paid service tax.

CESTAT rules in Favor of Honda: No Service Tax on Excess Freight Charges Collected from Dealers

M/s. Honda Motorcycle and Scooter India Pvt. Ltd. vs Commissioner of Service Tax CITATION: 2025 TAXSCAN (CESTAT) 385
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled in favor of Honda Motorcycle and Scooter India Pvt. Ltd., quashing a service tax demand of over Rs. 20 crore on excess freight and insurance charges collected from its dealers. The tribunal held that these charges were part of the transaction value on which excise duty had already been paid, making them ineligible for additional service tax.

The ruling reinforces the principle that excise duty and service tax cannot be levied on the same transaction, preventing dual taxation. The tribunal’s decision aligns with earlier judgments, including Tiger Logistics (India) Limited, where profit margins on freight were held to be business income, not taxable services.

ONGC wins Service Tax Case: CESTAT rules Liquidated Damages not Taxable u/s 66E(e)

M/s. Oil & Natural Gas Corporation Ltd vs Commissioner of Central Goods CITATION: 2025 TAXSCAN (CESTAT) 386

In a significant ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, set aside a service tax demand raised against Oil & Natural Gas Corporation Ltd. (ONGC), holding that amounts collected as liquidated damages and other related penalties do not attract service tax under Section 66E(e) of the Finance Act, 1994.

The bench noted that penal clauses in contracts are designed to deter default and ensure adherence to terms, and not to generate revenue through taxability. It further held that in the absence of an independent agreement to tolerate or refrain from an act, such compensatory recoveries cannot be treated as services for the purpose of taxation.

Exporters Lose Appeal as CESTAT bars Refund for Service Tax Paid u/s 68(2)

Amrut Cold Storage Pvt Limited VS Commissioner of Central Excise & Service Tax, Bhavnagar CITATION:   2025 TAXSCAN (CESTAT) 387

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad, has dismissed appeals filed by Amrut Cold Storage Pvt. Ltd., Silver Sea Food, and Silver Star Exports, all based in Porbandar, Gujarat, in a case involving refund claims of service tax paid on Goods Transport Agency (GTA) services used for the export of goods. The appeals were against a common order dated 25.04.2017 passed by the Commissioner (Appeals), Rajkot, which upheld the orders of the adjudicating authority dated 15.03.2016 confirming the recovery of erroneously sanctioned refunds.

Refuting these arguments, the Department, represented by Shri P. Ganesan, maintained that as per the plain reading of Clause 3(b) of Notification No. 41/2012-ST, persons liable to pay service tax under Section 68 of the Finance Act, 1994, could not claim rebate under this notification. The Revenue relied on the decision in M/s. Nahar Industrial Enterprises Ltd. v. CCE & ST, Chandigarh [2015 (38) STR 256 (Tri-Delhi)], which held that where the exporter is the service recipient and liable to pay tax under Section 68(2), refund cannot be granted.

Microsoft wins Service Tax Interest Case: CESTAT cites Automatic Interest Provision u/s 11BB

M/s Microsoft Corporation Private Limited vs Commissioner of Central Goods and Service Tax, Gurugram CITATION: 2025 TAXSCAN (CESTAT) 388

In a significant relief to Microsoft, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh has allowed the company’s claim for interest under Section 11BB of the Central Excise Act, 1944 on delayed service tax refund. The Tribunal passed the final order holding that the delay in sanctioning the refund was attributable solely to the Revenue and not to the appellant.

After considering the submissions, the Bench comprising S. S. Garg, Member (Judicial), and P. Anjani Kumar, Member (Technical), ruled in favor of the appellant. The Tribunal found no evidence from the Revenue to substantiate its claim that the delay was due to non-cooperation by the appellant. It also noted the Department’s failure to act in accordance with CBEC Circular No. 828/05/2006-CE and held that the delay was entirely on the part of the Department.

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