CESTAT Weekly Round-Up [Feb 23 to Feb 22, 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 23 February 2025 to   March 01 2025.

CESTAT upholds Penalty Imposed u/s 76 of Finance Act on TASMAC in absence of Payment of Service Tax

M/s. Tamil Nadu State Marketing Corporation Ltd. vs Commissioner of GST & Central Excise CITATION:   2025 TAXSCAN (CESTAT) 242

The Chennai  bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) upheld the  penalty imposed under section 76 of Finance Act, 1994 on Tamil Nadu State Marketing Corporation Ltd. (TASMAC) in the absence of Payment of  Service Tax.  It was observed that w.e.f. 1-7-2012, all services except those excluded by Section 65B (44), in particular, transfer of title in goods, deemed sale, transaction in money etc. will be liable to service tax or those falling in the negative list of services under Section 66D ibid or those which were specifically exempted otherwise, would be exigible to service tax levy.

The bench observed that the imposition of penalty under section 76 of the Finance Act, 1994 is statutory in nature and becomes payable when there is a failure to pay service tax in the normal course. It was found that the Tribunal in the appellants own case concluded that the entire dispute was one of interpretation and subsequently dropped penalties under section 77 & 78 of the Finance Act 1994. Relying that the CESTAT dropped  all other penalties i.e. other than that of section 76.

CESTAT Dismisses Customs Appeal on Approval of Resolution Plan by NCLT

M/s.Neoteric Infomatique Ltd. vs Commissioner of Customs (Air) CITATION:   2025 TAXSCAN (CESTAT) 243

The Chennai bench of the Customs, Excise And Service Tax Appellate Tribunal (CESTAT) disposed of the Customs appeal as it was abated on approval of resolution plan by National Company Law Tribunal (NCLT).

Since the appellant-assessee file dappeal praying for the closure of appeal in view of their resolution plan being accepted by the NCLT, the two member bench of P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) disposed the appeal as it  stand abated.

Service of Drilling Rig for Exploration Activities of Cauvery Block in India not falls under ‘Consulting Engineers: CESTAT

M/s. Nikoresources (NELPV) Ltd. vs Commissioner of Customs CITATION:   2025 TAXSCAN (CESTAT) 244

In a recent case, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) gas held that service of  drilling rig for exploration activities of Cauvery Block in India does not fall under  ‘consulting engineers and the bench set aside the demand of service tax.

While the agreement involves a host of services, a two member bench of Shri P. Dinesha, Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) observed thatthe dominant intention of the contract is for providing operational services i.e. providing Drilling Rig along with personnel and related services to NIKO for its exploration activities of Cauvery Block in India and not for the services of ‘consulting engineers’. This being so revenue has failed to prove its allegation that the classification of the service is that of ‘consulting engineer’ service as per section 65(31) of the Finance Act, 1994.

Date of Cenvat Credit Refund Claim is to be taken as Date on which Original Refund Claim was Acknowledged by Excise Dept: CESTAT

Vishay Transducers Pvt Ltd vs The Commissioner of CGST & Central Excise CITATION:   2025 TAXSCAN (CESTAT) 245

In a recent case, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the date of the cenvat credit refund claim under Cenvat Credit Rules (CCR), 2016 is to be taken as the date on which the original refund claim was acknowledged as received by the Excise Department.

On paragraph 2.4 of Chapter IX of the Central Excise Manual supplementary instructions which in fact states inter-alia that submission of refund claim without supporting documents will not be allowed.  Indisputably it is an admitted fact that the original refund claim filed was returned to the appellant. When the prevailing instructions itself according to the Appellate authority requires that submission of refund claims without supporting documents is not to be allowed, the factum of its return presupposes its filing with supporting documents, albeit later found to be of incomplete nature.

CESTAT Sets aside Demand of Service Tax under “Manpower Recruitment Supply Agency Service” in absence of Supply of Any Labourers

M/s. Arunachalam vs Commissioner of GST and Central Excise CITATION:   2025 TAXSCAN (CESTAT) 246

The Chennai bench of the Customs, Excise And Service Tax Appellate Tribunal (CESTAT) set aside the demand of service tax under “Manpower Recruitment Supply Agency Service” in the absence of supply of any labourers. The bench found that the department failed to prove that there was a supply of manpower.

The Tribunal found that there is a reference to the said letter in the OIO at para 14.4 but unfortunately, the Adjudicating Authority has not given finding on this factual aspect. Hence, it is to be accepted that the Appellant undertook various activities like grinding, RT upgradation, gouging, machining, etc., which were claimed to be used as components of the boilers used in the thermal/nuclear power plants and therefore, the said activities undertook by the appellant would amount to “manufacture” as claimed by the Appellant. By this, therefore, the authorities below have erred in ignoring this specific plea which otherwise would have entitled the appellant to the benefit of Notification No. 8/2005 supra.

Rule 8 of Central Excise Valuation Rules Applicable only when Manufactured Goods are Captively Consumed by Manufacturer: CESTAT

M/s Perfect Mechanical Industries vs Commissioner of Central Goods and Service Tax CITATION:   2025 TAXSCAN (CESTAT) 247

The Chandigarh Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) recently clarified that Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, applies only when manufactured goods are captively consumed by the manufacturer themselves or another manufacturer on their behalf.

The two-member Bench of Judicial Member S.S. Garg and Technical Member P. Anjani Kumar observed that in such a scenario, CENVAT cannot be imposed on a third-party fabricator when the chassis is duty-paid and the final sale occurs after the vehicle is returned to the manufacturer.

CESTAT set aside the impugned order while referencing a prior judgment of the Principal Bench in a similar matter filed by the same Appellant while affirming that excise duty is payable only on the value added by the body builder, not on the entire vehicle.

Failure to File Application within time for Continuation of Appeal even after Death of Proprietor: CESTAT Dismisses Appeal

M/s.Sambathe Carriers vs The Commissioner of GST & Central Excise CITATION:   2025 TAXSCAN (CESTAT) 241

The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) dismissed the appeal as the asseessee failed to file application for continuation of appeal before the tribunal even after death of the proprietor. The court found that no request has been made for condoning this delay, rather there is no mention of the delay at all.

A two member bench of P. Dinesha, Member (Judicial) and Vasa Seshagiri Rao, Member (Technical) viewed that Rule 22 of the CESTAT (Procedure) Rules, 1982 requires that such an application be made within a period of 60 days of the occurrence of the event, which in the present case is the death of the proprietor. The present purported application has been filed more than three years after the death of the proprietor. Even if the date of granting GST Registration to the wife of the appellant is considered, it is still a case of inordinate delay. It is true that the second proviso to Rule 22 ibid confers the power upon us to  condone a delay in the filing of the application, for sufficient cause.

Orders-In-Original to be Posted at Conspicuous Part of Factory u/s 37(1) Excise Act before Posting on Dept. Notice Board: CESTAT

Patel Steels vs Commissioner of C.E. & S.T. CITATION:   2025 TAXSCAN (CESTAT) 248

The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has ruled that an Order-in-Original under the Central Excise Act, 1944 must first be affixed at a conspicuous part of the factory before it can be posted on the notice board of the department.

Emphasizing that service of an Order-in-Original must strictly adhere to the prescribed order – first through registered post, then to be affixed at the factory, and only upon the failure of these steps shall the same be posted on the departmental notice board.

No CENVAT Levy on Third Party for Mounting Duty-Paid Chassis on Vehicles later Returned to Manufacturer for further Sale: CESTAT

M/s Perfect Mechanical Industries vs Commissioner of Central Goods and Service Tax CITATION:   2025 TAXSCAN (CESTAT) 247

The Chandigarh Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) recently ruled that a third-party vehicle body modifier is not liable for Central Value Added Tax (CENVAT) in the process of mounting duty-paid chassis on vehicles that are later returned back to the manufacturer for further sale.

The two-member Bench constituted by Judicial Member S.S. Garg and Technical Member P. Anjani Kumar upheld the contentions raised by the Appellant, holding that CENVAT cannot be imposed on a third-party fabricator when duty has already been paid on the chassis and the final sale occurs after the vehicle is returned to the manufacturer.

CESTAT Sets Aside Order for Failure to Examine Unjust Enrichment Aspect in LNG Import Duty Dispute

M/s Ratnagiri Gas & Power Pvt. Ltd vs Commissioner of Customs CITATION:   2025 TAXSCAN (CESTAT) 249

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, set aside an order for failure to examine the aspect of unjust enrichment in a dispute related to liquefied natural gas (LNG) import duty. The case arose from an appeal filed by Ratnagiri Gas & Power Pvt. Ltd. (RGPPL) against an order dated 19.08.2014 issued by the Commissioner (Appeals), Central Excise & Customs, Goa.

CESTAT reviewed the case and noted that the authorities had failed to examine the unjust enrichment aspect thoroughly. The tribunal observed that RGPPL had submitted financial records, Chartered Accountant certificates, and ledger accounts to substantiate its claim that the duty burden had not been passed on. It found merit in RGPPL’s argument that in cases of provisional assessment where the entire quantity is not discharged, unjust enrichment should not apply. CESTAT referred to previous decisions in Petronet LNG Ltd. and Hazira LNG Pvt. Ltd., supporting the contention that duty on un-imported goods should be refunded.

CESTAT Rejects PFCL’s ₹2 Crore Refund Claim on Employee Secondment to Subsidiary, Observes Service Tax Collection from PFFCL

Power Finance Corporation Limited vs Commissioner of Central Excise and Service Tax-LTU Delhi CITATION:   2025 TAXSCAN (CESTAT) 252

The Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) situated in New Delhi recently dismissed an appeal filed by Power Finance Corporation Limited (PFCL) challenging the rejection of their refund claim on service tax of ₹2,49,16,169 paid by virtue of secondment of employees to their subsidiary PFC Consulting Limited (PFFCL).

Further considering that PFFCL exercised operational control over the seconded employees the Bench concluded that there was manpower supply service implicit in the transfer of the appellant’s employees to PFFCL. Therefore, CESTAT upheld the impugned order passed by the Commissioner (Appeals) and affirmed the rightful levy of service tax on PFCL, vitiating their claims of refund of the same.

Tribunal Not Competent to Remand Matter Back to Authority other than one which passed Order : CESTAT

Principal Commissioner of Customs (Preventive) vs Blue Ribbon Emporium CITATION:   2025 TAXSCAN (CESTAT) 254

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the tribunal lacks the authority to change the show cause notice or return the case to the original authority.

According to the CESTAT, the Tribunal’s jurisdictional structure allows it to either confirm, amend, or revoke a decision or order in an appeal or return the case to the original entity that made the decision, with or without guidance.       The tribunal determined that the appeal was unsuccessful because the requested remedy was outside the purview of the authority granted to it under section 129B of the Customs Act of 1962.

The two member bench of C J Mathew (Technical Member) and Ajay Sharma (Judicial Member) while dismissing the customs department’s appeal held that the appeal does not succeed as the relief sought therein is beyond the scope of the jurisdiction assigned to the Tribunal in section 129B of Customs Act, 1962.

No Service Tax on Installation Charges on Machinery Imported under EPCG Scheme: CESTAT

Powerband Industries Pvt Ltd vs C.C.E. & S.T.-Daman CITATION:   2025 TAXSCAN (CESTAT) 251

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) notably ruled that no service tax can be levied under the categories of installation and commissioning charges for machinery imported under the Export Promotion Capital Goods (EPCG) Scheme.

Averring that the export obligation under EPCG Scheme is linked to total value declared during import, CESTAT held that the Authorities had priorly accepted the value declared by the Appellant as assessable value, inclusive of erection and commissioning.

In light of all the observations made, the Bench set aside the demand of service tax along with the impugned order passed by the Commissioner (Appeals).

Relief to Hindustan Coca Cola , CCR Rule 3(1) Obligation Cannot Be Transferred to Credit Recipient: CESTAT

Hindustan Coca-Cola Beverages Pvt Ltd vs Commissioner of CGST & Customs CITATION: 2025 TAXSCAN (CESTAT) 255

The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled in favour of Hindustan Coca-Cola, stating that the beneficiary of credit under rule 7 of the CENVAT Credit Rules, 2004 cannot be obligated under rule 3(1) of the same rules.

The department said that the appellant in this case was properly invoked under rule 14 of the CENVAT Credit Rules, 2004 because the procedures had been started because the appellant had misused credit.  According to him, the “input service distributor (ISD)” system is just a transit and does not impose any requirement that the distributor be evaluated for compliance with the definition of “input service” as stated in rule 2(l) of the CENVAT Credit Rules, 2004.

Wrong Availment of Exemption Notification Does Not Prove Intention was to Evade Payment of Central Excise Duty: CESTAT

M/s. Aglowmed Ltd vs Commissioner Central Goods and Service Tax CITATION:   2025 TAXSCAN (CESTAT) 256

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Bench in New Delhi has ruled that merely using an exemption notification incorrectly does not imply that the use was made to avoid paying central excise duty.

While allowing the appeal, the Tribunal held that “Mere wrong availment of an Exemption Notification would not lead to a conclusion that it was with an intent to evade payment of central excise duty unless the department is able to not only allege but substantiate that the said suppression was deliberate with an intent to evade payment of central excise duty.”

Leasing of Scaffolding Equipment liable to VAT as “Deemed Sale”, no Transfer of Ownership: CESTAT quashes Service Tax Demand

Standard Belex India Pvt Ltd vs Commissioner of C.E. & S.T CITATION:   2025 TAXSCAN (CESTAT) 250

In a landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Bench at Ahmedabad has quashed a hefty service tax demand imposed. The tribunal held that leasing of scaffolding equipment, while not involving a transfer of ownership, constitutes a “deemed sale” for VAT purposes due to the transfer of the right to use, possession, and effective control to the lessee.

Presiding over the matter, Judicial Member Ramesh Nair and Technical Member C L Mahar examined the contractual clauses in detail. The tribunal observed that the agreements provided for the lessee’s exclusive right to use, possession, and control of the equipment during the lease term, clearly satisfying the criteria for a deemed sale under Article 366(29A)(d) of the Constitution.

CESTAT Allows CENVAT Credit on ‘Catch Covers’ Used in Physician Samples

Softsule Pvt. Ltd vs Commissioner of Central Excise, Mumbai-III CITATION:   2025 TAXSCAN (CESTAT) 257

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Mumbai Bench has ruled in favor of the appellant by allowing CENVAT credit on ‘catch covers’ used in physician samples. The tribunal set aside the order of the Commissioner of Central Excise ( Appeals ), Mumbai-III, which had earlier upheld the denial of CENVAT credit.

The tribunal also observed that the same issue had been previously decided in favor of the assessee for different periods. In Final Order No. A/88078/17/SMB dated 16.06.2017, the tribunal had ruled that there was no legal requirement to include packing material costs in the final product’s value for availing CENVAT credit. Similarly, in Final Order the tribunal reaffirmed this view. Since the current dispute pertains to January 2012 to September 2012, the tribunal maintained consistency with its previous rulings.

Appeal Against Suspension of CHA License Dismissed as Infructuous by CESTAT

M/s.Shri Krishna Logistics Solutions vs The Commissioner of Customs CITATION:   2025 TAXSCAN (CESTAT) 258

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in Chennai has dismissed an appeal by M/s. Shri Krishna Logistics Solutions concerning the suspension of its Customs House Agent (CHA) license. The appeal challenged the Order-in-Original No. 40737/2015, dated August 13, 2015, issued by the Commissioner of Customs, Chennai VIII Commissionerate, which continued the suspension of the CHA license.

During the hearing on December 12, 2024, Advocate S. Murugappan, representing M/s. Shri Krishna Logistics Solutions, informed the tribunal that a subsequent Order-in-Original No. 48262/2016, dated July 8, 2016, had been issued. In this order, the Commissioner did not revoke the CHA license but imposed a penalty of Rs.50,000 on the appellant. Additionally, the Revenue has appealed this penalty before the CESTAT in Appeal No. C/42048/2016, which is currently pending. Given these developments, Advocate Murugappan argued that the original appeal regarding the suspension had become infructuous.

Export Duty Not Payable on Indian Refractory Mortar: CESTAT

Commissioner of Customs (Port) vs M/s Alliance International CITATION:   2025 TAXSCAN (CESTAT) 253

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no export duty payable on Indian Refractory Mortar.

The export product, according to the tribunal, is not really utilized in the metallurgical sector for the extraction of Section XV metals (chromium is covered in Chapter 81).  It will go to M/s ITACA Spain, which manufactures ceramic additives, frits, glazes, pigments, and inks.  It is not common practice in the metallurgical sector to combine chromite with bentonite and magnesite.  Based on the HSN explanatory notes and chapter note 2 of chapter 26, it is clear that the exported product does not come under category 2610.

CESTAT Kolkata Rules Packaging Services as Manufacturing, Exempts from Service Tax

M/s Emami Limited vs Commissioner of CGST & Central Excise CITATION:   2025 TAXSCAN (CESTAT) 260

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Kolkata has ruled that the activity of packaging bulk goods into retail packs qualifies as “manufacture” under the Central Excise Act, 1944, and is not liable for service tax. The tribunal held that such job work is covered under the negative list of services under Section 66D(f) of the Finance Act, 1994, thereby exempting it from service tax liability. The tribunal set aside the tax demand raised by the Principal Commissioner, CGST & Central Excise, Guwahati, and ruled in favor of the appellants.

The Revenue had invoked the extended limitation period to justify the tax demand, arguing that Emami Limited and Pradip Das had suppressed material facts. The tribunal rejected this argument, stating that the appellants had disclosed their activities and agreements to the tax authorities, and there was no deliberate misrepresentation. The tribunal cited the Supreme Court ruling in International Merchandising Co. LLC v. CST, New Delhi (2022), which held that extended limitation cannot be applied in cases involving interpretation of tax laws.

Unjustified Procedural Delays by Authorities: CESTAT sets aside Customs Broker License Revocation Order

M Dharamdas & Co vs Commissioner of Customs (General) CITATION:   2025 TAXSCAN (CESTAT) 259

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) set aside the revocation of the customs broker license due to unjustified procedural delays by customs authorities.

The tribunal observed that the customs authorities failed to provide any explanation for the delay and that procedural deadlines cannot be bypassed arbitrarily. The tribunal held that in the absence of a valid justification, the revocation order was not sustainable. Without digging deeper into the merits of the case, CESTAT set aside the revocation order and allowed the appeal.

Challenge on Service Tax Liability on Income Generated out of ‘Renting Out Immovable Properties’ of Muncipality: CESTAT remands Matter

M/s. Velur Town Panchayat vs Commissioner of GST and Central Excise CITATION:   2025 TAXSCAN (CESTAT) 261

In a recent case, the Chennai bench of the Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) remanded the challenge on Service Tax liability on income generated out of ‘Renting Out Immovable Properties’ of Muncipality.

In the case of St. Thomas Mount Cum Pallavaram Cantonment Board  after referring to the above conflicting decisions, held it proper to remand the matter back to the file of original authority observed that “8. For the foregoing reasons, the impugned order dated 30-92022 passed by the respondent is hereby quashed and the matter is remanded back to the respondent for fresh consideration on merits and in accordance with law, within a time frame to be fixed by this Court. The respondent shall pass final orders, after giving due consideration to the orders of this Court in the cases of (a) Cuddalore Municipality v. Joint Commissioner of GST and Central Excise in W.P. No. 8900 of 2017, dated 22-3-2021 as well as (b) St. Thomas Mount Cum Pallavaram Cantonment Board v. The Additional Directors and others in W.P. Nos. 28468 and 28080 of 2021, dated 10-8-2022, within a period of twelve weeks from the date of receipt of a copy of this order.”

CESTAT quashes Demand Order on Lack of Evidence against Clandestine Clearance Allegations, slashes Penalty on Directors

Sri Deepak Keshan M/s. Budge Budge Refineries Ltd vs Commissioner of Central Excise Kolkata-VII Commissionerate CITATION:   2025 TAXSCAN (CESTAT) 262

The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) set aside the demand of Rs. 53,38,184  on account of clandestine clearance.

The tribunal observed that the demand for clandestine removal was based solely on presumptions and lacked tangible evidence. The adjudicating authority had relied on a comparison between laboratory registers and dispatch registers, but the tribunal found no concrete evidence to support the allegation of clandestine clearance. The tribunal emphasized that allegations of such a serious nature require tangible evidence, which was absent in this case. Consequently, the demand was set aside as unsustainable.

Reimbursements Received Cannot Considered as ‘Consideration’ Towards Any Taxable Service: CESTAT

M/s. Assam Gas Company Limited vs Commissioner of Central Excise & Service Tax CITATION:   2025 TAXSCAN (CESTAT) 263

In a recent case, the Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that the reimbursements received by the assessee cannot be considered as ‘consideration’ towards any taxable service.

“The personnel engaged are the employees of the assessee company and the assessee is paying all salaries etc. to such employees,” the Tribunal said in granting the appeal. The JV only reimburses the actual cost of these employees’ salaries. Therefore, according to rule 2(g) of the Service Tax Rules, the entire agreement between the assessee and the JV does not constitute a taxable service of manpower supply service.

Absence of Recorded Reasonable Belief for Smuggling Case: CESTAT quashes Confiscation of Gold

Shri Prasanta Sarkar vs Commissioner of Customs (Preventive) CITATION:   2025 TAXSCAN (CESTAT) 264

The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) quashed the confiscation of gold and the imposition of penalties due to the absence of a recorded reasonable belief that the gold was smuggled.

The bench observed that the appellants had produced documents to support their claim of legitimate possession, and there was no evidence to prove that the gold was smuggled. The Tribunal also found that the provisions of Section 111(b) and 111(d) of the Customs Act, which deal with the confiscation of goods imported in violation of specified routes or prohibitions, were not applicable in this case.

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