CESTAT Weekly Round-Up [Jan 13 to Jan 17, 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 13 January 2025 to January 17 2025.

Goods wrongly loaded could not be Exported without clearance by Customs: CESTATM/s. Samudera Shipping Line (India) Pvt. Ltd. vs Commissioner of Customs (Port) CITATION:   2025 TAXSCAN (CESTAT) 159

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) remanded the matter concerning the addition of Rs. 24,89,121 as gross receipts of commission income under Section 144 of the Income Tax Act, 1961, for fresh adjudication.

The single-member bench comprising Dr. Manish Borad (Accountant Member) observed that the NFAC failed to fulfill its statutory obligation under Section 250(6) of the Income Tax Act which mandates appellate authorities to adjudicate appeals by stating points for determination, decisions, and reasons.

Penalty u/r 209A of Central Excise Limited to Individuals Dealing with Confiscable Goods, Not Applicable to Partnership Firms: CESTAT Taher & Company vs Commissioner of C.E. & S.T.-Daman CITATION:   2025 TAXSCAN (CESTAT) 158

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that penalties under Rule 209A of the Central Excise Rules, 1944, cannot be imposed on partnership firms as the rule applies only to individuals dealing with confiscable goods.

Citing precedents such as Woodmen Industries, the tribunal held that partnership firms could not be penalized under Rule 209A of the Central Excise Act. The tribunal also observed that the adjudicating authority’s order was non-speaking and failed to address submissions raised by the appellants.

Non-Compliance with Section 9D, Statements Without Cross-Examination Unsustainable for Demand: CESTAT M/s Shree Krishna Laxami Steel Udyog Private Limited vs Commissioner of Central Excise CITATION:   2025 TAXSCAN (CESTAT) 161

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Kolkata Bench held that statements  without cross-examination are unsustainable for demand as there has been non- compliance with Section 9D of the Central Excise Act, 1944.

The bench noted that the Delhi High Court in the case of Flevel International Vs. Commissioner of Central Excise-2016 (332) ELT 416(Del), had held that the denial of an opportunity of cross-examination of a witness whose statements have been relied upon in the adjudication order would vitiate the order of adjudication.

The CESTAT comparing Ashok Jindal ( Judicial Member ) and Rajeev Tandon ( Technical Member ) set aside the impugned order and ruled in favour of the appellant.

CESTAT Dismisses Clandestine Removal Charge due to Lack of Supporting Evidence M/s Shree Krishna Laxami Steel Udyog Private Limited vs Commissioner of Central Excise CITATION:   2025 TAXSCAN (CESTAT) 161

The Customs Excise and  Service Tax Appellate Tribunal ( CESTAT ), Kolkata held that serious allegation cannot be made merely on assumption, in the absence of detailed supporting evidence and thus dismissed the charge of clandestine removal.

The bench noted that although Shri Sati Ram’s statement was recorded and documents were seized from his possession, further investigation is needed, including examining suppliers, buyers, transporters, and commission agents listed in the records and thus the authenticity of these documents remains questionable.

The CESTAT held that due to the lack of proper investigation and corroborative evidence, the allegations against the appellants regarding clandestine manufacture and clearance of goods are unsustainable

Time Barred SCN: CESTAT quashes Service Tax Demand New Age Laminators Private Limited VS Commissioner of Central Goods And Service Tax & Central Excise &-Alwar CITATION:   2025 TAXSCAN (CESTAT) 162

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has ruled that a time-barred Show Cause Notice ( SCN ) invalidates the confirmation of a service demand proposed therein.

The bench, comprising Judicial Member Rachna Gupta and Technical Member Hemambika R. Priya reiterated the obligation of the Central Excise Officer to scrutinize filed returns, conduct necessary assessments under Section 72, and issue an SCN under Section 73 within the prescribed time limit. Failure to do so, leading to any tax escaping assessment, places the responsibility squarely on the officer.

Municipal Corporation Engaged in Commercial Activities liable to Service Tax: CESTAT M/s. Bidhannagar Municipality VS Commr. of Service Tax, Kolkata CITATION:   2025 TAXSCAN (CESTAT) 165

The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that municipal corporations engaged in commercial activities are liable to pay service tax.

The appellant made submissions that the corporation undertook constitutional function and their services were not covered under the definition of service tax. Despite the submission, the department confirmed the demand and levied a penalty on the appellant. Aggrieved by the order, the appellant filed an appeal before the Tribunal.

Taking into account that the appellant is a government body, the tribunal set aside the penalty levied by the department. The appellant’s appeal was partially allowed.

Relief for TATA Steel: CESTAT Declares Excise Demand Notice Issued After 9.5 Years as Time-Barred, Exceeding 5 Years Limit Tata Steel Limited vs Commissioner of CGST & CX, Bhubaneswar CITATION:   2025 TAXSCAN (CESTAT) 164

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that the demand notice issued after 9.5 years exceeding the time limit of 5 years is time-barred relieving TATA steel from excise duty.

The two-member bench comprising Ashok Jindal (Judicial Member) and Rajeev Tandon (Technical Member) observed that the High Court of Odisha directed the revenue to complete proceedings within 4 months.

The tribunal observed that no proceedings were initiated within the said time. The tribunal further observed that the maximum time limit to issue notice is 5 years if there was any evasion of duty by the way of suppression of facts and in the present case the notice was issued after 9.5 years.

Revenue Neutrality and Procedural Lapses: CESTAT quashes Central Excise Duty and Penalty Orders M/s Allied Resins and Chemicals Limited vs Commissioner of Central Excise CITATION:   2025 TAXSCAN (CESTAT) 166

The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has quashed central excise duty and penalty orders due to revenue neutrality and procedural lapses.

Thus, the CESTAT bench, consisting of Ashok Jindal ( Judicial Member ) and Rajeev Tandon ( Technical Member ), only confirmed a conceded demand of Rs. 89,855 for scrap clearance but set aside all other demands and penalties. The bench held procedural lapses, revenue neutrality, and the absence of malafide intent invalidated the department’s claims.

Statutory Authority’s Sovereign Functions exempt from Service Tax: CESTAT quashes Rs. 28 Cr. Demand for lack of evidence and limitation by time bar Asansol Durgapur Development Authority vs Commissioner of CGST & Central Excise, Bolpur CITATION:   2025 TAXSCAN (CESTAT) 167

The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) dismissed the service tax demand of Rs. 28.39 crore due to insufficient evidence and limitations due to the time bar and also held that statutory authority’s sovereign functions are exempt from service tax.

The bench noted that it was difficult to establish that the ADDA had suppressed the facts to evade tax as it was a statutory authority. The bench, by relying on the figures taken for quantification of demand, has derived the income and expenditure statement and balance sheet of ADDA, which shows that all the details have been disclosed in the records.

Relief to TATA Beverages: CESTAT Rules SCN Issued in 2010 for Alleged IPR Service Invalid as Business Transfer Details Disclosed in 2005 M/s. Tata Global Beverages Ltd. vs Commissioner of Service Tax CITATION: 2025 TAXSCAN (CESTAT) 168

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the Show Cause Notice (SCN) issued in 2010 for alleged IPR service was invalid citing that the business transfer details were disclosed in 2005.

The two-member bench comprising R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) observed that the transfer details were disclosed to the department in 2005 but the notice was issued to the appellant in 2010. Despite the business transfer information available to the department, they invoked an extended period and there was no suppression of facts.

CESTAT upholds Service Tax Refund Claim Rejection on Course by YCMOU MAHARASHTRA KNOWLEDGE CORPRATION LTD vs COMMISSIONER SERVICE TAX-I PUNE F- Wing CITATION:   2025 TAXSCAN (CESTAT) 170

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has affirmed the denial of a refund claim for the period between April 2014 and September 2014. The claim pertained to service tax remitted for an educational program that only later, in March 2015, received recognition from the Yashwantrao Chavan Maharashtra Open University (YCMOU).

Nevertheless, the refund applications were disallowed because recognition for the relevant time frame had not yet been granted by the Open University, whose agreement was finalized only on March 30, 2015. By that point, student fees had already been collected. Additionally, the Tribunal deemed the request time-barred, given that relevant documents were submitted on June 8, 2015, rather than March 30, 2015. This contradicted the appellant’s contention that an online refund application had been filed in April 2015, which would have been within the statutory deadline.

No Confiscation of Seized Gold Merely for Invalid LOA: CESTAT M/s Encee International NSEZ vs Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 169

The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that gold cannot be confiscated solely on the ground of an invalid Letter of Approval (LOA).

The Third Member, examining Rule 47 of the SEZ Rules, 2006, observed that this provision applies to the removal of goods from an SEZ to the Domestic Tariff Area (DTA). Since there was no actual or attempted transfer of gold from the SEZ to the DTA, Rule 47 was irrelevant. Instead, the case revolved around unauthorized manufacturing within an SEZ unit due to the absence of a valid LOA—an issue squarely under the purview of the Development Commissioner rather than Customs.

Dept. Fails to Verify Document Veracity with Key Parties like Suppliers, Buyers, Transporters, Agents: CESTAT Rules Investigation Faultyv M/s Shree Krishna Laxami Steel Udyog Private Limited vs Commissioner of Central Excise & Service Tax CITATION:   2025 TAXSCAN (CESTAT) 171

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled the investigation faulty due to the department failing to verify the veracity of documents with key parties like suppliers, buyers, transporters, agents etc,.

On the other hand, the counsel for the revenue submitted that the documents were recovered from the employees of the appellant company. The counsel also contended that Sati Ram made statements that these documents belong to the appellant company. Therefore the counsel for the revenue justified the demand against the appellants.

Commissioner Denies Cross-Examination Opportunity: CESTAT Quashes Excise Demand Order for Violation of S. 9D of CEA M/s Shree Krishna Laxami Steel Udyog Private Limited vs Commissioner of Central Excise & Service Tax CITATION: 2025 TAXSCAN (CESTAT) 171

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Quashed the order of the commissioner for denying cross-examination opportunity citing that it is in violation of section 9D of the Central Excise Act, 1944.

Therefore, the tribunal relying on the judgment of the Supreme Court in Andaman Timber Industries and also the judgment of the High Court of Delhi in Flevel International held that the statements recorded in the investigation without Examination in Chief and absence of Cross-examination were not sustainable in law.

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