Annual Customs, Excise and Service Tax Case Digest: CESTAT Rulings 2025 (Part 14)

Relief to Bosch: CESTAT Rules Notional Cost of Free Designs from Maruti Not Part of Excise Duty Valuation

M/s. Bosch Ltd vs Commissionerof CGST 2025 TAXSCAN (CESTAT) 751

Bosch Ltd.,appellant-assessee, had challenged the inclusion of the notional cost of free drawings and designs provided by Maruti Suzuki in the excise duty valuation of parts and components supplied to Maruti.

The two member bench comprising Justice DilipGupta ( President ) and P.V.Subba Rao( Technical Member) examined the issue in detail in the case of Denso India Private Limited vs. Additional Director General (Adjudication) and held that the notional cost of drawings and designs supplied free of cost by Maruti could not be included in the assessable value of parts and components manufactured by vendors and cleared to Maruti for excise duty purposes.

Relying on this decision, the appellate tribunal allowed the appeal. The impugned order was set aside, and the excise appeal was allowed.

CESTAT Allows Concessional Duty Benefit on Aluminium Based Laminates Used in MCPCBs

M/s. Arktron Electronics vsCommissioner of Customs 2025 TAXSCAN (CESTAT) 752

Arktron Electronics,appellant-assessee,had been engaged in the manufacture of Printed Circuit Boards. During the relevant period, it sought exemption under Serial No. 39 of Notification No. 24/2005-Cus in respect of aluminium-based copper clad laminates imported for use in the production of metal clad printed circuit boards.

The issue had already been decided by the tribunal in Crompton Greaves Consumer Electricals Ltd. vs. Commissioner of Customs (NS-V), where it held that the importer was eligible for exemption. This decision was later followed in another case involving the same company. The Department challenged the appellate tribunal’s view before the Supreme Court, but the Civil Appeal was dismissed on 29.11.2024 due to delay and lack of merit.

The two member bench comprising Justice DilipGupta (President) and P.V.Subba Rao (Technical Member) based on these rulings,found the order passed by the Commissioner of Customs (Preventive) unsustainable. It set aside the order and allowed the appeal.

CESTAT upholds Confiscation of 2.95 Kg Foreign-Marked Gold as Invoice Mismatched and No Proof of Duty Payment

MR. KAILASH CHANDER VARSHNEY vsADDITIONAL COMMISSIONER 2025 TAXSCAN (CESTAT) 753

Kailash Chander Varshney, the appellant, is a trader dealing in gold and silver. Customs officers, acting on specific intelligence, searched his premises and seized six pieces of gold weighing 2,946.80 grams with foreign markings. The appellant admitted during statements recorded on multiple occasions that he did not have any documents or invoices for the gold, stating that he had purchased it without a bill from traders visiting his shop.

The two-member bench comprising Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that gold is a notified item under Section 123 of the Customs Act, and once it is seized under reasonable belief of being smuggled, the burden shifts to the person from whom it is seized to prove it is not smuggled.

The tribunal found that the appellant repeatedly admitted to having no documents for the gold, and the invoice produced later did not match the seized gold and appeared to be an afterthought. The tribunal explained that the appellant failed to discharge the burden of proving lawful import and duty payment, and therefore, the confiscation and penalty were justified.

Auto AC Parts Like Filters, Valves Must Be Classified Under Specific Tariff Heads, Not General ‘Parts of Air Conditioners’: CESTAT

M/s Motherson Bergstorm HvacSolutions Pvt. Ltd. vs Principal Commissioner of Customs 2025 TAXSCAN (CESTAT) 754

Motherson Bergstrom HVAC Solutions Pvt Ltd, the appellant, is engaged in importing and manufacturing parts for automobile air conditioning systems. Between August 2018 and October 2020, the appellant imported items such as blowers, filters, water valve assemblies, control panels, and thermostats and classified these under specific tariff headings while paying customs duty.

The two-member bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) observed that Note 2(a) requires that parts that are themselves identifiable goods under Chapters 84 and 85 should be classified under their specific headings, even if used in specific machines, and that Note 2(b) could only be applied if Note 2(a) did not apply.

Reduced Penalty u/s 78 of GST Applies If Tax and Interest Paid Within 30 Days of Demand Order: CESTAT Cuts Penalty to 25%

M/s Minerals Marketing &Consultancy vs The Principal Commissioner 2025 TAXSCAN (CESTAT) 755

Minerals Marketing & Consultancy, the appellant, is engaged in providing taxable services. Based on third-party data for FY 2015-16, the department found a difference between the income shown in Form 26AS and the taxable value declared in ST-3 returns. A show cause notice was issued demanding Rs. 11,16,723 in service tax, interest, and penalties.

The single-member bench comprising Dr. Rachna Gupta (Judicial Member) observed that the appellant paid the confirmed tax, interest, and 25% penalty within 30 days of the demand order, fulfilling the conditions under Section 78 Proviso (ii). It explained that since the law allows a reduced penalty when payment is made within the prescribed period, the appellant was entitled to this benefit.

Recovery u/s 28AAA of Customs Act Not Valid without Prior DGFT Cancellation of Scrips: CESTAT

M/s Ganpati Hosiery Mills vsPrincipal Commissioner of Customs 2025 TAXSCAN (CESTAT) 756

Ganpati Hosiery Mills, the appellant, is a manufacturer and exporter of readymade garments. The appellant exported garments to buyers in Panama and the Netherlands under FOB contracts and claimed benefits under the Focus Market Scheme (FMS).

The two-member bench comprising Justice Dilip Gupta (President) and P. Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click HereV. Subba Rao (Technical Member) observed that under the law and as clarified in the Delhi High Court’s judgment in Amit Exports, recovery under Section 28AAA requires the DGFT to first cancel the scrips before customs authorities can initiate recovery.

No Penalty u/r 26 of Central Excise If Superintendent Revises Returns in Bona Fide Belief Without Evidence of Collusion: CESTAT

M/s. Kedar Nath Vishwakram vsPrincipal Commissioner of CGST and CX 2025 TAXSCAN (CESTAT) 757

Shree Kedar Nath Vishwakarma, the appellant, was a Superintendent of Central Excise and Service Tax at Bokaro from April 2015 to June 2017. The department alleged that he had facilitated Shri Ram Alloys and Ingots Pvt Ltd in availing irregular CENVAT credit of Rs. 2.55 crores by revising their ER-1 returns for August to November 2016, which allowed the company to use excess credit compared to previous periods and imposed a penalty of Rs. 25 lakhs.

The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that although the appellant made revisions to the returns, resulting in the assessee’s excess CENVAT credit.

The disciplinary authority had found that the appellant’s actions were not deliberate and were done under the bona fide belief that the assessee’s claim was correct, and there was no allegation of extraneous benefit.

Relief for L.G. Electronics: CESTAT Directs Interest Payment on Post-2014 Pre-deposit u/s 35FF of Central Excise Act

M/s L. G. Electronics India Pvt.Ltd. vs Principal Commissioner of Central Excise & CGST 2025 TAXSCAN (CESTAT) 758

L.G.Electronics India Pvt. Ltd,appellant-assessee, was engaged in manufacturing Colour Televisions (CTVs), Refrigerators, Air Conditioners, and Washing Machines. It also produced chassis sub-assemblies (PCBs) for CTVs, which were used in-house and also supplied to various OEMs across the country. These parts were classified under heading 85.29, and excise duty at 16% was paid based on the sale price.

The tribunal heard both parties and reviewed the appeal records.It noted that the assessee had challenged the denial of interest on the pre-deposit amount of ₹47,82,819/-. The bench observed that since the appeal was filed after 06.08.2014, the pre-deposit was made under the new Section 35F. Therefore, the proviso to Section 35FF, which applies to deposits made before 06.08.2014, was not relevant.

The appellate tribunal clarified that pre-deposit requirements arise only after an appeal is filed. Since the appeal in this case was filed in July 2016, the deposit was rightly treated under the amended law. It held that interest under Section 35FF was payable from the actual date of deposit.

Company Reversed Wrongfully Availed CENVAT Credit with Interest and Paid Penalty: CESTAT Quashes SCN Invoking Extended Period

M/s. Development ConsultantsPrivate Limited vs Commissioner of Service Tax 2025 TAXSCAN (CESTAT) 759

Development Consultants Private Limited, the appellant, is a company engaged in providing consulting engineering services. During an audit, the department found that the appellant had availed CENVAT credit of Rs. 32,23,866 on input services, but the records had missing invoice details. In some cases, the documents did not mention service tax, making the credit appear irregular.

The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that the audit was conducted in April 2011, and the show cause notice was issued in April 2012 for the period 2004-05 to 2008-09.

Classification of Offshore Services as Export or Taxable Business Support Services: CESTAT Remands Matter to Commissioner

Randstad Offshore PrivateLimited vs COMMISSIONER OF CGST & CENTRAL EXCISE 2025 TAXSCAN (CESTAT) 760

The tribunal observed that the Commissioner had relied on a post-SCN period agreement and noted the assessee’s willingness to produce the appropriate agreement for the relevant time frame. The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) remanded the matter to the Commissioner for fresh consideration in a matter involving the classification of offshore services, whether they qualified as export of services or were taxable under Business Support Services.

Randstad Offshore Private Limited,appellant-assessee, claimed that its services to the US company qualified as export of services during 01.07.2012 to 31.03.2015. However, the department held that the assessee was running an offshore office for the US company and was liable to pay tax under Business Support Services.

The two member bench comprising Somesh Arora (Judicial Member) and Satendra Vikram Singh (Technical Member) considered the submissions made by both sides. It noted that the Commissioner had relied on an agreement which the assessee counsel had now submitted, though it pertained to a period after the show cause notice.

Extraction, Crushing, and Sizing of Coal Amounts to Manufacture, Not Liable to Service Tax under “Mining Services”: CESTAT

M/s Integrated Coal MiningLimited vs Commissioner of CGST 2025 TAXSCAN (CESTAT) 761

Integrated Coal Mining Ltd., the appellant, is engaged in mining and selling coal after crushing and sizing it to meet the requirements of buyers under agreements with CESC Ltd. and Crescent Power Ltd. The appellant paid central excise duty and VAT on the sale of coal, treating these activities as manufacture under the Central Excise Act.

The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that the appellant’s activities amounted to manufacture, which had been accepted by the department through consistent excise duty collection and could not be taxed under “Mining Services.”

The tribunal further observed that VAT and service tax are mutually exclusive and that the department could not demand service tax when VAT and excise duty had already been paid. It also found that the appellant maintained separate accounts and did not wrongly avail Cenvat credit, making the reversal demand unsustainable.

Recorded Statement u/s 108 of Customs Act Not Admissible if Witnesses Not Cross-Examined before AA: CESTAT

Shanti Swaroop Sharma vs ThePrincipal Commissioner of Customs 2025 TAXSCAN (CESTAT) 762

Shanti Swaroop Sharma and Sangeeta Tuteja, the appellants, are directors of New Era Trading Pvt. Ltd., an exporter of readymade garments. The department alleged that the appellants, in collusion with a freight forwarder, diverted goods to Dubai while falsely declaring exports to Focus Market Scheme (FMS) countries to claim undue export benefits.

The two-member bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) observed that the statements recorded under Section 108 could not be relied upon without complying with the procedure under Section 138B, which mandates that such statements are only admissible when the witnesses are examined and cross-examined before the adjudicating authority, which was not done in this case. The tribunal also observed that as the confiscation of goods had been set aside, the penalty under Section 114(iii) was not sustainable.

The tribunal explained that reliance on statements recorded during investigations without following the procedure under Section 138B defeats the safeguard intended to prevent misuse of such statements. The tribunal held that the penalties imposed under Sections 114(iii) and 114AA could not be sustained in the absence of admissible evidence. The appellants' appeals were allowed, and the penalties were set aside.

Transport Services by Single Truck Operator Without Consignment Notes Fall Under Negative List: CESTAT Sets Aside Service Tax Demand

M/s. Bajrang Enterprise vsCommissioner of C.G.S.T. and Central Excise 2025 TAXSCAN (CESTAT) 763

Bajrang Enterprise,appellant-assessee, was a sole proprietorship engaged in providing road transportation services using its own truck, without issuing consignment notes. It had registered for service tax under the category of ‘transportation of goods by road’ but did not file returns, believing it was not liable to pay service tax.

The appellate tribunal also accepted that even if treated as GTA services, the tax liability for services provided to Balmer Lawrie Ltd., a government company, was to be discharged under the Reverse Charge Mechanism.

Additionally, the tribunal noted that the individual consignment values were ₹750 and ₹1400, below the exemption limit of ₹1500 as per Notification No. 25/2012 ST, and hence exempt from service tax.

Taxability of Foreign Exhibition Services: CESTAT Rules No Service Tax Payable on Services Performed Abroad

Sarup Industries Ltd vsCommissioner of Central Excise And Service Tax 2025 TAXSCAN (CESTAT) 764

Sarup Industries Ltd,appellant-assessee,, was engaged in manufacturing and exporting footwear. During an audit, it was found that in FY 2005-06 and 2006-07, it had paid ₹5,72,027 in foreign currency to overseas entities for advertisement and exhibition services related to its business in India.

The two member bench comprising S.S Garg (Judicial Member) and P.Anjani Kumar ( Technical Member) noted that the Commissioner (Appeals) had wrongly treated the case as involving both ‘Business Exhibition Service’ and ‘Commission Agent Service’. It clarified that the demand for commission services had already been dropped, and the only issue was the taxability of ‘Business Exhibition Service’.

It observed that as per Rule 3(ii) of the relevant service tax rules, such services were taxable only if performed in India. Since the exhibition services were carried out entirely outside India, no service tax was payable.

CESTAT Allows Adjustment and Refund of ₹22.37 Lakh Excess Service Tax to Eastern India Enterprise and Sets Aside Penalties

M/s.Eastern India Enterprise vsCommissioner of Central Excise 2025 TAXSCAN (CESTAT) 765

The appellant, Eastern India Enterprise, is a registered service tax assessee involved in providing "maintenance and repair service" under Section 65(105)(zzg) of the Finance Act, 1994.

The Tribunal comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member held that the service tax liability of ₹13,19,071 which being the short payment for the years 2009–10 and 2012–13, is infact payable along with the applicable interest, but the liability amount should be adjusted from the excess amount which is already deposited by the appellant.

The Tribunal also observed that after such adjustment, an excess payment of ₹22,37,334 still remains and held that this excess should be refunded to the assessee, subject to verification of unjust enrichment and correctness of the claim.

CESTAT Upholds classification of Activity by Adjudicating authority under ‘works contract service’ as assessee paid service tax by opting scheme as per State VAT Rules

M/s. Nag Interiors Pvt. Ltd vsThe Commissioner of Service Tax 2025 TAXSCAN (CESTAT) 766

The issue in the appeals is whether the activity carried out by Nag Interiors Pvt. Ltd, the appellant amounts to ‘Completion and Finishing Service’ as defined under Section 65(105)(zzq) of the Finance Act, 1994 and whether the appellant is eligible to avail the benefit of Notification No.12/2003-ST dated 20.06.2003.

It was evident that the appellant was paying service tax by opting the scheme as per the State VAT Rules and also submitted evidence regarding payment of VAT against the value of goods/materials during the relevant period and paid service tax on the balance amount.

A two-member bench, P. A. Augustian, Member (Judicial) and R. Bhagya Devi, Member (Technical) held that since, the appellant paid service tax under the category of “Interior Decorations and Commercial or Industrial Service” on gross amount excluding the value of goods materials where VAT was paid, the appropriation of the said amount as per the impugned orders under works contract service is upheld.

Styrene-Butadiene Copolymer to Be Classified as ‘Polymers of Styrene’, Not Synthetic Rubber: CESTAT

KLJ POLYMERS & CHEMICALSLIMITED vs Commissioner of CUSTOMS 2025 TAXSCAN (CESTAT) 767

KLJ Polymers & Chemicals Limited, the appellant, is engaged in importing and trading SBC used in manufacturing processes. The appellant classified the imported SBC under Chapter Heading 3903 as “Polymers of Styrene” and claimed exemption benefits. The customs department issued show cause notices arguing that SBC should be classified under Chapter Heading 4002 as “Synthetic Rubber,” alleging that the appellant wrongly availed customs duty exemptions. The Principal Commissioner confirmed the department’s view, demanding differential duty with interest and proposing penalties, leading the appellant to approach the CESTAT.

The two-member bench comprising Somesh Arora (Judicial Member) and Satendra Vikram Singh (Technical Member) observed that the imported SBC, containing over 70% styrene, should be classified under “Polymers of Styrene” as it did not pass the necessary tests to qualify as synthetic rubber. The tribunal also observed that the appellant had disclosed all relevant details, and the dispute was a classification issue, making the invocation of the extended limitation period inappropriate.

Education Consultant Services to Foreign Universities Qualify as Export, Not Intermediary Services: CESTAT

M/S.Canam Consultants Ltd. vsThe Principal Director General 2025 TAXSCAN (CESTAT) 768

Canam Consultants Ltd., the appellant, is engaged in promoting and marketing foreign universities and their courses among Indian students wishing to study abroad. The appellant had entered into agreements with foreign universities to conduct seminars, counsel students, forward profiles to universities, and assist with the admission process. For these services, the appellant received payments in foreign currency from the foreign universities.

The tribunal comprising Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) observed that the services provided by the appellant to foreign universities were on a principal-to-principal basis, the foreign universities located outside India were the recipients of the service, and the payment was received in foreign currency.

Bagasse is Not A Manufactured Final Product: CESTAT Quashes Central Excise Duty Demand Under Rule 6 of CCR

M/s.The Salem Co-operative SugarMills Ltd. vs The Commissioner of GST & Central Excise 2025 TAXSCAN (CESTAT) 769

The Salem Co-operative Sugar Mills Ltd., the appellant, is engaged in the manufacture of sugar and molasses from sugarcane. In the process, bagasse (dry pulp residue) emerges as a by-product during the extraction of juice from sugarcane.

The two-member bench comprising P. Dinesha (Judicial Member) and P. Anjani Kumar (Technical Member) observed that the issue was no longer res integra in light of the Allahabad High Court’s judgment, which held that Rule 6 of the Cenvat Credit Rules would not apply to bagasse since it is not a manufactured product.

The tribunal also observed that the CBEC circular treating bagasse as liable for reversal under Rule 6 was held to be erroneous and quashed by the High Court. The tribunal explained that since bagasse is not a manufactured final product, the demand for reversal under Rule 6 was unsustainable. The tribunal set aside the orders-in-original and allowed the appeals with consequential benefits.

Service Tax Payable Only on Service Portion in Works Contract Where VAT Already Paid on Goods: CESTAT

M/s. Ocean Lifespaces India vsThe Commissioner of GST 2025 TAXSCAN (CESTAT) 770

Ocean Lifespaces India Private Limited, the appellant, is a company engaged in providing interior decoration services for commercial, industrial, and residential buildings. The appellant classified its services under "Works Contract Service" and paid VAT on 79.85% of the invoice value while paying service tax on the remaining 20.15%.

The two-member bench comprising P. Dinesha (Judicial Member) and P. Anjani Kumar (Technical Member) observed that Rule 2A(ii) would apply only if the value is not determined under Rule 2A(i) and that the appellant, having paid VAT under state law on the goods portion, was correct in paying service tax only on the service portion. The tribunal also observed that once VAT is paid on the goods, the same value cannot be subjected to service tax again.

The tribunal explained that the appellant had correctly determined the service tax payable under the works contract provisions and that the department's demand could not be sustained in law. The appellant’s appeal was allowed with consequential relief.

CESTAT Quashes ₹1.5 Crore Penalty on Customs Officer in Red Sanders Smuggling Case Due to Lack of Corroborative Evidence

Sandeep Kumar Dikshit vsPrincipal Commissioner of Customs (Port) 2025 TAXSCAN (CESTAT) 771

Sandeep Kumar Dikshit, the appellant, was working as a Superintendent (then Inspector) of Customs. A penalty of Rs. 1.5 crore was imposed on him under Sections 114(i) and 114AA of the Customs Act, 1962, by the Principal Commissioner of Customs (Port), Kolkata.

The single-member bench comprising Ajay Sharma (Judicial Member) observed that the statements were unverified and not supported by any independent evidence. It further observed that the DVD had not been authenticated or properly examined, and the original documents related to the exports were not produced.

The tribunal also took note of the fact that the adjudicating authority itself had doubted the reliability of the DVD and had not relied on it.

Win for BSNL: CESTAT Rules Free Telecom Services to Employees Not Taxable as It Constitutes Service to Self

M/s. Bharat Sanchar NigamLimited vs Commissioner of Central Excise & CGST 2025 TAXSCAN (CESTAT) 772

Bharat Sanchar Nigam Limited,appellant-assessee,was engaged in providing telecommunication services and regularly deposited service tax. During an audit, it was found that the assessee had offered free postpaid mobile services to its employees up to a certain limit. For usage beyond this limit, bills were raised and tax was paid.

The two member bench comprising Binu Tamta ( Judicial Member) and Hemambika R.Priya ( Technical Member) noted that both parties agreed the issue had already been decided in the appellant’s favour in an earlier case related to its Gurgaon unit.

No Service Tax Chargeable on Warranty Labour for Free After-Sale Service: CESTAT

M/s. K.P. Automotives Pvt. Ltdvs Commissioner 2025 TAXSCAN (CESTAT) 773

K.P. Automotives Pvt. Ltd,appellant-assessee, was an authorised Maruti dealer providing services at its authorised service stations. The dispute was whether service tax was payable on free services offered during the warranty period.

The two member bench comprising Binu Tamta (Judicial Member) and Hemambika R.Priya ( Technical Member) noted that apart from earlier orders in the assessee’s own case, similar findings were made by the Division Bench in Hindustan Auto House Pvt. Ltd. vs. CCE, Jaipur. In that case, the tribunal held that the so-called “free services” were not truly free, as their value was already included in the vehicle price, which was subject to excise duty and sales tax.

It also found no evidence of separate reimbursement by the vehicle manufacturer for these services. Since no direct service charges were received from customers and no specific reimbursement was established, the appellate tribunal held that service tax and penalties were not justified.

No Countervailing Duty on Areca Nut Processing Machines Imported for Pan Masala Production: CESTAT

M/s. Dharampal Satyapal Ltd vsCommissioner of Customs 2025 TAXSCAN (CESTAT) 774

Dharampal Satyapal Ltd., the appellant, imported machinery including a crumbler, plansifter, and discharge airlock for use in its areca nut (supari) processing plant. The company classified the equipment under Customs Tariff Heading (CTH) 84371000, which covers machines for cleaning, sorting, or grading seed, grain, or dried leguminous vegetables. This classification carries a 0% CVD rate.

The two-member bench comprising Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) held that both the adjudicating authority and the Commissioner (Appeals) had exceeded their jurisdiction by confirming classifications not proposed in the show cause notice. The tribunal explained that no authority can travel beyond the scope of the notice citing Supreme Court precedents.

Relief for Castrol India: CESTAT Rules SAD Refund Cannot Be Denied Solely Due to Brand Name Change When Product Is Identical

State of Maharashtra vs M/s.Castrol India Ltd. 2025 TAXSCAN (CESTAT) 775

Castrol India Ltd., the appellant, is engaged in the manufacture and sale of lubricating oils and related products. The company imported a product called “Long Life Coolant” and cleared it under Customs Tariff Heading 3820 00 00, paying SAD at the time of import.

The two-member bench comprising P. Dinesha (Judicial Member) and K. Anpazhakan (Technical Member) observed that the product remained the same in substance and that the name change was only for marketing purposes. It observed that the refund claim was supported by documentary evidence, including invoices and VAT records, which showed that the imported goods were sold without any modification.

Sharing of G-Card Credentials Led to Misdeclaration of Import Consignment: CESTAT Upholds Revocation of Customs Broker Licence

M/s. GMC & Co vsCommissioner of Customs 2025 TAXSCAN (CESTAT) 776

GMC & Co.,appellant-assessee, had authorised Shri Nitesh Patel, a G-card holder, through a Power of Attorney to act as a Customs Broker at Mumbai Customs. Based on an Offence Report dated 08.09.2017 from DRI, Mumbai, alleging irregularities committed by Shri Patel, proceedings were initiated against the assessee.

The two member bench comprising AshokJindal (Technical Member) and K.Anpazhakan (Technical Member) heard both sides and considered the matter. It found that the assessee’s G-card holder, Shri Nitesh Patel, had shared his ID and password with Shri Pragnesh Gandhi, which allowed him to misuse the Customs Broker Licence. This led to misdeclaration of imported goods.

No Obligation on Customs Broker After Importer Relinquishes Goods: CESTAT Quashes Licence Revocation

M/s. Kushagra Shipping Agency vsPrincipal Commissioner of Customs 2025 TAXSCAN (CESTAT) 777

Kushagra Shipping Agency, the appellant, is a licensed Customs Broker based in Kolkata. The agency had filed a bill of entry on behalf of an importer on 14th September 2021. By 18th September 2021, the importer informed the appellant that they had abandoned the goods and did not wish to proceed further.

The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that once the importer had relinquished the goods and asked the Customs Broker not to proceed, the broker had no legal authority or duty to act further. The tribunal observed that the broker had provided inspection facilities and cooperated with the Customs authorities to the extent possible.

Customs cannot cancel or question MEIS Licenses Without Prior Action by DGFT: CESTAT

M/s. Aquapharm Chemical Limitedvs Commissioner of Customs (Port) 2025 TAXSCAN (CESTAT) 778

Aquapharm Chemicals Limited, the appellant, is a manufacturer and exporter of Organophosphorus Compounds operating as an Export Oriented Unit (EOU) in Pune. Between 2017 and 2021, the appellant obtained 233 MEIS licenses issued under the Foreign Trade Policy 2015–20 for exports made under Tariff Item No. 29319090.

The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that MEIS licenses are issued under the Foreign Trade Policy by the DGFT, and their cancellation or invalidation falls strictly within the jurisdiction of the DGFT.

They further observed that Customs cannot unilaterally question the validity of these licenses or initiate recovery under Section 28AAA unless the DGFT first cancels the scrips. Since no such cancellation had occurred, the tribunal held that the entire recovery proceeding was without legal authority.

Service Tax Not Leviable on Notional Interest from Security Deposits for Locker Rentals: CESTAT

M/s. JYOTSNA VAULTS vsCOMMISSIONER OF CGST & CENTRAL EXCISE 2025 TAXSCAN (CESTAT) 779

Jyotsna Vaults, appellant-assessee,challenged the levy of service tax on notional interest accrued from the security deposit collected for renting out safe deposits and private lockers.

The two member bench comprising Binu Tamta (Judicial Member) and Hemambika R.Priya (Technical Member) referred to its earlier decision in Murli Realtors Pvt. Ltd., where it had held that only actual rent is taxable, not any notional interest on security deposits, which serve a different purpose like covering rent defaults or damages.

Since the assessee had already paid service tax on rent and the dispute was only on notional interest, the tribunal followed its earlier ruling and held that such interest could not be taxed.

No Penalty Shall be Levied under Excise Act if Dept could not prove Allegation of Fraud to evade Duty: CESTAT

M/s Punjab Cold Treads vsCommissioner of Central Excise 2025 TAXSCAN (CESTAT) 780

The appellants, M/s Punjab Cold Treads, have been issued a show cause notice dated 12.04.2013, seeking to recover service tax of Rs.87,95,473/-, invoking an extended period during the period 2007-08 to 2012-13, on the tyre retreading process the appellants undertake for their clients under the heading Management, Maintenance or Repair Service as defined under Section 65 (105) (zzg) of the Finance Act, 1994; the proposals in the show cause notice were confirmed along with equal penalty vide the impugned order dated 23.03.2015.

A two-member bench of Mr. S. S. Garg, Member (Judicial), and Mr. P. Anjani Kumar, Member (Technical), observed that the appellant argues on the limitation. They contend that there was no clarity on the issue, and the confusion was cleared only after the judgment of the Supreme Court in the case of Ahmedabad Electricity Co.2003 has also issued a circular dated 27.02.2012.

The tribunal observed that the appellants have demonstrated bona fide reasons for not discharging service tax during the impugned period. The court considered the opinion that Revenue has not made out any case for invocation of the extended period, and the facts and circumstances of the case do not warrant the same either.

Excise Commissioner’s Order Not Restorable in Absence of Sufficient reason of Non Appearance: CESTAT

M/s. Siva Industries andHoldings Ltd. vs Commissioner of GST & Central Excise 2025 TAXSCAN (CESTAT) 781

The tribunal ruled that the Rule provides that if the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non-appearance when the appeal was called for hearing, can set aside the dismissal and restore the appeal. Hence, an opportunity for the appellant to restore the appeal and be heard on merits if sufficient cause is shown for his non-appearance, remains.

While dismissing the appeal, the two member bench of M. Ajit Kumar, Member (Technical), and Ajayan T.V., Member (Judicial) held that no purpose would currently be served in continuing with this appeal and hence reject the same for default as per Rule 20 of CESTAT (Procedure) Rules, 1982.

Penalty u/s 112(a) and 114AA cannot be Imposed on Customs Broker as Revenue fails to Prove Direct Involvement in Wrong Doing: CESTAT

HIM Logistics Private Limited vsCommissioner of Customs : Respondent Export 2025 TAXSCAN (CESTAT) 782

The dispute related to an import consignment filed on behalf of M/s Jagdamba Enterprises, whose IEC holder later claimed that his credentials had been misused by a third party, Pawan Kumar Ralli.

The Tribunal noted that no material evidence was produced to show that appellant had any knowledge of the misdeclaration or that it had actively aided in the alleged offence.

It also observed that the penalty under Section 114AA which penalises knowingly making or using false documents could not be sustained since the revenue failed to establish any deliberate or wilful misstatement by the broker.

Trust Recruiting Students by way of campus selection is liable to Service Tax under category of 'Manpower Recruitment or Supply Agency Service': CESTAT

M/s. T.A. Pai ManagementInstitute vs The Commissioner of Central Excise 2025 TAXSCAN (CESTAT) 783

M/s. T. A. Pai Management Institute, the appellants, are rendering taxable services under the category of ‘Management Consultancy Services’ and also various academic courses. During audit verification, it was noticed that the appellant was engaged in accommodating Multinational Companies (MNCs) and other recruitment agencies to conduct campus selection of candidates, for which different amounts were collected per successful candidates once the placement of service was confirmed.

A two member bench of the P. A. Augustian, Member (Judicial), and R.Bhagya Devi, Member (Technical) observed that in the second appeal ST/2323/2012, the definition is amended to mean ‘any person’ hence, the claim of the appellant for this period is absolutely of no consideration as they are liable to pay tax on the amounts received by them from the students and based on the discussions above, the demand in the second appeal is also sustained.

The tribunal observed that since the first show-cause notice had invoked suppression, the question of invoking suppression for the subsequent period does not arise. Since the show-cause notice was issued on 12.4.2010 for the period 01.05.2006 to 28.02.2009, the demand for an extended period cannot be sustained.

Service Tax Demand Cannot Be Based Solely on Form 26AS w/o Reconciliation: CESTAT

M/s Shri Sai Financial Servicesvs Commissioner, CGST & Central Excise 2025 TAXSCAN (CESTAT) 784

Shri Sai Financial Services, a proprietorship concern owned by Tilak Singh, was engaged in providing services under the category of “Business AuxiliaryServices.” Based on third-party information received from the Income Tax Department through Form 26AS, a show cause notice was issued for the financial years 2014-15 to 2017-18 (up to June 2017), alleging that the appellant had not paid the applicable service tax.

The single-member bench of P.K. Choudhary (Judicial Member) tribunal observed that the authorities had not verified whether the amounts reflected in Form 26AS represented only taxable services.

The tribunal held that reliance on Form 26AS alone, without examining ST-3 returns, contracts, and supporting documents, was insufficient to sustain the demand. It referred to previous decisions, including Sharma Fabricators & Erectors Pvt. Ltd. v. CCE, Allahabad, and Kush Construction v. CGST NACIN, Kanpur, which stressed the need for detailed scrutiny before raising a tax demand.

Form DRC-03 Not Valid for Excise Pre-Deposit, Must Use CBIC Challan via ICEGATE or Authorized Bank: CESTAT

M/s Intercity Courier Servicesvs Commissioner of Central Excise & CGST 2025 TAXSCAN (CESTAT) 785

Intercity Courier Services, the appellant, is a courier company based in Moradabad. The appellant had filed an appeal before the Commissioner (Appeals), which was dismissed solely on the ground that the mandatory pre-deposit of 10% of the disputed amount was not made in the prescribed manner.

The single-member bench comprising Sanjiv Srivastava (Technical Member) observed that the Commissioner (Appeals) had not considered the appeal on merits but had dismissed it only for want of a proper pre-deposit. The appellant had now complied with the deposit requirement, but the tribunal held that the matter should be reconsidered.

The tribunal also clarified that the appellant must not seek a refund of the deposited amount or withdraw it until the appeal is finally decided.

SCN Issued 3.5 Years After Voluntary Disclosure Without New Findings or Suppression: CESTAT quashes Extended Period Demand

M/s. Sungreen VentilationSystems vs Commissioner of GST and Central Excise 2025 TAXSCAN (CESTAT) 786

Sungreen Ventilation Systems Pvt. Ltd., the appellant, is engaged in manufacturing Wind Driven Ventilators. The appellant did not pay excise duty under a bona fide belief that their product was exempt for the years 2008-09 and 2009-10.

The two-member bench comprising Ajayan T.V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that the department had not discovered the lapse but was informed by the appellant voluntarily.

The tribunal ruled that the conditions to invoke the extended limitation period under Section 11A were not met. The appellant had already complied and disclosed all facts, so the demand and penalty were set aside. The appeal was allowed with consequential relief.

Credit Reversal Dispute Based on Interpretation, Not Suppression: CESTAT Denies Extended Period

M/s Pepsico India Holdings Pvt.Ltd. vs Commissioner of Central Goods & Service Tax 2025 TAXSCAN (CESTAT) 787

Pepsico India Holdings Pvt. Ltd., the appellant, is engaged in the manufacture of aerated beverages and mango-based drinks under the brand "Lehar Slice." While aerated beverages were dutiable, "Lehar Slice" was exempt from excise duty until February 2011, after which it attracted concessional duty at 1%.

The two-member bench comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that Pepsico had been regularly filing statutory returns and had informed the department of their credit practices through official correspondence.

The tribunal observed that the department had conducted regular audits and did not question the appellant’s reversal method at the relevant time. The tribunal also observed that the issue involved the interpretation of complex legal provisions and that the appellant’s approach could not be seen as deliberate evasion.

Extended Period Not Invocable when Department Previously Audited and Issued SCN: CESTAT

M/s Bridgeview Broadband NetworkPrivate Limited vs The Commissioner of Central Excise & Service Tax 2025 TAXSCAN (CESTAT) 788

Bridgeview Broadband Network Pvt. Ltd., the appellant, is a company engaged in providing internet services through leased cable networks and also in leasing out Dark Optical Fibre to telecom companies.

The two-member bench comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that when a prior audit and SCN had already addressed similar issues for the overlapping period, the department could not invoke the extended limitation period again for new demands on related matters.

It explained that merely detecting issues during a subsequent audit does not amount to suppression or fraud, especially when the department had access to the relevant data during the earlier audit.

Excise Duty Mistakenly Paid on Alcohol-Based Homoeopathic Medicines Refundable Without Time Bar: CESTAT

M/s Parul Homoeo LaboratoriesPvt. Ltd vs Commissioner of Central Excise & CGST 2025 TAXSCAN (CESTAT) 789

Parul Homoeo Laboratories Pvt. Ltd., the appellant, manufactures homoeopathic medicines containing alcohol. Between 2011 and 2016, the appellant paid central excise duty on these products under the belief that they were dutiable under Chapter 30 of the Central Excise Tariff.

The single-member bench comprising P.K. Choudhary (Judicial Member) observed that since the goods were never liable to central excise duty, the payment could not be treated as duty under the Act. The refund claim, being one for rectifying a mistake of law, was not subject to the one-year limit.

The tribunal explained that the refund claim was not a typical tax refund but a recovery of an amount paid without legal authority. It held that the excise department could not retain such payments, as doing so would violate Article 265 of the Constitution. The tribunal allowed the appeal and directed the department to refund the amount of Rs. 6.5 lakh.

Temporary Storage Outside Bonded Area is Not Unauthorized Removal: CESTAT Quashes Customs Confiscation and Penalty

Akshay Logistics vs Commissionerof Customs 2025 TAXSCAN (CESTAT) 790

Akshay Logistics, the appellant, is a licensed public bonded warehouse operator under Section 57 of the Customs Act, 1962. During a departmental inspection conducted between August 28 and September 5, 2023, customs officers found that nine consignments of imported goods were placed outside the designated bonded area.

The two member bench comprising C.J. Mathew (Technical Member) and Ajay Sharma (Judicial Member) observed that there was no evidence showing that the goods were removed in violation of Section 71. The tribunal found that the goods were either present within the premises, cleared with duty, or moved with proper permission. The tribunal further observed that procedural lapses such as stacking issues or camera coverage could not be treated as serious violations when no revenue loss had occurred.

The tribunal ruled that the customs authorities acted in an overly rigid manner and failed to exercise responsible adjudication. Holding that the confiscation and penalty were unjustified, the tribunal allowed the appeal and set aside the order.

Relief for Vodafone Idea: CESTAT Allows CENVAT Credit on Police Booth Maintenance, Treats It as Brand Promotion

M/s. Vodafone Idea Limited vsCommissioner of GST and Central Excise 2025 TAXSCAN (CESTAT) 791

Vodafone Idea Limited had availed CENVAT credit on various input services, including the cost of maintaining a police booth near its telecom infrastructure. The department denied the credit on the ground that such expenses had no direct connection with the provision of output services and so did not qualify as eligible input services under the CENVAT Credit Rules, 2004.

The two-member bench comprising Judicial Member P. Dinesha and Technical Member Vasa Seshagiri Rao held that the maintenance of the police booth could be seen as part of the company’s brand-building efforts and had a sufficient nexus with the business.

The tribunal ruled that such expenses fall under the broad definition of input services when they contribute to the promotion of the company’s brand and business activities, even if indirectly.

Pre-Shipment Inspection Certificate not issued by DGFT-Approved Agency for Mauritius: CESTAT upholds Penalty

Greta Steels Ltd. vsCommissioner of Customs 2025 TAXSCAN (CESTAT) 792

Greta Steels Ltd., the appellant, acting as a high-seas seller, imported Light Melting Scrap (LMS) from Mauritius and sold the goods to an Indian buyer. For clearance, a PSIC was submitted, which was issued by Worldwide Inspection Services Pvt. Ltd., New Delhi.

The single-member bench comprising M. Ajit Kumar (Technical Member) observed that an unauthorized agency issued the PSIC and the certificates included inconsistencies that would not be acceptable to a reasonable person.

The tribunal also observed that even if the goods were found to be clean upon inspection, the submission of a forged certificate still violated the legal procedure intended to safeguard against the import of hazardous materials.

Exported Goods Misdeclared as “Natural Abrasive Grain” Instead of Restricted “Natural Garnet”: CESTAT upholds DGFT Policy Violation

TIRUPATI ENTERPRISES vsCommissioner of Customs (P)- Jamnagar 2025 TAXSCAN (CESTAT) 793

Tirupati Enterprises, the appellant, exported goods described as “Natural Abrasive Grain” under tariff heading 25132090 through five shipping bills filed in July and August 2019. Upon laboratory testing by the Central Revenue Control Laboratory (CRCL), the goods were confirmed to be “Natural Garnet (Almandine),” which falls under heading 25132030.

The two-member bench comprising Somesh Arora (Judicial Member) and Satendra Vikram Singh (Technical Member) observed that the CRCL report confirmed the goods were Natural Garnet and not general abrasives. It found that the DGFT notification applied to all forms of garnet, regardless of source.

The tribunal also observed that the appellant’s change in classification from 25132030 to 25132090 after the notification indicated an intent to circumvent the export restriction. It further held that reliance on internal communications not mentioned in the show cause notice did not alter the fact that the export violated DGFT policy.

Loose Sheets and Pocket Diary Not Sufficient to Prove Clandestine Clearance of Mild Steel Ingots: CESTAT

M/s DD Iron & Steel Pvt. Ltdvs Commissioner of CGST & Central Excise 2025 TAXSCAN (CESTAT) 794

DD Iron & Steel Pvt. Ltd., the appellant, is a company engaged in the manufacture of mild steel ingots using sponge iron, pig iron, and cast iron as raw materials. On September 1, 2012, officers from the Directorate General of Central Excise Intelligence (DGCEI) conducted a search at the appellant's factory premises and the residence of the director’s brother-in-law, during which they seized some handwritten loose sheets and a spiral-bound pocket diary.

The two-member bench comprising R. Muralidhar (Judicial Member) and Rajeev Tandon (Technical Member) observed that the loose sheets and the pocket diary lacked credibility as evidence. The tribunal observed that the documents were unsigned, written in pencil by more than one person, and did not relate to excisable goods or prove the removal of goods without payment of duty.

The tribunal observed that the department failed to bring on record any corroborative evidence to support the charge of clandestine removal. It pointed out that there was no evidence of unaccounted raw material purchases, cash transactions, use of transportation, or any acceptance by buyers or transporters. The tribunal held that such serious allegations cannot be sustained without strong, clear, and corroborative evidence.

Wine Stock Discrepancies in Bonded Warehouse: CESTAT finds License Cancellation Too Harsh

M/s Ajay Wines & Spirits vsPrincipal Commissioner of Customs 2025 TAXSCAN (CESTAT) 795

Ajay Wines & Spirits, the appellant, was granted a Public Bonded Warehouse License under Section 57 of the Customs Act, 1962. During a stock verification on 04.04.2024, Customs authorities found a shortage of 339 cases of imported liquor.

The two-member bench comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that part of the customs duty was paid even before the first shortage was officially recorded, and that the actual shortage of Jacob Creek was only 12 cases, not 50 as mentioned in the impugned order.

Splitting Invoices for Furniture and Building Rent Should Not Deny Legitimate Refund When Service Tax is Properly Paid: CESTAT

Swan Defence and HeavyIndustries Limited vs Commissioner of C.E. & S.T 2025 TAXSCAN (CESTAT) 796

Swan Defence and Heavy Industries Limited, the appellant, is a Special Economic Zone(SEZ) unit engaged in authorized operations from Pipavav Port, Gujarat. The appellant had filed a refund claim under Notification No. 12/2013-ST for service tax paid on input services.

The two-member bench comprising Somesh Arora (Judicial Member) and Satendra Vikram Singh (Technical Member) observed that when a service is classified and taxed by the service provider under a valid service category, and is duly approved for SEZ use, refund cannot be denied solely on the basis of how the invoice is structured.

The tribunal explained that artificial splitting of charges should not be a reason to reject the refund if the service was used for authorized SEZ operations and tax was correctly paid.

Smuggling of 3kg Gold Concealed in Shoes via Airport Staff :CESTAT Reduces Penalty From ₹30L to ₹10L Citing Limited Role

Shri Suvadeep Dutta vsCommissioner of Customs (Airport & Admn.) 2025 TAXSCAN (CESTAT) 797

Suvadeep Dutta,appellant-assessee,was implicated in a gold smuggling case after Avijit Sarkar was caught at Kolkata Airport on 14.01.2015 by Customs officials. Acting on intelligence about ground staff involvement, officers recovered four gold bars weighing 3,000 grams and worth ₹82.5 lakh from Sarkar’s shoes.

A single member bench of K.Anpazhakan ( Technical Member) examined the appeal and found that it related to the penalty imposed on Suvadeep Dutta under Sections 112(a) and 112(b) of the Customs Act, 1962.

The tribunal also noted that the assessee avoided appearing before Customs despite being summoned and only appeared after his anticipatory bail plea was rejected.

Relief for SAIL: CESTAT Holds By-Products Not Liable Under Rule 6 of CCR, Accepts Proportionate Reversal

M/s. Steel Authority of IndiaLtd vs Commissioner of CGST 2025 TAXSCAN (CESTAT) 798

Steel Authority of India Ltd,appellant-assessee,was engaged in manufacturing iron and steel products under Chapters 72 and 73 of the Central Excise Tariff. In the process, some exempted by-products like Ammonium Sulphate, Coal Tar, Burnt Dolomite, and Molten Slag also emerged.

The two member bench comprising R.Muralidhar ( Judicial Member) and Rajeev Tandon (Technical Member) heard both sides and examined the appeal papers and submissions. The dispute related to reversal of CENVAT credit on common inputs and input services used in manufacturing both dutiable and exempted goods. The issue of demanding 5%/6%/8% of the value of exempted goods had remained contentious for years.

It also observed that the so-called exempted goods Ammonium Sulphate, Coal Tar, Burnt Dolomite, and Molten Slag were by-products or waste arising unintentionally during manufacturing. There was no indication that these goods were deliberately produced.

No Service Tax Leviable on Construction Service Provided to Semi-Govt Firm: CESTAT

M/s. Gyarsilal Mohanlal vsCommissioner-I , Customs, Central Excise & Service Tax 2025 TAXSCAN (CESTAT) 799

Gyarsilal Mohanlal, the appellant is a contractor and registered as service tax assessee for rendition of “Commercial or Industrial Construction Service”. The appellant was awarded work for construction of residential complex by Rajasthan Housing Board (RHB) at Pratap Apartments and construction of Office building at Panchsheel, Ajmer by Ajmer Vidyut Vitran Nigam Limited (AVVNL). The present dispute arises as a consequence of the department seeking payment of service tax for the said activities undertaken.

A two member bench of Binu Tamta, Member ( Judicial ) and Rajeev Tandon, Member (Technical) observed that there could be no levy of service tax for construction of the said residential building, as it would squarely fall within the ambit of the clarification issued by the department; as independent buildings having twelve or less than twelve residential units would not be covered by the definition of “residential complex”.

Customs Act not applicable on Gold Seized from Transit Passenger from Bangkok going to Dubai via New Delhi: CESTAT

Jai Kishan Choudhary vsCommissioner of Customs 2025 TAXSCAN (CESTAT) 800

Jai Kishan Choudhary, the appellant, is in appeal against the impugned order wherein gold recovered from his position weighing 1215 gms has been confiscated and penalty on the appellant has been imposed.

A single member bench of Ashok Jindal, Member (Judicial) found that the appellant had not crossed the green channel and had not even gone for immigration and the appellant was a transit passenger who was coming from Bangkok and going to Dubai via New Delhi. In those circumstances, the appellant has not crossed the immigration. Therefore, the provisions of Customs Act, 1962 are not applicable to the facts of the case.

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