Annual Customs, Excise and Service Tax Case Digest: CESTAT Rulings 2025 (Part 17)

This article summarises all CESTAT orders published in the Taxscan.in.

Relief for Apollo Tyres: CESTAT Rules Extended Limitation Inapplicable When Packaging Practice Unchanged for 25 Years

M/s. Apollo Tyres Ltd. vs Commissioner of GST & Central Excise

2025 TAXSCAN (CESTAT) 901

Apollo Tyres Limited, the appellant, manufactures tyres, tubes, and flaps. For certain packed tubeless tyres, the appellant paid duty under Section 4A of the Central Excise Act and for other tyres, tubes, and flaps, whether sold individually or together with strapping, they paid duty under Section 4.

The two-member bench comprising P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) observed that the department had accepted the same practice in earlier final orders, and no change in law or facts was shown to justify a different view.

The tribunal also observed that the commissioner had failed to address the exemption plea under the Legal Metrology Act and had not established the suppression of facts necessary to invoke the extended limitation period.

Setback for JSW Energy: CESTAT Rules Final Customs Assessments Cannot Be Reopened Without Statutory Appeal, Rejects Refund Claim

M/s JSW Energy Ltd vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 902

JSW Energy Ltd., the appellant, imported steam coal from Indonesia and claimed concessional Countervailing Duty (CVD) at 2% under Notification No. 12/2012-Cus while also availing Basic Customs Duty (BCD) exemption under Notification No. 46/2011-Cus. The provisional assessments were finalized at 6% CVD, and the appellant paid the differential 4% with interest under protest.

The two-member bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) observed that the case did not involve clerical mistakes or document amendments but amounted to reviewing the original decision, which the adjudicating authority could not do.

The tribunal pointed out that the proper course for the appellant was to challenge the assessment under Section 128 rather than bypassing the appellate process. The tribunal explained that under established legal principles, no refund can be granted while the original assessment order stands unchallenged. The appellant’s appeals were dismissed.

Customs Brokers Not Liable if Client Shuts Down After Verified Transactions: CESTAT Rules No Violation Under Regulation 10(n)

M/s Brightline (C&F) Agency vs The Commissioner of Customs

2025 TAXSCAN (CESTAT) 903

Brightline (C&F) Agency, the appellant, held a valid customs broker licence and was accused of handling exports for entities flagged by the Directorate General of Analytics & Risk Management (DGARM) as non-existent.

The two-member bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) observed that there was no evidence to show the appellant had handled shipments for three of the four exporters and accepted the appellant’s position on this.

Regarding Lalit Enterprises, the tribunal observed that the GSTIN and IEC were valid at the time of transactions and that Regulation 10(n) allows verification through reliable documents without mandating physical inspection. The tribunal pointed out that the regulation does not impose a duty of continuous surveillance after initial verification.

No Service Tax on Packing of Bulk pack into Retail Packs as Job Work, amounts to Manufacture: CESTAT deletes Demand, Penalty and Interest

M/s Emami Limited vs Commissioner of CGST & Central Excise

2025 TAXSCAN (CESTAT) 904

The case arose from a demand of ₹4.25 crore in service tax against Emami Ltd. on a reverse charge basis, along with ₹19.14 lakh against contractor Chandanj Kakati on a forward charge basis, and penalties on two other contractors - Pradip Das and M/s Vaishno Devi Enterprise. The tax department alleged that these job work contracts were a camouflage for “manpower supply services,” which are taxable.

The two-member bench, comprising Judicial Member Ashok Jindal and Technical Member K. Anpazhakan ruled that packing bulk into retail packs amounts to manufacture as per Chapter Notes 5 and 6 of Chapters 30 and 33 of the Central Excise Tariff Act. Such activities fall within the negative list of services under Section 66D(f) of the Finance Act, 1994, and are therefore not liable to service tax.

It was further noted that retracted statements without examination under Section 9D have no evidentiary value and that accounting descriptions and GST/trade license classifications cannot override the legal nature of the transaction.

CESTAT Abates Service Tax Appeal against Vasan Dental Hospitals since Company is Undergoing Liquidation

The Commissioner of GST and Central Excise vs M/s. Vasan Dental Hospitals Private Limited

2025 TAXSCAN (CESTAT) 905

The assessee-respondent, Vasan Dental Hospitals Private Limited, was engaged in providing dental related treatments. They are registered with the Service Tax Department under the category of ‘Health Services’.

The Tribunal noted that the National Company Law Tribunal (NCLT) had ordered liquidation of the respondent company. Referring to the Supreme Court’s ruling in Ghanshyam Mishra (2021), it reiterated that once a Resolution Plan is approved, all claims not part of the plan stand extinguished, and no further proceedings can be initiated.

The Bench comprising P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) cited Rule 22 of the CESTAT (Procedure) Rules, 1982, which provides that proceedings abate when a company is being wound up unless an application is made by the successor or liquidator within 60 days. Since no such application was filed by the Official Liquidator, the Tribunal held that the appeal stood abated under Rule 22 and dismissed it as infructuous.

Relief for Shipping Corporation of India: CESTAT Rules Demurrage is Part of Exempt Transport Service, Quashes ₹49.44 Cr Service Tax Demand

Commissioner of Central Excise & Service Tax vs Shipping Corporation of India Ltd

2025 TAXSCAN (CESTAT) 906

The case involved SCI’s contracts with Hindustan Petroleum Corporation Limited (HPCL) for the transportation of goods by sea. The dispute related to demurrage charges for the periods July 2012 to September 2014 and October 2014 to September 2015.

The two-member bench comprising C.J. Mathew (Technical Member) and Ajay Sharma (Judicial Member) observed that section 66E(e) applies only to standalone agreements and not to charges forming part of another service, whether taxable or exempt.

The tribunal explained that demurrage is directly linked to the transportation of goods by sea and falls within the scope of the exempt service. The tribunal ruled that the main service was not taxable, so there was no ground to levy service tax on demurrage. The appeal filed by the revenue was dismissed.

Excise Duty Evasion and Fraudulent Cenvat Credit Availment: CESTAT upholds Penalty

M/s. Kaizen Organics Pvt. Ltd. vs M/s. Commissioner of Central Excise & Service Tax, Guwahati

2025 TAXSCAN (CESTAT) 907

The appeals arose from an order by the Commissioner of Central Excise and Service Tax, Guwahati dated March 15, 2013, which found the appellants guilty of misusing excise exemption notifications meant for promoting industry in the North-East.

The bench of R. Muralidhar, Member (Judicial) and Rajeev Tandon, Member (Technical) noted that, “From the aforesaid, the plethora of evidence gathered and the diversity and variety thereof, it is clear that the revenue has gathered enough circumstantial evidence as discussed in forgoing paras to assert that the appellant Koolmint Manufacturing Company, did not actually involve itself at the given premises into any manufacturing activity for the production of finished goods. It is settled law that the department is not required to prove its case of non production and fudging of records to claim undue fiscal benefits, by way of mathematical precision and mere preponderance of probability in such circumstances would suffice to nail the dot. The balance of convenience clearly flows in favour of the assertions made by the department.”

It was thus noted that, “In view of what has been stated in forgoing paras it automatically flows that the goods said to be manufactured were not manufactured, there being no requisite infrastructure to undertake said manufacture, the appellant could not have collected any duty in terms of section 3 of the Central Excise Act and the amount so collected is clearly recoverable from the appellant.”

Non-Compliance of Mandatory Pre-Deposit Leads to Dismissal of Appeal: CESTAT Remands Matter noting Fulfilment of Pre-deposit

Prime Cable vs Commissioner of Central Excise, Goods & Service Tax

2025 TAXSCAN (CESTAT) 908

Prime Cable, appellant-assessee, challenged the order dated 30.05.2023 passed by the Commissioner (Appeals), where the appeal was dismissed as non-maintainable because the appellant had failed to make the mandatory pre-deposit under Section 35F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994.

A single member bench comprising S.S.Garg (Judicial Member) observed that the assessee had made the mandatory pre-deposit under Section 35F of the Central Excise Act, 1944.

It set aside the earlier order and remanded the appeal to the Commissioner (Appeals) to decide on merits, following natural justice, and to pass a reasoned order within three months of receiving the certified copy.

No Evidence of Export Attempt of Prohibited Shark Fins: CESTAT Quashes Confiscation and Penalty, Clarifies ‘Attempt to Export’

Global Impex Trading vs The Additional Director General

2025 TAXSCAN (CESTAT) 909

The Tribunal clarified that mere storage of prohibited goods does not constitute “attempt to export” under Section 113(d) of the Customs Act, 1962. It said that Section provides that goods attempted to be improperly exported are liable for confiscation. Specifically, clause (d) covers goods brought into or attempted to be exported from a customs area in violation of prohibitions under the Act or any other law.

The bench relied on Malkiat Singh v. State of Punjab (1969) and other precedents and clarified that preparation alone is not an attempt; an overt act moving directly towards export is essential. Since the department failed to produce any evidence of such intent or action, confiscation could not be sustained.

According to the tribunal “In order to constitute an act of attempt to export, the ingredients required to be fulfilled are intention, preparation, and preliminary act to export. We find that the department had not brought on any iota of evidence to prove their case that the appellant had intended to export the shark fins.”

Mere Assembly of Imported Components can make “e-Rickshaw”: CESTAT upholds Differential Customs Duty Demand, Penalty and Interest

M/s Y. C. Electric Vehicle vs PRINCIPAL COMMISSIONER

2025 TAXSCAN (CESTAT) 910

The case arose when the customs assessee, Delhi, imported consignments of converters, charging sockets, controllers, throttles, motors, digital speedometers, shock absorbers, and other parts between May and November 2019. These were declared as “spare parts of e-rickshaw” under tariff item 8708 9900, on which the company paid Basic Customs Duty (BCD) @ 15%, SWS @ 10%, and IGST @ 28%.

The Tribunal bench, after examining the Bills of Entry, noted that most essential components were imported in equal numbers - 1,000 sets each in some consignments which was noted to be clearly indicative of intent to assemble complete vehicles.

Upholding the adjudicating authority’s view, the Bench comprising Dr. Rachna Gupta (Judicial Member) and Ms. Hemambika R. Priya (Technical Member) ruled that, “Even though some components are locally procured, the goods imported had the essential characteristics of an E-rickshaw in CKD/SKD condition. Accordingly, classification under CTH 8703 9000 is correct.”

Construction of Independent Residential Houses for Personal Use Not Taxable as ‘Residential Complex Service’: CESTAT

PRINCIPAL COMMISSIONER CGST & CENTRAL EXCISE vs M/s AAKRITI CONSTRUCTION

2025 TAXSCAN (CESTAT) 911

Aakriti Construction was engaged in providing construction services. The department issued a show cause notice demanding service tax on the construction of certain residential houses built for individuals.

The two-member bench comprising Binu Tamta (Judicial Member) and P. V. Subba Rao (Technical Member) observed that the definition of residential complex services under the Finance Act expressly excludes houses constructed for the personal use of individuals. The tribunal explained that the certificates filed by the house owners supported the assessee’s claim that the construction was for personal use and not for commercial exploitation.

The tribunal set aside the demand and held that the construction of independent residential houses for individuals’ personal use is not taxable under “Construction of Residential Complex Service.” The appeal of the assessee was allowed.

Extra Charges on Resold Cargo Space Are Principal-to-Principal Trading, Not Taxable as BAS: CESTAT

Shikhar Logistics Pvt. Ltd. vs Commissioner of Central Tax

2025 TAXSCAN (CESTAT) 912

Shikhar Logistics Pvt. Ltd.,appellant-assessee,was engaged in the business of freight forwarding and allied activities, including booking space on shipping lines and airlines and reselling it to customers (exporters/importers).

The two member bench comprising Binu Tamta (Judicial Member) and Subba Rao ( Technical Member) observed that the assessee operated on a principal-to-principal basis, held MTO registration with the Director General of Shipping, booked cargo space, paid the charges, and sold it to customers at varying prices.

Considering the consistent decisions in favour of the assessee the tribunal set aside the impugned order and allowed the appeal.

CESTAT Abates Service Tax Appeal against Vasan Dental Hospitals since Company is Undergoing Liquidation

The Commissioner of GST and Central Excise vs M/s. Vasan Dental Hospitals Private Limited

2025 TAXSCAN (CESTAT) 913

The assessee-respondent, Vasan Dental Hospitals Private Limited, was engaged in providing dental related treatments. They are registered with the Service Tax Department under the category of ‘Health Services’.

The Tribunal noted that the National Company Law Tribunal (NCLT) had ordered liquidation of the respondent company. Referring to the Supreme Court’s ruling in Ghanshyam Mishra (2021), it reiterated that once a Resolution Plan is approved, all claims not part of the plan stand extinguished, and no further proceedings can be initiated.

The Bench comprising P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) cited Rule 22 of the CESTAT (Procedure) Rules, 1982, which provides that proceedings abate when a company is being wound up unless an application is made by the successor or liquidator within 60 days. Since no such application was filed by the Official Liquidator, the Tribunal held that the appeal stood abated under Rule 22 and dismissed it as infructuous.

License to Run Duty-Free Shops Constitutes Renting of Immovable Property, Not Liable to Service Tax under Airport Service Before 2010: CESTAT

M/s Airport Retail Private Limited vs Commissioner of Service Tax

2025 TAXSCAN (CESTAT) 914

Airport Retail Pvt. Ltd., the appellant, had taken licenses from Delhi International Airport (DIAL) to run duty-free shops inside the airport premises. DIAL collected service tax from the appellant under the category of “airport services.” The appellant filed a writ petition before the Delhi High Court challenging the levy.

The two-member bench comprising Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) observed that the Delhi High Court had already settled the issue by holding that the activity could not be classified as airport services before 01.07.2010.

The tribunal pointed out that the refund claim was filed within one year of the High Court’s judgment, which was the relevant date under Section 11B of the Central Excise Act. The tribunal also explained that DIAL’s confirmation showed that the burden of tax had not been passed on to any other party.

Dept Audit Findings Alone Insufficient to Invoke Extended Period Without Intent to Evade or Wilful Suppression: CESTAT

National Engineering Industries Ltd vs Commissioner of CGST & Central Excise

2025 TAXSCAN (CESTAT) 915

National Engineering Industries Ltd., the appellant, is engaged in the manufacture of ball bearings and axle boxes. The appellant has several units across India, including one at Khatipura, Jaipur, and an Input Service Distributor (ISD) office in Kolkata.

The two-member bench comprising Justice DilipGupta (President) and P. Anjani Kumar (Technical Member)observed that to invoke the extended period, there must be wilful suppression with intent to evade duty, not merely an error or omission.

The court explained that discovery during audit does not by itself prove suppression, especially when the assessee has been filing returns and records were available to the department.

Relief for MRF: CESTAT Rules Reimbursements of Salaries, Rent and Branch Expenses to Overseas Offices Not Taxable as Services under BAS

M/s. MRF Ltd. vs The Commissioner of Central Excise and Service Tax

2025 TAXSCAN (CESTAT) 916

MRF Limited, the appellant, is a manufacturer of tyres, tubes, and flaps under Chapter 40 of the Central Excise Tariff Act 1995. The company operates overseas offices in Australia, Dubai, Vietnam, and Sri Lanka.

The two-member bench comprising Ajayan T.V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that reimbursements of expenses such as salaries, rent, and office costs to overseas branches could not be treated as taxable services rendered to the head office.

The tribunal explained that Section 66A created a legal fiction only to determine whether services were provided and consumed in India or abroad, and it did not authorize taxation of self-to-self transactions.

Misrepresented Two Challans used for Payment of previous period service tax: CESTAT Upholds Penalty u/s 78(1)

Suresh Singh vs Commissioner (Appeals) Central GST Central Excise and Customs

2025 TAXSCAN (CESTAT) 917

Suresh Singh, the appellant challenged the order which confirmed the service tax liability of Rs.18,07,429/- as against Rs.37,90,922/-. The appellant are engaged in providing services of Manpower. On the basis of Form 26AS (2014-15) investigation was initiated, wherein it was found that appellant has received consideration from various parties for providing manpower. The appellant has also not filed any Service Tax Return for the said period.

A single bench of Binu Tamta, Member (Judicial) observed that since there was delay in payment of service tax, the levy of interest is automatic and the same is therefore, recoverable from the appellant. According to the Revenue, the appellant has misrepresented the two challans which were actually used in payment of service tax for the previous period, i.e., 2013–14, and therefore, the extended period has been rightly invoked.

The penalty under Section 78(1) of the Act has been rightly imposed and the Appellate Authority has consciously reduced the same to the reduced amount of service tax liability. Lastly, the penalty imposed under Section 77(1)(a)and section 77(2) on the ground that though the appellant had already obtained the service tax registration from the Department, however, did not properly assess and pay the service tax. The tribunal confirmed the impugned order and dismissed the appeal.

Relief for Godrej: CESTAT Rules Provisional Refunds Given Under Court Orders Cannot Be Treated as Wrong Refunds, No Interest Payable

M/s. Godrej Consumer Products Limited vs Commissioner of C.G.S.T. and Central Excise

2025 TAXSCAN (CESTAT) 918

Godrej Consumer Products Ltd., the appellant, had manufacturing units in Assam that were eligible for area-based excise duty refund under Notification No. 20/2007-CE. In 2008, the notification was amended, restricting refunds to a value-added percentage.

The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that refunds sanctioned under interim orders of the High Court and Supreme Court could not be considered erroneous.

The tribunal observed that after adjustments, only Rs. 50.96 lakh was excess, and this was already repaid. The tribunal pointed out that no show-cause notice had been issued before demanding interest, which was a violation of natural justice.

Relief for Bentley Motors: CESTAT Quashes ₹20 Lakh Penalty, Rules Exporter Not Liable for Importer’s Undervaluation

M/s Bentley Motors Ltd vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 919

Bentley Motors Ltd., the appellant, is a UK-based exporter that supplied 170 cars to its Indian dealer, Exclusive Motors Pvt. Ltd. The Directorate of Revenue Intelligence investigated the imports and alleged undervaluation, claiming that Exclusive Motors received supplementary invoices from Bentley which were not disclosed in the Bills of Entry.

The tribunal also observed that Bentley had produced supplementary invoices, airway bills, and account adjustment records, showing that the transactions were disclosed and not concealed. The tribunal pointed out that Bentley, as an exporter, had no responsibility for declarations made before Indian Customs, and no evidence showed that the company abetted misdeclaration.

The tribunal explained that Section 112 requires proof of abetment or omission rendering goods liable to confiscation. In this case, no such conduct was attributable to Bentley. The penalty of Rs. 20 lakh was set aside and Bentley’s appeal was allowed.

CESTAT quashes Customs Broker License Revocation as SCN and Order Issued Beyond Mandatory Time Limits under CBLR Regulation 17

Shri Sai Logistics vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 920

The Tribunal observed that the delay in both issuance of the SCN and final order rendered the proceedings invalid.

The bench comprising Dilip Gupta (President) and Hemambikar R Priya (Technical Member) ordered that the time limit, as has been held in the aforesaid decisions, has to be complied with and any breach would result in setting aside the final order.

Accordingly, CESTAT allowed the appeal, set aside the order dated 30 April 2020 revoking the Customs Broker License, and quashed all consequential proceedings, including the forfeiture of the security deposit and imposition of the penalty.

Relief to Polycab Wires: CESTAT Quashes Demand of service tax on Ocean Freight

Polycab Wires Pvt Ltd vs Commissioner of C.E. & S.T.-Daman

2025 TAXSCAN (CESTAT) 921

During audit of appellant, it was observed by the Audit Officers that the appellant has imported raw material from different foreign countries by sea and incurred expenses on ocean freight but they have not paid any service tax on the said expenses during the period from 23.04.2017 to 30.06.2017, under reverse charge.

The High Court of Gujarat in the case of M/s. SAL Steel Limited Vs. Union of India has held that “The Notification Nos. 15/2017-S.T. and 16/2017-S.T. making Rule 2(1)(d)(EEC) and Rule 6(7CA) of the Service Tax Rules and inserting Explanation-V to reverse charge Notification No. 30/2012-S.T. is struck down as ultra vires Sections 64, 66B, 67 and 94 of the Finance Act, 1994; and consequently the proceedings initiated against the writ applicants by way of show cause notice and enquiries for collecting service tax from them as importers on sea transportation service in CIF contracts are hereby quashed and set aside with all consequential reliefs and benefits.”

A two member bench of Member (Judicial), Mr. Somesh Arora And Member (Technical), Mr. Satendra Vikram Singh relying in the decision allowed the appeal of the party with consequential relief if any.

Relief for India Cements: CESTAT Holds Innocent Buyers Cannot Be Denied DEPB Scrip Benefits for Fraudulently Obtained Licences Unless Cancelled by DGFT

The India Cements Ltd. vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 922

India Cements Ltd. and Seshasayee Paper and Boards Ltd., the appellants, had purchased DEPB licences from the market and used them to import goods. Investigations revealed that the original licence holder, CEEAN Commerce Pvt. Ltd., had obtained these licences fraudulently by filing false export documents.

The two-member bench comprising M. Ajit Kumar (Technical Member) and Ajayan T.V. (Judicial Member) observed that a distinction must be drawn between fake or forged licences, which were never issued by DGFT and are void from the outset, and licences obtained by misrepresentation but issued by DGFT, which remain valid until cancelled.

The tribunal explained that the Principle “fraud vitiates everything” does not apply against innocent transferee importers for valid, uncancelled licences. It pointed out that unless the DGFT cancels such licences, Customs authorities cannot deny their validity.

Amprolium HCL Classifiable Under Chapter 29 as Pure Chemical, Not under Animal Feed Premixes: CESTAT Upholds Demand

Vital Therapeutics Pvt. Ltd vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 923

Vital Therapeutics Pvt. Ltd., the appellant, imported several consignments of feed additives and chemicals including Amprolium HCL. The department alleged misclassification of the product, claiming that it was declared under the entry for animal feed premixes to claim exemption from duty, whereas in reality it was a pure chemical falling under Chapter 29.

The tribunal pointed out that classification must be determined on the basis of the nature of the imported goods at the time of entry and not on their end use. The tribunal explained that the item was a pure chemical, so it could not be classified under animal feed premixes for the purpose of duty exemption.

The tribunal upheld the duty demand on Amprolium HCL while giving partial relief to the appellant on other products.

DGH Essentiality Certificate for Petroleum Operations Required Only for Importers, Not Domestic Manufacturers: CESTAT

M/s. Emerson Process Management Pvt. Ltd vs Commissioner of GST & Central Excise

2025 TAXSCAN (CESTAT) 924

Emerson Process Management Pvt. Ltd., the appellant, is a manufacturer of industrial valves and gaskets falling under Chapter 84 of the Central Excise Tariff Act, 1985. For the period between August 2013 and March 2014, the appellant supplied valves and accessories against international competitive bidding without payment of duty by availing exemption under Notification No. 12/2012-CE dated 17.03.2012, at Sl. No. 336 read with Condition No. 41.

The tribunal pointed out that Condition No. 41 of the excise notification was satisfied once such goods were exempted under the relevant customs notification. The tribunal explained that additional conditions prescribed in the customs notification were meant only for importers and could not be extended to domestic manufacturers.

The tribunal set aside the order of the Commissioner (Appeals) and allowed the appeal with consequential relief.

Liquidated Damages Not Taxable as Declared Service: CESTAT sets aside Service Tax Demand, Extended Limitation Unsustainable

Madhya Pradesh Poorva vs Commissioner, Central Excise & CGST

2025 TAXSCAN (CESTAT) 925

The assessee, Madhya Pradesh Poorva Kshetra Vidyut Vitran Co. Ltd., is a State Government company registered with the Service Tax department.

The Tribunal agreed with the assessee and observed that liquidated damages recovered under contractual clauses are compensatory in nature and do not amount to consideration for tolerating an act. The Bench further held that mere breach of contract and recovery of damages cannot be treated as taxable service.

The Bench comprising Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) noted that the Department had not brought any material on record to prove suppression of facts with the intent to evade service tax. It held that mere non-payment of tax cannot justify the invocation of the extended limitation under section 73(1).

CESTAT sets aside Service Tax Demand as Invocation of Extended Limitation under Section 73(1) Not Sustainable

M/s Oswal Cargo Movers vs Commissioner of Central Goods And Service Tax

2025 TAXSCAN (CESTAT) 926

The assessee, Oswal Cargo Movers, was engaged in providing cargo handling services. A Show Cause Notice dated 05.10.2012 was issued to the appellant alleging that the appellant was providing ‘cargo handling service’ and not ‘transportation of goods by road service’, and therefore sought to demand service tax by invoking the extended period of limitation.

The Tribunal observed that the Department had not brought on record any material evidence to show that the assessee had suppressed facts or had any intent to evade payment of tax.

The bench comprising Justice Dilip Gupta (President) and Hemambika R Priya (Technical Member) noted that the mere failure to pay tax cannot justify the invocation of the extended limitation period. Since the normal period had already expired, the SCN issued by invoking the extended period under section 73(1) was held to be unsustainable.

CESTAT Rules Leasing of ISO Tank Containers from Overseas Suppliers as Deemed Sale, Not Taxable Service

TRANSPEK INDUSTRIES LTD vs COMMISSIONER OF CGST & CENTRAL EXCISE

2025 TAXSCAN (CESTAT) 927

Transpek Industries Ltd., the appellant, had entered into agreements with foreign suppliers for the lease of ISO tank containers to transport chemicals. The department treated the arrangement as a service under the category of “Supply of Tangible Goods Service” and demanded service tax under the reverse charge mechanism.

The tribunal pointed out that since the appellant had effective possession and control, the leasing of ISO tanks could not be treated as a service. It ruled that the transaction was a deemed sale and thus not liable to service tax under “Supply of Tangible Goods Service.”

The tribunal set aside the impugned orders and allowed the appeals with consequential relief.

Service Tax Cannot Be Levied on TDS Paid to Govt on Behalf of Foreign Service Provider: CESTAT

M/s. Indian Additives Limited vs Commissioner of GST and Central Excise

2025 TAXSCAN (CESTAT) 928

Indian Additives Ltd., the appellant, had entered into an agreement with Chevron Oronite Company LLC, USA, under which it paid royalty on net sales of its products. The department observed that the appellant discharged service tax on the royalty amounts remitted to Chevron but it had not paid service tax on the TDS portion deposited with the Government of India.

The two-member bench comprising M. Ajit Kumar (Technical Member) and S.S. Garg (Judicial Member) observed that TDS is a statutory levy and cannot be treated as consideration for services rendered.

The tribunal pointed out that service tax is chargeable only on the amount billed by the service provider, and the TDS deposited with the Government does not form part of this value. The tribunal explained that this position had already been settled in earlier rulings in the appellant’s own cases as well as in similar matters involving other assessees.

Chlorine Supplied Free by Service Recipients not Part of Gross Amount Charged for Service Tax Calculation: CESTAT

M/s Sicagen India Ltd vs Commissioner of CGST & Central Excise

2025 TAXSCAN (CESTAT) 929

Sicagen India Ltd., the appellant, was engaged in providing water treatment services to clients such as ONGC and NTPC. In the course of rendering these services, chlorine was supplied free of cost by the service recipients.

The two-member bench comprising Ajayan T.V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that chlorine was supplied free of cost by the clients and not charged by the appellant. It pointed out that the Supreme Court had already ruled in Bhayana Builders that unless an amount is billed or charged by the service provider, it cannot be included in the gross amount charged.

The tribunal explained that since the appellant had not billed its clients for chlorine, its value cannot be brought into the taxable value of services. The tribunal set aside the orders of the lower authorities and allowed the appeals with consequential relief.

CESTAT Rules Assessable Value Must Be CIF with Air Freight Limited to 20% of FOB, Not Ex-Works

M/s Delphi Automotive Systems Private Limited vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 930

Delphi Automotive Systems Pvt. Ltd., the appellant, imported goods under invoices issued on an ex-works basis. In the Bills of Entry filed, the ex-works price was wrongly declared as the FOB value. Since the goods were transported by air, the cost of air freight was calculated as 20% of the ex-works price instead of 20% of the FOB value.

The two-member bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) examined the case. The tribunal observed that the duty must be levied on CIF value, and for imports by air, the cost of transport is restricted to 20% of the FOB value.

The tribunal observed that in this case ex-works prices were treated as FOB, which was incorrect and led to undervaluation. The tribunal also observed that all the Bills of Entry were assessed by officers of customs, who had access to the invoices and airway bills showing the true basis of the transaction. There was no evidence of collusion or concealment.

Failure to Verify Importer’s Credentials and Mis-declaration of Goods: CESTAT Upholds Revocation of Customs Broker License

Sagar Shipping Services vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 931

Sagar Shipping Services, the appellant, was a licensed customs broker with validity until 27 August 2027. The appellant filed Bill of Entry No. 9892525 dated 13 January 2024 on behalf of importer Digen Traders for a consignment declared as base oil arriving at Mundra Port.

The two-member bench comprising Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that the appellant never met the importer, acted only on the freight forwarder’s instructions, and admitted this fact in a statement under section 108 of the Customs Act, which was never retracted.

The tribunal observed that reliance solely on GST and IEC details without verifying the importer’s actual functioning fell short of the obligations under CBLR 2018. The tribunal pointed out that a customs broker holds a position of trust between importers and the department and is expected to exercise due diligence and report non-compliance.

Arranging Cane-Harvesting Workers for Farmers Without Control is Mere Facilitation, Not Taxable as Manpower Supply Service: CESTAT

M/s. MRK Co-Operative Sugar Mills Ltd. vs Commissioner of GST and Central Excise

2025 TAXSCAN (CESTAT) 932

MRK Co-Operative Sugar Mills Ltd., the appellant, is engaged in the manufacture of sugar and molasses and also supports registered cane growers by arranging gangs of workers for harvesting and transporting sugarcane.

The two-member bench comprising Ajayan T V (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that the labourers and gang leaders were independent service providers who fixed their charges directly with the farmers. The mill had no control over them, and there was no employer-employee relationship.

The tribunal pointed out that the mill only facilitated the farmers by giving contact details of gang leaders and adjusting payments in accounts.

Maintenance of Streetlights under Contracts Issued after 01.03.2015 Not Exempt from Service Tax: CESTAT Strictly Interprets Exemption Notifications

Dariyanath Electricals vs Commissioner of Central Goods and : Respondent Service Tax

2025 TAXSCAN (CESTAT) 933

Dariyanath Electricals and Party, the appellant, was registered under Works Contract Services and provided electrical installation, civil construction, and maintenance services to government agencies and private companies.

The tribunal pointed out that the Supreme Court in Dilip Kumar & Company and Hari Chand Shri Gopal had explained that exemption notifications must be strictly construed and the burden to prove applicability lies on the assessee.

The tribunal explained that as the appellant’s case did not meet the conditions of the exemption, the demand of Rs. 8,69,305/- with interest and penalties was correct. The appeal was dismissed.

Charges Deducted by Foreign Banks on Export Remittances Not Liable to Service Tax: CESTAT

Annur Cotton Mills vs Commissioner of GST and Central Excise

2025 TAXSCAN (CESTAT) 934

Annur Cotton Mills, the appellant, is a unit of Sharadha Terry Products Limited engaged in bleaching and dyeing processes of terry towels. The appellant held a service tax registration under “Transport of Goods by Road.” During scrutiny, the department found that the appellant had not paid service tax on charges deducted by foreign banks while realizing export proceeds.

The tribunal explained that the appellant had no direct dealings with foreign banks, and no service provider–recipient relationship existed between them. It pointed out that any service, if at all, was rendered by foreign banks to Indian banks, and not to the exporter.

The tribunal set aside the impugned order and allowed the appeal with consequential relief, explaining that charges deducted by foreign banks while remitting export proceeds are not liable to service tax.

No CBLR Violation Proven under Regulations 10(b),10(d) & 10(n): CESTAT Sets Aside Revocation of Customs Broker License

M/s Jaiswal Import Cargo Services Limited vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 935

The appellant-assessee, M/s Jaiswal Import Cargo Services Limited, had filed a warehousing Bill of Entry No. 3673416 dated 09.12.2022 on behalf of Tanu Trading for cosmetic imports, which were intended for re-export.

Holding that there was no evidence of connivance or violation, the Bench comprising Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) set aside the revocation order.

The appellant was represented by Vidushi Shubham, while the Revenue was represented by Mukesh Kumar Shukla.

CESTAT confirms Excise Exemption for Henna Paste Containing Oils

Prem Henna Pvt. Ltd vs Commissioner of Central GST & Central Excise

2025 TAXSCAN (CESTAT) 936

The assessee-appellant, Prem Henna Pvt. Ltd., is engaged in the manufacture and clearance of mehandi paste and mehandi powder.

The Tribunal, after considering the rival submissions, noted that the chemical examiner’s report had confirmed the goods to be henna paste, and that the addition of oil did not change its essential character.

The bench emphasized that the exemption notification specifically covered henna powder and paste in unit containers, and the respondent’s product squarely fell within the scope of the entry.

Exporter’s Address Found Fake: CESTAT Quashes Penalty on Customs Broker Citing Due Diligence and Bona Fide Belief

M/s. Daga Shipping Agents Private Limited vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 937

Daga Shipping Agents Pvt. Ltd., the appellant, is a licensed Customs Broker in Kolkata. The appellant filed a shipping bill on 26 August 2019 for export of 37,500 pieces of capacitors on behalf of Poonam Export, New Delhi.

The two-member bench comprising Ashok Jindal (Judicial Member) and Sanjiv Srivastava (Technical Member) observed that the appellant had in fact collected and verified all the required documents and that the revenue had not disputed this fact.

The tribunal explained that the mere allegation that the exporter was introduced by a third party could not be a ground for penalty. The tribunal pointed out that the Customs Broker had acted with due diligence and bona fide belief.

Relief to Polycab Wires: CESTAT Quashes Demand of service tax on Ocean Freight

Polycab Wires Pvt Ltd vs Commissioner of C.E. & S.T.-Daman

2025 TAXSCAN (CESTAT) 938

During audit of appellant, it was observed by the Audit Officers that the appellant has imported raw material from different foreign countries by sea and incurred expenses on ocean freight but they have not paid any service tax on the said expenses during the period from 23.04.2017 to 30.06.2017, under reverse charge.

A show cause notice dated 02.08.2018 was issued to the appellant demanding service tax of Rs.11,23,903/- (including cess) under Section 73 of the Finance Act, 1994 along with applicable interest and imposition of penalty. The said show cause notice was adjudicated by the Assistant Commissioner wherein, the vide order dated 30.01.2019 confirmed the charges against the appellant.

A two member bench of Member (Judicial), Mr. Somesh Arora And Member (Technical), Mr. Satendra Vikram Singh relying in the decision allowed the appeal of the party with consequential relief if any.

Customs Dept Cannot Question DGFT’s Export Obligation Discharge: CESTAT Sets aside Demand & Penalties on EPCG Licence

Super Cassettes Inds. Ltd. vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 939

The appellant-assessee, Super Cassettes Industries Ltd., is engaged in the manufacture of audio cassettes, video cassettes, and CDs. The appellant is also engaged in the sale of products for home consumption as well as exports outside India and has obtained the EPCG Licence, imposing an obligation to export products worth USD 2,482,135 within five years from the licence date. The company also furnished a bank guarantee equal to 100% of the duty saved.

The Tribunal noted that DGFT alone which can examine whether the appellant had discharged its export obligation, and so long as the time period for discharging the obligation under the EPCG licence was extended by DGFT and the appellant fulfilled its obligation under the Licence before expiry of the extended period, it cannot be urged by customs authorities that the appellant had not fulfilled its export obligation.

The Bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member), relying on precedents, held that the customs authority does not possess jurisdiction to issue SCN or impose penalties concerning the discharge of export obligation once DGFT has issued its discharge certificate.

Refurbishing of Cranes Falls Under MMR Services, Not Motor Vehicles: CESTAT Quashes Demand on Limitation

M/s. Sugesan Warehousing Pvt Ltd vs Commissioner of GST & Central Excise

2025 TAXSCAN (CESTAT) 940

Sugesan Warehousing Pvt. Ltd., the appellant, was registered for providing “supply of tangible goods service.” During the audit, it was observed that the appellant had also earned income from refurbishing cranes during April 2008 to March 2012.

The two-member bench comprising Ajayan T.V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that the appellant, in its reply, had clearly admitted that the cranes refurbished were not registrable with the RTO.

On this basis, the tribunal held that the activity fell within MMR services and not under motor vehicles. It also observed that the show cause notice issued in 2013 covered the period 2007 to 2012 and there was no evidence of wilful suppression or intent to evade payment of service tax.

Absence of Contractual Obligation Shows Branch Transfer, Not Inter-State Sale: CESTAT Remands Matter

State of Maharashtra vs M/s. CMS Computers Ltd.

2025 TAXSCAN (CESTAT) 941

The assessee-appellant, CMS Computers Ltd., engaged in computer systems and also carries out manufacturing, trading, leasing, and works contract activity across India.

The Tribunal observed that the main issue was whether the movement of goods from Noida to Mumbai was occasioned by a contract of sale. It noted that no document had been brought on record by the Department to establish such a contractual obligation.

The Bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) emphasized that in the absence of such proof, the movement should be treated as a branch transfer, which would entitle the assessee to exemption under Notification No. 6/2002-CE.

Maintenance Charges Collected from Tenants Not Liable to Service Tax under “Management, Maintenance or Repair Service”: CESTAT

M/s. Chennai Citi Centre Holdings Pvt Ltd vs Commissioner of GST & Central Excise

2025 TAXSCAN (CESTAT) 942

Chennai Citi Centre Holdings Pvt. Ltd., the appellant, is the owner of the Chennai Citi Centre Mall in Mylapore, Chennai. The appellant leased out commercial spaces in the mall to various tenants and paid service tax on the rent received under “renting of immovable property service.”

The tribunal explained that the lease deed clearly showed the tenants were required to bear only the actual proportionate cost of maintenance and that the appellant had not added any profit element. The tribunal pointed out that the amounts collected were like reimbursements and not consideration for taxable service.

The tribunal held that the demand for service tax, interest, and penalties could not be sustained. The impugned order was set aside and the appeal was allowed with consequential relief.

Customs Duty on Imports Mistakenly Paid Twice on Same Bills of Entry: CESTAT Orders Refund of Second Payment

Yazaki India Private Limited vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 943

The company, Yazaki India - appellant had imported insulating fittings under two Bills of Entry dated 28.12.2018 and 29.12.2018, for which duty amounting to ₹5,35,010 was duly paid on 29.12.2018. However, due to an inadvertent error, the same amount was again deposited on 31.12.2018. Realising the duplication, Yazaki India filed a refund claim in January 2020, seeking return of the second payment.

The Tribunal examined the Bills of Entry, challans, ICEGATE references confirming that the burden of duty was borne entirely by Yazaki India and had not been passed on. It held that once customs duty was lawfully discharged on the first occasion, the second deposit had no legal basis. Accordingly the bench directed to grant the refund of the second deposit.

The bench noting that the issue of refund arising on account of payment of duty/tax twice has been dealt with in detail by the by the High Court of Gujarat in the case of Swastik Sanitary wares Limited (supra), upon taking into account the judgement of the Supreme Court in Mafatlal Industries Ltd. Vs. Union of India, where it was ruled that the assessee is eligible for refund of the amount paid for the second time.

Denial of Refund by Invoking Rule 9(1)(b) of Cenvat Credit Rules Without Fraud or Suppression is Invalid: CESTAT

Rashtriya Metal Industries Limited vs Commissioner of CGST & Central Excise

2025 TAXSCAN (CESTAT) 944

Rashtriya Metal Industries Ltd., the appellant, is a manufacturer of brass strips and brass caps. The company had imported zinc ingots between 2012 and 2014 under the Advance Authorization Scheme without payment of customs duty, subject to export obligations.

The two-member bench comprising Dr. Ajaya Krishna Vishvesha (Judicial Member) and Ramesh Nair (Judicial Member) observed that there was no allegation or adjudication of fraud, suppression, or misstatement against the appellant, and the deficiency letter issued by DGFT was only an opportunity to regularize excess imports, not a penal action.

The tribunal pointed out that several High Courts and CESTAT benches had consistently held that Section 142(3) entitled assessees to such refunds in cash. The tribunal explained that the denial of a refund by merely invoking Rule 9(1)(b) on presumptive grounds was unsustainable.

Relief for ITC Ltd: CESTAT Rules Quicklime with 92% Purity Classifiable under ‘Quicklime’, Not as ‘Other Inorganic Chemicals’

ITC Ltd vs Commissioner of Customs (Port), Kolkata

2025 TAXSCAN (CESTAT) 945

ITC Ltd., the appellant, imported goods described as PCC Lime (Quicklime) and declared them under Customs Tariff Item 2522 1000. The assessing officer reclassified the imports under 2825 9090, treating them as inorganic chemicals, and the Commissioner (Appeals) upheld this decision. Aggrieved, ITC approached the CESTAT.

The tribunal pointed out that 2522 is a specific entry for quicklime, whereas 2825 9090 is only a residuary entry and classification rules require preferring the specific heading. The tribunal explained that the purity in this case was only 92%, so the imports could not be considered highly purified calcium oxide to fall under Chapter 28.

The tribunal set aside the impugned orders and allowed ITC’s appeals, granting consequential relief as per law.

CESTAT Overturns Diesel Seizure, Rules Lab Test Trumps "Confession" in Classification Dispute

Victory Trading Company vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 946

Victory Trading Company, which had imported a consignment declared as ‘Mixed Hydrocarbon Oil’ and classified it under Customs Tariff Item (CTI) 27011990. Based on intelligence, the Nhava Sheva Preventive Unit suspected the goods were mis-declared automotive diesel oil which is a restricted item; and seized the consignment. Samples were sent to the Central Revenue Control Laboratory (CRCL) for testing.

The tribunal strongly criticized the lower authorities for ignoring the definitive lab report in favor of statements and internet material. It reaffirmed the settled legal principle from the H.P.L. Chemicals Ltd. (2006) case that the burden of proof for re-classification lies squarely on the revenue department, which it failed to discharge. The bench further cited the Vinod Solanki (2009) case, noting that a statement made under investigative stress requires strong independent corroboration, which was absent here. The forensic analysis of seized electronic devices also yielded no incriminating evidence.

The final order was pronounced by a bench comprising S.K. Mohanty, Member (Judicial), and M.M. Parthiban, Member (Technical). The tribunal allowed the importer’s appeal, setting aside the confiscation order and affirming that the goods were correctly declared, thereby upholding the supremacy of scientific evidence in classification matters.

CESTAT Dismisses Transport Finance Company's Plea, Confirms Taxability of Financial Collection Services

Shriram Transport Finance Company Ltd vs Commissioner of CGST & Central Excise

2025 TAXSCAN (CESTAT) 947

The case involved Shriram Transport Finance Company Ltd., a company that finances commercial vehicles. Its business model involved lending to customers for vehicle purchases and then selling those loan portfolios to banks through a process called 'assignment.' A key part of these agreements was that Shriram Finance would continue to collect the Equated Monthly Instalments (EMIs) from the original borrowers on behalf of the banks that now owned the loans. For the period from April 2008 to March 2012, the company often performed this collection service for a nil or nominal fee, while from 2012 to 2015, it charged a fee ranging from 0.01% to 2% of the collected amount.

The bench found that the collection service was an independent activity for which Shriram Finance was entitled to retain a surplus from the collected amounts, which constituted consideration. It held that such services, when provided by a financial entity, correctly fall under "banking and other financial services." The tribunal distinguished the Edelweiss case, finding it inapplicable to the present facts.

On valuation, the tribunal upheld the Commissioner's method of using a weighted average of the collection fees for each financial year, applying a best judgment assessment under the law. Regarding the cross-appeal on the liquidity facility, the tribunal found no evidence of a separate consideration for this service and thus upheld its exclusion from the tax demand.

CESTAT Remands Case, Slams Authority for Blindly Trusting Income Tax Return Over Evidence

MX Systems International Private Limited vs Commissioner of GST& Central Excise

2025 TAXSCAN (CESTAT) 948

The case involved MX Systems International Private Limited, a company that sells and installs fire extinguishers. The dispute arose from a ₹4.72 crore service tax demand for the financial year 2015-16. The demand was based on a massive difference between the company’s service turnover as reported in its service tax return (₹9.34 crore) and its Income Tax Return (₹41.93 crore). The company argued this was a clerical error in the ITR classification, where income from the sale of goods was mistakenly declared under ‘income from services.’

The bench referenced the principle established in the Dinesh Chandra R Agarwal V. Commissioner of CGST (2023) case, which held that a mere mismatch between returns filed with different agencies cannot be the sole basis for extending the limitation period without specific findings of intent to evade tax.

The final order was pronounced by a bench comprising. Ajay Sharma, Member (Judicial), and Mathew, Member (Technical). The tribunal allowed the appeal by remanding the case back to the original authority for a fresh decision, with instructions to properly examine all evidence of the sale of goods submitted by the company.

Customs uses Australian Weapons Law to Seize Gun-Shaped Lighters in India: CESTAT exposes Blunder, Overturns Seizure

S.F. Trading Company vs Commissioner of Customs Nhava Sheva-V Commissionerate

2025 TAXSCAN (CESTAT) 949

Mumbai-based importer S.F. Trading Company, which had imported a consignment including 260 cartons of "Gun shape Metal Cigarette Lighters" in November 2021. Upon examination, customs officials seized the goods, claiming they were replicas of arms as defined under the non-existent "Weapons Act, 1990" and required a prohibited import license. The authorities subsequently ordered absolute confiscation and destruction of the lighters.

The Single Member Bench of MM Parthiban (Technical Member) further observed that at the time of import, the policy for such lighters was ‘Free’ and not restricted. While a 2023 notification later prohibited cheap lighters, it was not retrospective. The bench also examined India's actual Arms Rules, finding that a ‘firearm replica’ must be indistinguishable from a real gun and rendered innocuous, which did not apply to functional lighters that merely have a gun-like shape.

Consequently, the tribunal found no legal basis for the confiscation under the Customs Act. The bench set aside the impugned order and allowed the appeal in favor of the importer.

CESTAT Rules Old Cenvat Rule 6(5) Still Applicable, Orders Recalculation on Decade-Old Service Tax Credit Dispute

M/s. SHV LPG India Pvt. Ltd vs Commissioner of GST & Central Excise

2025 TAXSCAN (CESTAT) 950

SHV LPG India Private Limited (formerly Caltex Gas India Pvt Ltd.), which was engaged in the import, storage, and bottling of LPG. The company sold its own LPG cylinders under the brand ‘Caltex’ and also provided taxable storage and packaging services to Bharat Petroleum Corporation Ltd (BPCL). The department had disallowed Cenvat credit availed on common input services, arguing that credit pertaining to the sale of their own LPG (a trading activity not subject to service tax) was ineligible. The demands covered the period from April 2008 to March 2011.

After considering both sides, the CESTAT bench acknowledged the settled legal position that credit on inputs used for trading activities must be reversed. However, the tribunal delved into the crucial issue of the applicability of the since-omitted Rule 6(5). Relying on the Supreme Court's judgment in Shree Bhagawati Steel Rolling Mills V. CCE (2015), which equated ‘omission’ with ‘repeal,’ and considering the protective nature of Section 38A of the Central Excise Act, the bench concluded that the legal provision must be applied to the period it was active.

The Bench comprising Member (Judicial) Ajayan T.V. and Member (Technical) Vasa Seshagiri Rao. found merit in the appellant’s argument and held that the benefit of Rule 6(5) should be examined. This rule allowed full credit on a specific list of input services unless used exclusively for exempted goods or services.

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