Annual Customs, Excise and Service Tax Case Digest: CESTAT Rulings 2025 (Part 18)

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

Syntel Wins Key Tax Refund Case as CESTAT Backs SEZ Unit on Input Service Classification

M/s Syntel Solutions (India) Pvt. Ltd vs Commissioner ofCustoms, Excise & Service Tax

2025 TAXSCAN (CESTAT) 951

The dispute concerned the rejection of a portion of Syntel’s service tax refund claim. The company, an SEZ unit providing software services treated as exports, had filed for a refund of ₹40,18,518.

The CESTAT bench, after hearing both sides, found merit in Syntel’s arguments. The Tribunal took note of a crucial Instruction No. 83 issued by the Department of Commerce, which provides a uniform default list of services eligible for SEZ units. This list includes ‘Business Support Service’ as an approved service.

The bench concluded that even if the services were classified as ‘Business Support Service’ and not ‘Business Auxiliary Service’, they were still entitled to be treated as valid input services for the SEZ unit, making the refund denial unjustified.

Refund cannot be adjusted against Disputed Penalty when 25% Reduced Penalty Paid within Time: CESTAT Orders Refund with Interest

Icon Industries vs Commissioner of CGST – Delhi West

2025 TAXSCAN (CESTAT) 952

The appellant, Icon Industries, was engaged in the manufacture and clearance of PVC separators for batteries using imported PVC resin.

The single bench comprising Ashok Jindal (Judicial Member) held that the appellant was entitled to a refund of the adjusted amount and also directed that interest shall be payable from three months after the filing of the refund claim, i.e., 07.08.2018, till its realization.

Accordingly, the appeal was allowed, and the adjustment of the refund against penalty was set aside.

Confiscation and Double Duty Demands Quashed: CESTAT Orders Fresh Quantification of Differential Duty on Inflated MRP Sales

M/s.Sharaya International vs Principal Commissioner of Customs

2025 TAXSCAN (CESTAT) 953

The assessee-appellant, Sharaya International, is a regular importer of deodorants and perfumes, filed the Bill of Entry No.8107125 dated 27.01.2015.

The Tribunal accordingly modified the impugned order as the confiscation under section 111(m) of the Act was set aside and consequently, the redemption fine also does not stand.

The Tribunal also set aside the amount of ₹6,23,664 relating to Bill of Entry No.8107125 dated 27.01.2015 and the customs duty amounting to ₹14,22,622, remaining amount of ₹66,41,737 was affirmed. Also, the penalty under Section 112(a) was reduced from ₹25,00,000 to ₹5,00,000 and under Section 114AA amounting ₹2,00,000 was set aside.

Curtain Wall Glazing Constructed on Site Becomes Part of Immovable Property Once Affixed and Cannot Be Treated as Excisable Goods: CESTAT

Commissioner of Central Excise vs M/s AGV Alfag Ltd

2025 TAXSCAN (CESTAT) 954

AGV Alfag Ltd. carried out construction of curtain walls and structural glazing for various buildings between September 2007 and December 2010. The work involved fixing aluminium sections to building walls, applying tapes, placing toughened glass, and sealing with structural silicon.

The tribunal also observed that sales tax is levied on sale or deemed sale of goods, not on manufacture and excise duty is chargeable only if a new movable product comes into existence.

The tribunal explained that curtain walls are constructed on site, are too large to be manufactured in a factory, and once affixed, become part of the immovable building, which means no excisable goods are manufactured. The tribunal pointed out that paying sales tax or service tax does not alter this position.

CESTAT Quashes 20-Year-Old Duty Demand, Rules in Favor of Importer in Landmark Textile Classification Case

IMFA Trading Company vs Commissioner of Customs (Import)

2025 TAXSCAN (CESTAT) 955

IMFA Trading Company, which had imported ‘Polyester fabrics’ in 2003. The goods were declared under Customs Tariff Item (CTI) 5407 6190, a classification confirmed at the time by the Textile Committee Laboratory; a specialized government body under the Ministry of Textiles. The importer paid the assessed duty, and the goods were cleared. Years later, the Directorate of Revenue Intelligence (DRI) initiated an investigation based on generic intelligence about potential misdeclaration in the sector. The DRI sent remnant samples to its in-house Central Revenue Control Laboratory (CRCL), which produced a new report suggesting the fabric was made of textured yarn, warranting a higher duty rate. This led to a demand for over ₹19 lakh in differential duty.

The tribunal concluded that the entire demand was legally unsustainable. It found that the department failed to discharge its burden of proof for reclassification and that the belated retest, conducted without transparency or proper procedure, carried no weight. The 20-year-old demand was based on a process that lacked credibility and fairness.

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 demand and the impugned order, and bringing a long-standing dispute to a close in favor of the taxpayer.

Coal Loading and Transport Classified as Goods Transportation, Not Cargo Handling: CESTAT Upholds Commissioner’s Order

Commissioner of Central Goods and Service Tax vs Bhaiya LalInfrastructure Pvt Ltd

025 TAXSCAN (CESTAT) 956

The assessee, a contractor engaged in providing services to NCL, had been issued a Show Cause Notice (SCN) alleging that its activities of deploying tipping trucks and pay loaders for loading coal amounted to cargo handling services under section 65(23) of the Finance Act, 1994.

The Tribunal reiterated that mere loading incidental to transport cannot be classified as cargo handling and that the principal service was transportation of goods. Since the assessee was not a goods transport agency and no consignment notes were issued, no tax liability arose.

The Bench observed that the demand was based on the assessee’s own documents, and the fact that NCL had discharged service tax under reverse charge was already in the Department’s knowledge. There was no suppression or intent to evade, making the invocation of the extended period under section 73 of the Act unsustainable.

CESTAT Quashes Extended Service Tax & CENVAT Demand, says No Wilful Suppression Found, SCN Held Time-Barred

New Age Laminators Private Limited vs Commissioner of CentralGoods And Service Tax & Central Excise &-Alwar

2025 TAXSCAN (CESTAT) 957

The assessee, engaged in the manufacture of High-Density Polyethylene (HDPE) and Polypropylene (PP) laminated paper bags, was audited by the Central Excise department, which observed that CENVAT credit of ₹1,16,924 had been wrongly availed and that service tax of ₹5,75,134 under reverse charge on commission paid to foreign agents between September 2013 and September 2014 had not been discharged.

The Bench held that there was no deliberate act of suppression as the transactions were reflected in the appellant’s financial records and regularly filed returns, and the demand arose only upon audit scrutiny. Consequently, the SCN was declared barred by limitation.

Accordingly, the CESTAT Bench comprising Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) set aside the impugned order and allowed the appeal.

2025 TAXSCAN (CESTAT) 958 NOT FOUND

CESTAT Confirms Penalty on Combine Trading for Under-Valuation and False Invoices in Glass Imports

M/s.Combine Trading Company vs Principal Commissioner of Customs

2025 TAXSCAN (CESTAT) 959

The case arose from an intelligence input received by SIIB-Import ICD indicating widespread mis-declaration and undervaluation by Delhi-based importers, including Combine Trading Company, in the import of “Automotive Safety Glass” windshields and PU Sealant.

The Tribunal noted that the documents recovered and self-certified under section 138C of the Act, as well as the admitted statements, provided credible evidence of undervaluation.

The Tribunal concluded “We do not find any good reason to interfere with the findings in the impugned order and hence the same are affirmed. The appeal is, accordingly, dismissed.”

CESTAT Upholds Assessee’s Right to Cenvat Credit on Commission Paid for Flat Sales, Explanation to Rule 2(l) Held Declaratory

Commissioner of CGST & Central Excise Commissionerate vsM/s. Krish Infrastructure Pvt. Ltd.

2025 TAXSCAN (CESTAT) 960

The respondent, Krish Infrastructure Pvt. Ltd., was engaged in providing taxable services of Construction of Residential Complex, Real Estate Agent Services, and Business Auxiliary Services.

The Tribunal noted that the issue was no longer res integra and had been decided in a series of decisions. The tribunal relied on an earlier decision in the case of Essar Steel India Ltd. v. CCE (2016), which held that the Explanation to Rule 2(l), inserted by Notification No. 2/2016-CX (NT), was declaratory in nature and effective retrospectively. It was clarified that sales promotion includes services by way of the sale of dutiable goods on a commission basis.

In view of these decisions, the Bench comprising Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) held that the respondent was entitled to avail Cenvat credit on service tax paid as commission agents on the sale of flats.

Relief for SAIL: CESTAT Rules Forfeited Amount on Breach of Contract Not Liable to Service Tax

M/S.STEEL AUTHORITY OF INDIA LIMITED vs COMMISSIONER OF CENTRALTAX & GST

2025 TAXSCAN (CESTAT) 961

Steel Authority of IndiaLimited,appellant-assessee, was engaged in trading iron and steel products manufactured by Bhilai Steel Plant. It had entered into a Conversion Agreement dated 01.06.2011 with M/s SKS Ispat & Power Ltd. for converting billets into rolled products for a per-ton consideration.

It was also submitted that, as clarified in these decisions, an activity could be treated as a declared service under Section 66E of the Act only when there was a separate agreement to refrain from, tolerate, or perform an act, which was not applicable in this case.

The two member bench comprising Binu Tamta (Judicial Member) and P.V.Subba Rao (Technical Member) found no merit in the impugned order, set it aside, and allowed the appeal.

CENVAT Credit availed on input service which are used for output service cannot be denied: CESTAT

M/s. Enmas Andritz Pvt. Ltd vs Commissioner of GST & CentralExcise

2025 TAXSCAN (CESTAT) 962

M/s. Enmas Andritz Pvt. Ltd, the appellant is engaged in designing and supply of recovery boilers for pulp and paper manufacturers in India and enters into composite contracts for the same. The activity undertaken by the Appellant involves identifying the type of boiler suitable for the particular manufacturer, designing the same, arranging for manufacture and sourcing of various parts and components of the boiler with related equipment and accessories, and supervision of the erection and commissioning of the boilers.

A single bench of K. Anpazhakan, Member (Technical) found that there is no dispute that the input service on which the credit availed by the appellant were used in connection with the output service, namely, Consulting Engineering Service and held that the CENVAT Credit availed on the input service which are used for output service by the appellant cannot be denied.

There is nothing on record to establish that the input services credit availed by the appellant were used for proving the exempted service of ‘trading’. On the other hand, the evidence available on record indicate that all the activities of the appellant are directly related to ultimate clients, used in designing and supply of recovery boilers for pulp and paper manufacturers.

Services provided for Imparting Education as per University Curriculum Exempted from Service Tax: CESTAT rules in favour of Sky Lark Educational Welfare Society

M/s Sky Lark Educational Welfare Society vs Commissioner ofCentral Goods & Service Tax

2025 TAXSCAN (CESTAT) 963

M/s Sky Lark Educational Welfare Society, the Appellant challenged the Order-in-Appeal passed by the Commissioner (Appeals), CGST, Noida. The Appellant was registered with the Central Excise & Service Tax Department for providing taxable services.

The single member bench of P.K. Choudhary, Member (Judicial) observed that the Appellant had been imparting education to the students of Swami Vivekananda Subharti University, enrolled under the distant learning programme, as per the curriculum provided by the said University and the said University was duly recognized under the laws of the Uttar Pradesh Government/UGC. For such services provided by the Appellant, the Swami Vivekananda Subharti University, Meerut had been paying some fees to the Appellant.

The tribunal thus held that the demand of service tax confirmed on services rendered by the Appellant on the consideration received from NULM is not sustainable and set aside the same.

CESTAT Sets aside Commissioner's order denying Cenvat Credit only because of absence of Nexus with Input services and Output services

Divyasree Holdings Private Limited vs The Commissioner of Service

2025 TAXSCAN (CESTAT) 964

The Appellant M/s. Divyasree Holdings Pvt. Ltd. are registered under the category of Construction Services, Goods Transport Agency and Renting of Immovable Property Services. The audit party on verification of records observed that the appellant had availed cenvat credit on various input services and utilized the same for payment of service tax on renting of immovable property service. The Commissioner in the impugned order observed that the various input services had no nexus with the taxable output service.

The two member bench of P.A. Augustian, Member (Judicial) and R. Bhagya Devi, Member (Technical) observed that the cenvat credit is denied only on the ground that the input services had no nexus with output services for the reason that the input services were used for the construction of immovable property, which was later on rented; on which service tax being paid under the category of ‘Renting of Immovable Property’.

The tribunal set aside the observations of the Commissioner in the impugned order and allowed the appeal.

Punjab Roadways Providing Transport Services to General Public Not a Manpower Recruitment or Supply Agency: CESTAT

Commissioner of Central Excise, Goods & Service Tax vsPunjab Roadways

2025 TAXSCAN (CESTAT) 965

The Govt of Punjab got incorporated under the Companies Act, 1956 a company named Punjab Bus Stand Management Company Limited (‘PUNBUS’) which is wholly owned by the Govt of Punjab. The PUNBUS started operation in May, 2006 on the existing route permits of the Punjab Roadways. It was also decided by the Govt of Punjab that the staff of the Punjab Roadways was to be deployed with PUNBUS on assignment basis without any additional remuneration or deputation allowance.

The assessee-Punjab Roadways was performing statutory function and therefore, they do not fall in the definition of “Manpower Recruitment or Supply Agency’s Service” as defined under Section 65(68) of the Act.

A two member bench of S. S. Garg, Member (Judicial) and P. Anjani Kumar, Member (Technical) held that assessee-Punjab Roadways, being a transport department of the State of Punjab, is performing statutory function to provide transport services to the general public and is not a manpower recruitment or supply agency.

Rule 6 of Central Excise Valuation Rules not invocable when Discount Policy is Generally Offered for all Customers: CESTAT

Hyderabad Industries Limited vs Commissioner of Central Tax andCentral Excise

2025 TAXSCAN (CESTAT) 966

M/s. Hyderabad industries limited the appellant is the manufacturer of asbestos products. The appellant during the impugned period sold goods from factory gate and also from their sales depot at Kerala in respect of stock transferred goods on payment of central excise duty based on the price card fixed by the corporate office, the price card is the rate at which the excisable goods are supplied to the buyer of goods.

The tribunal found that the appellant had given cash discounts to the buyers of the goods who had paid advances and the discounts are as per the already disclosed rates which are available for all the buyers who pay the amounts in advance or who pay the sale consideration within the stipulated periods after the delivery of the goods.

The two member bench of P. A. Augustian, Member (Judicial) and Pullela Nageswara Rao, Member (Technical) held that there is no reason for invoking Rule 6 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and set aside the impugned orders.

CENVAT Credit on Sub-Contractor’s Services Denied as Not Input for Cement Manufacture: CESTAT Upholds Service Tax Demand on Mining Services

M/S PRISM JOHNSON LIMITED vs COMMISSIONER OF CGST & CENTRALEXCISE

2025 TAXSCAN (CESTAT) 967

The assessee, Prism Johnson Limited, a manufacturer of cement, was issued a Show Cause Notice (SCN) covering the period 01.10.2014 to 30.06.2017.

The tribunal ordered the credit to be recovered, but only within the normal period of limitation, as ER-1 returns did not require disclosure of service-wise credit details, and suppression could not be alleged. Also, the penalties under Rule 26(2)(ii) of the Central Excise Rules imposed on the officers were also set aside.

Accordingly, the Tribunal dismissed the service tax appeal and sustained the demand of service tax with penalties, but partly allowed the excise appeal by restricting recovery of CENVAT credit to the normal period and also set aside the penalties.

Dry Dates Found of UAE Origin Not Pakistan, Valid Documents Present and No Fraud Proven: CESTAT Sets Aside Customs Demand

S. S. Overseas vs The Principal Commissioner of Customs

2025 TAXSCAN (CESTAT) 968

The assessee, S.S. Overseas, had entered into a sales contract on 02.07.2019 with GVO Global FZC, UAE, for the supply of 55 MT of dry dates. Relying on a commercial invoice, packing list, fumigation certificate, phytosanitary certificate issued by the UAE Plant Protection Organization, and a certificate of origin dated 16.07.2019 from Ajman Chamber of Commerce, the importer filed a Bill of Entry on 09.08.2019. The goods were duly examined by the proper officer, assessed to duty, and cleared on payment.

On appeal, the Tribunal noted that the documents submitted by the appellant, particularly the certificate of origin issued by a competent UAE authority, had not been cancelled or questioned by the issuing authority.

The Tribunal also observed that the Rule 6 of the Customs (Administration of Rules of Origin) Rules, 2020 provided a procedure for verifying the genuineness of such certificates, but no such verification was undertaken with the UAE authorities. Instead, the documents was placed on an unsigned photocopy of an export declaration obtained from a shipping line, which contained discrepancies in consignee details, invoice values, and lacked attestation. The Tribunal, relying on its earlier decision in Omega Packwell Pvt. Ltd. vs. Pr. Commissioner of Customs (2024), held that such documents could not displace a valid certificate of origin.

Export Cannot be Penalised for Dept’s Delay in Litigation: CESTAT Orders Interest on Duty Drawback from 2003

M/s Siddhachalam Exports Pvt. Ltd vs The Commissioner of Customs

2025 TAXSCAN (CESTAT) 969

M/s Siddhachalam Exports Pvt. Ltd. filed seven shipping bills on 24.02.2003 for export of “Ladies Top” and “Denim Shirt,” claiming a duty drawback of ₹49,75,536 under section 75 of the Customs Act, 1962. The let export order was issued on 13.03.2003, and as per Rule 13 of the Drawback Rules, the drawback claim was filed on that date itself.

The Tribunal noted that Section 75A of the Customs Act mandates interest if the drawback is not paid within one month from the date of claim. The Tribunal thus directed that interest from 14.04.2003 up to the date of payment of drawback shall be paid to the appellant within a period of one month from the order date, failing which the appellant shall become entitled to also receive interest from 01.03.2025 up to the date of payment of interest.

The appeal was accordingly allowed.

Hotel Property Lease Exempt from ‘Renting of Immovable Property’: CESTAT Sets Aside Service Tax of ₹9.63L

M/s. Valvan Village Resorts vs Commissioner of Central Excise& Service Tax

2025 TAXSCAN (CESTAT) 970

The appellant, Valvan Village Resorts, engaged in the hotel business at Lonavala with its corporate office in Mumbai, faced two notices that are show cause and demand notices dated 15.10.2012 and 25.03.2013. These notices covered the periods April 2011 to March 2012 and April 2012 to July 2012, alleging liability of ₹6,87,098 and ₹2,76,464 respectively, totaling ₹9,63,562.

The Tribunal also noted that while the service might have been considered under “hotel accommodation service” as defined in Section 65(105)(zzzzw) of the Finance Act, 1994, that provision only applied where accommodation was provided for a continuous period of less than three months. Since the conducting agreement contained no such stipulation and no demand was raised under that category, the classification was irrelevant to the case.

The Tribunal ruled that the demand confirmed against the appellant under “Renting of Immovable Property Service” was unsustainable in law and on the facts.

No Confiscation Without Authority: CESTAT Rules DRI and Customs Cannot Invalidate BRCs or DEPB Scrips Without DGFT or RBI Action

PANKAJ CHORDIA vs THE COMMISSIONER OF CUSTOMS, AIR CARGO COMPLEX

2025 TAXSCAN (CESTAT) 971

The case arose from a batch of 21 appeals filed by importers, bank officers, and a chartered accountant against an order passed by the Commissioner of Customs, Air Cargo Complex (Export), New Delhi.

The tribunal pointed out that even if the scrips were obtained through fraud, they remained valid until cancelled by the competent authority. It further observed that the demand of duty under Section 125(2) was unsustainable as it presupposes confiscation of goods, which had not occurred.

The tribunal allowed all 21 appeals. It set aside the impugned order, holding that the findings and penalties imposed by the Commissioner were without authority of law. The appellants were granted consequential relief.

Traffic Police Not a “Person” Under Service Tax Law Before 2012: CESTAT Rules No Service Tax on Crane Hire

SURINDER AGGARWAL vs COMMISSIONER (APPEALS-I)

2025 TAXSCAN (CESTAT) 972

Surinder Aggarwal, now operating as New Royal Motor, had supplied cranes on hire to the Delhi Traffic Police for towing and related purposes. The department treated this as a taxable service under the category of “supply of tangible goods” and demanded service tax. The Commissioner (Appeals) upheld the demand, after which the appellant approached the Tribunal.

The bench comprising Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that for the period in dispute, the Finance Act did not define the term “person,” and the meaning under the General Clauses Act applied.

The tribunal explained that since Delhi Traffic Police was not a “person” under the law for the period 2009-2012, no service tax could be levied on the hiring of cranes. The order of the Commissioner (Appeals) was set aside, and the appeal was allowed.

Rice Qualifies as “Agricultural Produce” under Notification, Service Tax on Commission Agents Not Payable: CESTAT

M/s Bharat Industrial Enterprises Ltd. vs Commissioner ofCentral Excise and Service Tax

2025 TAXSCAN (CESTAT) 973

Bharat Industrial Enterprises Ltd., the appellant, is engaged in cultivation of paddy and the sale and export of rice obtained by de-husking. During 2007–08, the appellant paid service tax under reverse charge on commission paid to agents for promoting its domestic and export sales.

The two-member bench comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that the inclusive clause in the definition of agricultural produce under the notification clearly covered cereals, and rice being a cereal, there was no ambiguity. The tribunal pointed out that the CBIC’s 2011 circular confirmed this position and left no room for doubt.

The tribunal explained that since rice is an agricultural produce, the commission agent services received by the appellant for promoting its sales were exempt from service tax under Notification No. 13/2003-ST. The appeal was allowed and the refund claim was restored with consequential relief.

Preloaded Software Must Be Included in Customs Valuation of Imported Navigation Devices: CESTAT

M/s. Lakshmi Access Communications Systems Pvt. Ltd. vsCommissioner of Customs

2025 TAXSCAN (CESTAT) 974

Lakshmi Access Communications Systems Pvt. Ltd., the appellant, imported 20,150 GPS navigation devices and 20,000 paper software licences under separate bills of entry in April 2010. The supplier also provided 150 units free of cost, which were not declared to customs.

The two-member bench comprising Dr. D.M. Misra (Judicial Member) and Pullela Nageswara Rao (Technical Member) observed that the software was preloaded into the navigation devices and the licence keys were already imprinted, making the software an integral part of the hardware.

The tribunal held that the commissioner was right in enhancing the value by including the software component, confirming the duty demand, interest, and confiscation. However, it reduced the penalty on each of the directors from Rs. 6 lakh to Rs. 1 lakh, finding the earlier penalty excessive.

Liability to Pay Service Tax under Reverse Charge for Foreign Services: CESTAT Rules No Liability Post 1st July 2012

M/s.Frisco Foods Pvt. Ltd vs Commissioner of Central Goods

2025 TAXSCAN (CESTAT) 975

Frisco Foods Pvt. Ltd.,appellant-assessee, was engaged in manufacturing biscuits and had availed manpower recruitment, GTA, works contract, and other related services. The company also exported biscuits and had appointed commission agents abroad, making commission payments in foreign exchange.

As a result, the bench held that the demand, interest, and penalties for the period after 1st July 2012 were not sustainable and needed to be set aside. It also ruled that the extended period of limitation could not be invoked, since the facts were already known to the department and repeated show cause notices did not amount to suppression of facts, in line with the Supreme Court’s decision in Nizam Sugar Factory Vs. CCE, Andhra Pradesh.

Consequently, the tribunal found no merit in the impugned orders and set them aside, allowing the appeals.

Service Tax Not applicable on Public Utility Works including Laying of Pipelines, Repairs of Sainik Schools: CESTAT quashes Demand

M/s Chaitanya Constructions vs Commissioner of Central Excise& Service Tax

2025 TAXSCAN (CESTAT) 976

The Tribunal comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) emphasized that service tax under the Works Contract Service (WCS) cannot be levied on projects undertaken for municipal authorities, government departments, or SEZs, as these are not works “primarily for commerce or industry.”

The issue is related to works executed by the appellant, Chaitanya Constructions, between October 2010 and September 2011, including laying, shifting, and maintenance of pipelines for municipal corporations, construction of water supply facilities at industrial growth centers for the Andhra Pradesh Industrial Infrastructure Corporation (APIIC), and execution of elevated storage reservoirs and other facilities for SEZ operations.

Accordingly, the bench of A.K. Jyotishi (Technical member) and Angad Prasad (Judicial member) observed that government bodies such as APIIC and municipal authorities are public authorities whose projects are for promotion of public welfare and industrial infrastructure, and not for commercial exploitation.

Clear Float Glass with Tin Absorbent Layer Classifiable as Non-Wired Glass with Absorbent/Reflecting Layer: CESTAT

M/s. Float Glass Centre vs Commissioner of customs

2025 TAXSCAN (CESTAT) 977

Float Glass Centre, the appellant, is a regular importer of clear float glass from Malaysia. The goods in question were declared to be classifiable under tariff heading 7005 1090, which covers non-wired glass with an absorbent, reflecting, or non-reflecting layer.

The two-member bench comprising M. Ajit Kumar (Technical Member) and Ajayan T.V. (Judicial Member) observed that Article 265 of the Constitution requires that tax be collected strictly under authority of law, and excess duty cannot be demanded even if self-assessed.

The tribunal explained that self-assessment is also an appealable order and payment under protest can be made in such cases. The tribunal pointed out that test reports clearly showed the presence of a tin layer acting as an absorbent or non-reflective coating, which satisfied the requirements of Chapter Note 2(c) to Chapter 70.

Cenvat Credit Admissible on Service Tax Paid on "Manpower Supply Service”, Qualify as Input Service: CESTAT

Shri Vijay Kumar Sharma vs Commissioner of C.E.-Kutch

2025 TAXSCAN (CESTAT) 978

The Tribunal ruled that these services, being directly connected with the overall manufacturing process and essential factory operations, qualify as "input services" under Rule 2(l) of the Cenvat Credit Rules, 2004.

Multiple demands were raised on Solvay Specialities India Pvt. Ltd. for the period between 2014 and 2017, wherein the department contended that manpower supply services did not fall within the ambit of input services and disallowed credit amounting to several crores.

The Tribunal also stated the decision in CCE v. Carboline (India) Pvt. Ltd., which recognized that manpower supply and insurance services form part of the cost of manufactured products and are thus eligible for credit.

Cenvat Credit Admissible on Service Tax Paid on "Manpower Supply Service”, Qualify as Input Service: CESTAT

Solvay Specialities India Pvt Limited vs Commissioner of CentralExcise & ST

2025 TAXSCAN (CESTAT) 979

Multiple demands were raised on Solvay Specialities India Pvt. Ltd. for the period between 2014 and 2017, wherein the department contended that manpower supply services did not fall within the ambit of input services and disallowed credit amounting to several crores.

On appeal, the Bench comprising Dr. Ajaya Krishna Vishvesha (Judicial Member) noted that the issue was already covered in favour of the appellant in earlier decisions, including in the assessee’s own case decided by the same Tribunal in 2018.

It was reiterated that manpower recruitment and supply services are specifically included in the definition of "input service." Even if not directly linked to manufacture, their inclusion under the “recruitment service” clause makes the credit admissible.

Service Tax Refund Re-computation Request Treated as Fresh Claim without Complying Appellate Order: CESTAT sets aside New Order

M/s Deutsche CIB Centre Private Limited vs Commissioner of CGST& Central Excise, Mumbai East

2025 TAXSCAN (CESTAT) 980

Deutsche CIB Centre Pvt. Ltd., the appellant, is an exporter of services, sought refunds of accumulated unutilised CENVAT credit through applications filed in 2012. The refund sanctioning authority partly allowed the claims in 2013 but rejected portions stating lack of nexus between input and output services, and also failed to grant statutory interest.

The Tribunal, per Dr. Suvendu Kumar Pati (Judicial Member), held that the adjudicating authority’s role was limited to calculating the admissible refund as directed in 2017, and that treating the compliance letter as a new refund application was an irregularity rendering the proceedings void. The subsequent affirmation of such proceedings by the Commissioner (Appeals) in 2020 was also found to be unsustainable.

Accordingly, the Tribunal set aside the impugned order and directed the Assistant Commissioner of CGST & Central Tax, Mumbai, to implement the 2017 appellate order without delay, recompute the admissible refund, and release payment along with applicable interest within two months of receipt of the order.

CHA allows Unauthorized Person to use License: CESTAT upholds Penalty, Declines to Cancel License and Forfeit Security

Commissioner of Customs vs M/s. Thirumala Logistics

2025 TAXSCAN (CESTAT) 981

The Directorate of Revenue Intelligence (DRI) intercepted a container, originally declared as carrying zinc ingots, which was later found to conceal over 7.2 metric tonnes of red sanders, a prohibited item for export.

The bench said that Regulation 18 of CBLR allows for either revocation of the license or imposition of penalty, and the discretion exercised by the adjudicating authority to impose only a penalty was proper.

It was also noted by the tribunal that there was no evidence linking the Customs Broker directly with the attempted smuggling of red sanders, and precedent cases such as Skyline Shipping & Logistics v. Commissioner of Customs and Maheshwari Rocks (P) Ltd. v. Commissioner of Customs supported a balanced approach where brokers were not penalized beyond their actual role.

Customs Authorities cannot Levy Redemption Fine Beyond Market Value of Seized Goods u/s 125 less Duty Payable: CESTAT

M/s. S. Kantilal & Company vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 982

An appeal was filed by M/s S. Kantilal & Company and its partner, challenging excessive redemption fine and penalties imposed by the Principal Commissioner of Customs, Airport Special Cargo, Mumbai, in relation to a misdeclaration case involving import of “rough diamonds” that were later found to be low-value natural topaz.

The bench of Dr. Suvendu Kumar Pati (Judicial member) noted that the Commissioner’s justification, imposing a high fine to adequately punish the importer as an “economic offender”, could not override statutory limits.

It was ruled that the market value determined at ₹8,291 formed the ceiling for redemption fine. Consequently, the Tribunal restricted the redemption fine as well as penalty to ₹8,291, pointing out that proportionality is central to customs adjudication.

Setback for Pondicherry Engineering College: CESTAT Upholds Service Tax on Technical Testing & Analysis Services, Penalty Waived

Pondicherry Engineering College vs Commissioner of GST &Central Excise

2025 TAXSCAN (CESTAT) 983

Pondicherry Engineering College, the appellant, had provided technical testing services to Numeric Power Systems, Puducherry. During verification, it was found that service tax amounting to Rs. 3,42,367 was payable. A show cause notice was issued proposing demand of tax, interest, and equal penalty.

The two-member bench comprising Ajayan T.V. (Judicial Member) and M. Ajit Kumar (Technical Member) observed that in an earlier decision dated 25.01.2017, the tribunal had already ruled against the appellant on the issue of tax liability but had waived the penalty. The tribunal explained that judicial discipline required consistency and uniformity in decisions and no new facts had been produced to alter the earlier ruling.

The tribunal upheld the demand for service tax and interest but set aside the penalty, holding that there was no deliberate intention on the part of the appellant to evade tax. The appeal was partly allowed.

Exemption Notifications Override CBEC Circulars: CESTAT Rules Jewellery Exports Need Not Be Made Only from Imported Gold

PH Jewels vs Principal Commissioner of Customs

2025 TAXSCAN (CESTAT) 984

The bench examined the provisions of Notification No. 57/2000-Cus and the relevant Foreign Trade Policy (FTP). It observed that while the FTP permits procurement of gold either in advance or as replenishment after export, the exemption notification did not impose any condition requiring the exporter to use exclusively imported gold for jewellery exports.

The CESTAT noted that the CBEC circular attempted to read such a condition into the notification, which is impermissible in law.

The bench of P V Subba Rao and Angad Prasad, said that the principle that taxation law cannot be based on intendment. It pointed out that exemption notifications issued by the Government are subordinate legislation, vetted by Parliament, and carry the force of law. By contrast, CBEC circulars are only instructions to departmental officers and cannot modify, restrict, or expand the scope of statutory notifications.

Claiming Customs Exemption or Classification on Bill of Entry Not Mis-Declaration: CESTAT rules No Suppression when Identical Consignments Cleared Earlier

M/s. Gravity Ventures Pvt. Ltd vs Commissioner of customs

2025 TAXSCAN (CESTAT) 985

The Tribunal held that when past consignments with identical descriptions had been cleared by the Customs Department under the same classification and exemption, the importer cannot be accused of intent to evade duty.

The appellant, Gravity Ventures Pvt. Ltd., a Coimbatore-based importer, filed a bill of entry in April 2020 for importing various non-woven interlining materials such as chemical bond, embroidery paper, and double-dot fabric.

The Tribunal stated that reassessment or change of classification based on a test report cannot, by itself, sustain a charge of willful mis-declaration.

Consultancy Services Delivered Outside India Do Not Attract Service Tax Liability: CESTAT says Correlation of FIRCs and Invoices Procedural, Sets aside Order

Shri Shailesh Dayal vs Commissioner, Central GST, Agra

2025 TAXSCAN (CESTAT) 986

The bench, while setting aside the impugned order of the Commissioner (Appeals), allowed the appeal filed by M/s Refractories & Engg., represented by Shailesh Dayal holding that service tax cannot be levied on consultancy and commission services rendered to a foreign client when payments are received in convertible foreign exchange.

However, the bench of P.K. Choudhary found merit in the appellant’s arguments. The appellate tribunal noted that the appellant had indeed received foreign exchange amounting to USD 87,245.74 (equivalent to ₹56,85,074.84) for consultancy services, out of which ₹2,73,121.75 represented expenses incurred, leaving a net consultancy fee of ₹54,15,953.

Accordingly, it ruled that consultancy and commission services provided outside India are not taxable under the Finance Act, 1994.

Exporter’s Declaration in Shipping Bills Not False Merely Due to DRI’s Alternate Classification View: CESTAT sets aside Penalty u/s 114AA

COMMISSIONER, CUSTOMS vs M/S PELICAN QUARTZ STONE

2025 TAXSCAN (CESTAT) 987

The bench of Justice Dilip Gupta and P V Subba Rao observed that ‘The declaration in the Shipping Bills does not become false or incorrect simply because DRI takes a different view of the classification. No exporter has an obligation to conform to any future views of any officer of DRI, Audit, Preventive, etc. Penalty under section 114AA, therefore, cannot be imposed anyway in the matter regardless of the merits of the classification.”

The DRI investigations alleged that Pelican Quartz Stone, the appellant, misclassified “Engineered Quartz Stone” under Customs Tariff Heading (CTH) 68159990 instead of 68101990, thereby availing undue benefits under the Merchandise Exports from India Scheme (MEIS).

While setting aside the impugned order, CESTAT allowed the assessee’s appeal and dismissed the Revenue’s appeal, holding that penalties under Sections 114 and 114AA were not required.

Service Tax Demand Raised Solely on Income Declared in Income Tax Survey is Not Sustainable: CESTAT

Agrawal Builders and Colonizers VS Commissioner of CentralGoods, Service Tax

2025 TAXSCAN (CESTAT) 988

The appellants, Agrawal Builders and Colonizers is a partnership firm, engaged in construction and sale of residential complexes, were subjected to audit during which the department noticed that income of ₹1.25 crore was shown in their profit and loss account and later disclosed before the Income Tax Department.

Based on statements recorded from the partner and finance manager, a show cause notice was issued demanding service tax of ₹1.31 crore. The adjudicating authority partially allowed abatement and confirmed a demand of ₹32.83 lakh with interest and penalties, which was later upheld by the Commissioner (Appeals).

The bench of Binu Tamta and Hemmabika R Priya observed that statements alone cannot be treated as conclusive evidence without corroboration. The department failed to identify any specific taxable service or service recipient connected with the disclosed income.

Customs Dept. Cannot Deny Import Duty Exemption Made under Valid DFRC/DFIA Licences but Later Cancelled by DGFT: CESTAT

M/s. M.R. & Co. vs Commissioner of customs

2025 TAXSCAN (CESTAT) 989

The bench of M. Ajit Kumar and P. Dinesha observed that “Hence the action that lies when a scrip/licence has been issued by DGFT but was obtained by misrepresentation is not the same as in the case of a fraudulent scrip/licence. Since the import in this case was made under a licence which was valid at the time of import and was cancelled by DGFT much later, the said licence are required to be honored by the Custom authorities and no demand can be raised. In the circumstances interest, penalties etc do not survive.”

The appellant, a trader in raw silk, had imported 13,940 kgs of raw silk yarn worth ₹1.64 crore duty-free against DFRC licences originally issued to M/s Shree Kuberappa & Sons and transferred through Telegraphic Release Advise (TRA).

The Tribunal clarified that the doctrine “fraud vitiates everything” applies only where the licence itself is forged or fake and never issued by the authority. In contrast, where the licence was lawfully issued but subsequently cancelled for fraud by the original holder, it remains valid until cancellation and imports made during that period are protected.

Relief to JSW Steel: CESTAT Orders Cash Refund of ₹45.54 Lakh CVD & SAD Paid Post-GST Implementation

M/s JSW Steel Limited vs Commissioner of CGST & CentralExcise

2025 TAXSCAN (CESTAT) 990

JSW Steel, a leading steel manufacturer, imported iron ore and iron ore fines under provisional assessments. Following the finalisation of assessments, the company discharged CVD and SAD between July 2018 and July 2019.

Before the tribunal, counsel for JSW Steel argued that judicial precedents, including the Larger Bench ruling in Bosch Automotive Electronics India Pvt. Ltd., had conclusively settled that CVD and SAD paid post-GST are refundable in cash if CENVAT Credit is unavailable.

The counsel relied on the Bombay High Court’s decision in Combitic Global Caplet Pvt. Ltd., which interpreted Section 142(3) of the CGST Act broadly to cover not just credits but also “any other amount” paid under the erstwhile regime.

Remuneration Paid to Directors is in Nature of Salary, Excluded from Service Definition: CESTAT

M/s. Neelamber Catterers Private Limited vs Commissioner ofC.G.S.T. and Central Excise

2025 TAXSCAN (CESTAT) 991

Neelamber Catterers Pvt. Ltd., the appellant, had paid remuneration to its directors and deducted tax at source under section 192 of the Income Tax Act. The department demanded service tax of Rs. 1,49,411/- on such payments under the reverse charge mechanism, alleging that the directors were not full-time employees as they had income from other sources.

The single-member bench comprising K. Anpazhakan (Technical Member) agreed with the appellant’s arguments. The tribunal observed that the remuneration was paid as salary, tax was deducted under the salary head, and the directors were employees of the company.

The tribunal pointed out that as per section 65B(44)(b) of the Finance Act, 1994, services provided by an employee to the employer during the course of employment are not taxable. The tribunal explained that CBEC Circular No. 115/9/2009-ST had also clarified that remuneration paid to directors in their capacity as employees is outside the scope of service tax. The demand was set aside.

Rule 3(5) of CCR Mandates Reversal Only on Inputs/Capital Goods Cleared ‘As Such’, Not on Input Service Credit Like Transportation: CESTAT

M/s. Gagan Ferrotech Limited vs Commissioner of C.G.S.T. and CentralExcise

2025 TAXSCAN (CESTAT) 992

Gagan Ferrotech Ltd., the appellant, is a manufacturer of sponge iron, billets, ingots, TMT bars, and HR coils. During an audit, it was found that the appellant had reversed CENVAT credit on inputs and capital goods cleared “as such” but had not reversed service tax credit taken on transportation of those goods.

The single-member bench comprising K. Anpazhakan (Technical Member) observed that Rule 3(5) of the CENVAT Credit Rules only envisages reversal of credit on inputs and capital goods cleared “as such.” It does not cover credit of input services like transportation.

The tribunal pointed out that this issue had already been settled in earlier decisions, including those affirmed by the Punjab and Haryana High Court. The tribunal explained that taxing provisions must be read strictly, and no liability can be imposed by presumption or inference. The demand, along with interest and penalty, was set aside and the appeal was allowed.

CENVAT Credit Admissible on Services Used for Setting up and Administering First Aid in Factory: CESTAT

M/s. Usha International Limited vs Commissioner of CentralExcise

2025 TAXSCAN (CESTAT) 993

Usha International Ltd., the appellant, had during 2011-12 availed CENVAT credit of Rs. 8,996 on services connected with establishing and administering first aid in its factory. The department denied the credit on the ground that such services were not covered under the definition of input service under the CENVAT Credit Rules, 2004.

The single-member bench comprising K. Anpazhakan (Technical Member) agreed with the appellant’s arguments. The tribunal observed that setting up and maintaining first aid was a legal obligation under Section 45 of the Factories Act, 1948, and was inseparable from the manufacturing process.

The tribunal pointed out that Rule 2(l) of the CENVAT Credit Rules covers all services used directly or indirectly in or in relation to the manufacture of final products. The tribunal explained that since the first aid facility was mandatory for operating the factory, the services used for it qualified as input services. The impugned order was set aside.

CESTAT Holds CAs’ Executory Services Outside Scope of ‘Management Consultancy’, Export and Out-of-Pocket Expenses Not Taxable

M/s B S R and Co. vs Commissioner of Service Tax, Delhi

2025 TAXSCAN (CESTAT) 994

The appellants-assessee, engaged as Chartered Accountancy firms providing tax compliance, representation services, audit, and related work, were issued a Show Cause Notice (SCN) demanding service tax of ₹5,71,04,507 under the Management Consultancy Services category for the period from 01.10.2002 to 31.03.2007.

After hearing both sides, the Tribunal comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member), found that only consultancy or advisory services are covered under Management Consultancy, not executionary responsibilities, and reports delivered to clients abroad amounted to export of services, hence not taxable. The issue of inclusion of out-of-pocket expenses stands settled in favour of the appellants.

Accordingly, the CESTAT allowed both appeals, setting aside the demands of service tax, interest, and penalties.

Services to IIMs and XLRI Are Educational Support, Not ‘Commercial Training and Coaching’ : CESTAT

M/s Hughes Communication India Ltd vs Commissioner of ServiceTax

2025 TAXSCAN (CESTAT) 995

The appellant, Hughes Communication India Ltd. is engaged in providing Very Small Aperture Terminal (VSAT) services under license from the Department of Telecommunications.

During the audit, the Department observed that from 2005 to June 2012, the appellant booked tuition and other fees in its profit and loss account without paying service tax. Two Show Cause Notices covering 2005–06 to June 2012 were issued, demanding service tax with interest and penalties. The adjudicating authority confirmed the demands.

The Tribunal ruled that such activities constitute only educational support services, and therefore cannot be subjected to service tax under the Finance Act, 1994. It allowed the appeals and set aside the demands of service tax raised on the ground of “Commercial Training and Coaching Services.”

Depreciation on Capital Goods under EOU Scheme Allowed Only up to Date of Debonding, Not Till Duty Payment: CESTAT

Commissioner of Customs (Preventive) Vijayawada vs Blue GoldMaritech (International) Ltd

2025 TAXSCAN (CESTAT) 996

Blue Gold Maritech (International) Ltd, a 100 percent Export Oriented Unit in Nellore, Andhra Pradesh, had imported capital goods and raw materials without paying duty under Notification No. 188/1993-Cus dated 27 December 1993, and procured indigenous goods without excise duty under Notification No. 57/1994-CE and Notification No. 10/1995-CE.

The two-member bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) observed that the only issue was whether depreciation should be allowed till the date of payment or only till the date of debonding.

The tribunal observed that the relevant notifications clearly provide depreciation only up to the date of debonding or clearance, and not up to the date of actual duty payment. The tribunal explained that accepting the interpretation of depreciation until duty payment would lead to unreasonable and absurd results by incentivizing delay in payment of duty.

Failure to Endorse ‘No CENVAT Credit Admissible’ on Commercial Invoices Is Only a Procedural Lapse: CESTAT Grants SAD Refund

M/s. Palfinger Cranes India Pvt. Ltd vs Commissioner of Customs(Exports)

2025 TAXSCAN (CESTAT) 997

Palfinger Cranes India Pvt. Ltd., the appellant, had imported cranes and crane parts and paid 4% SAD at the time of import. They later filed refund claims under Notification No. 102/2007-Cus dated 14.09.2007, on the ground that VAT/CST had been paid on subsequent sales.

The two-member bench comprising M. Ajit Kumar (Technical Member) and P. Dinesha (Judicial Member) observed that the issue was already examined by a Larger Bench of the Tribunal in Chowgule & Co. Pvt. Ltd. v. CCE which held that trader-importers issuing commercial invoices without duty details are entitled to refund under Notification No. 102/2007, even without the endorsement, provided other conditions are satisfied. The tribunal explained that judicial discipline required them to follow the Larger Bench ruling.

The tribunal set aside the impugned orders and allowed the appeals, holding that the appellant was eligible for SAD refund subject to the satisfaction of other conditions. The tribunal directed consequential relief as per law.

Customs Duty on Bulk Liquid Imports to Be Based on Shore Tank Quantity: CESTAT Directs Apply Relevant Laws at Time of Import If Data is Missing

M/s Reliance Industries Limited vs Commissioner ofCustoms-(Prev)-Jamnagar

2025 TAXSCAN (CESTAT) 998

The case arose from multiple appeals filed by Reliance Industries Limited concerning imports made during 2006–2007. The company disputed the basis of duty calculation, arguing that reliance on ship ullage measurement was incorrect and that the applicable circulars and law in force at the time of import should govern the assessment.

The two-member bench comprising Somesh Arora (Judicial Member) and Satendra Vikram Singh (Technical Member) observed that the principle laid down in Mangalore Refinery confirms that shore tank quantity represents the actual import for assessment purposes. The tribunal also observed that in this case the shore tank quantity was not available, and the Supreme Court judgment did not specifically address ship ullage data.

The tribunal explained that in such circumstances, the relevant laws and circulars that were applicable on the date of import must be followed. It pointed out that assessments cannot rely on later circulars or decisions when the governing instructions at the time prescribed a different basis. The matter was remanded to the adjudicating authority with directions to re-examine the assessments by applying the law and circulars in force during 2006-2007.

Customs Seizure 3 km Away from India-Bangladesh Border: CESTAT Cites Contradictions in SCN, Orders Release of ₹15 Lakh

Manir Hossain vs The Commissioner of Customs

2025 TAXSCAN (CESTAT) 999

The case began when Customs Preventive officers at Sonamura, Tripura, acting on intelligence, intercepted one Ali Hossain on 20 November 2019 and recovered Rs. 15,00,000 in Indian currency. The department alleged that the cash was meant for illegal export to Bangladesh through the unfenced Rabindranagar border.

The tribunal pointed out that the benefit of doubt must go to the appellant when the department failed to prove its case with certainty.

The tribunal explained that as the revenue could not establish illegal export of the Indian currency, the confiscation and penalty were not sustainable. The appeal was allowed and the tribunal ordered the release of Rs. 15,00,000 to the appellant.

Revenue Fails to Prove Bags Were Polyethylene Instead of Polypropylene: CESTAT Quashes ₹5,43,963 Excise Duty Demand

SIDHARTH POLYSACKS PVT LTD vs COMMISSIONER

2025 TAXSCAN (CESTAT) 1000

Sidharth Polysacks Pvt. Ltd., the appellant, is engaged in the manufacture of polypropylene and HDPE bags. During audit, the department alleged that in January 2016 the appellant cleared bags to M.P. State Civil Supplies Corporation Ltd. at a concessional rate of 12.5% by classifying them under CETH 39232900, whereas the correct classification was under CETH 39232100 with a higher rate of 15%.

The tribunal observed that the purchase orders clearly mentioned polypropylene bags, and the appellant purchased only polypropylene granules. The allegation was not supported by evidence.

On limitation, the tribunal pointed out that the appellant had been filing ER-1 returns regularly and the department could have examined the classification earlier. Simply detecting the issue in audit could not establish suppression.

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