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

Packaging Bulk to Retail amounts to Manufacturing: CESTAT sets aside Service Tax Demands

The case arose from a demand of Rs. 4.25 crore in service tax from Emami Limited, along with penalties imposed on the company and its contractors, Chandan Kakati, Pradip Das, and Vaishno Devi Enterprise. A case of misappreciation of evidence and contrary facts on record was argued by the appellant side.

The CESTAT, comprising Ashok Jindal ( Judicial Member ) and K. Anpazhakan ( Technical Member ) set aside the service tax demands and the penalties made and held that the activity of packing its bulk into retail packs amounts to manufacture, due to which no service tax is payable by the other appellants or the job workers.

Cenvat Credit Reversal on Electricity Wheeled out: CESTAT remands Matter in absence of Records

It was observed that appellant has reversed an amount of Rs. 44,05,397/- which has been appropriated by the Original Authority, this reversal was made even prior to issuance of show cause notice. If this reversal was the actual reversal was to be made in terms of Rule 6 (3) of the Rules and then there could have been no case for imposition of penalty.

While the credit amount ascertained was reversed by the appellant, the correctness of amount confirms the demand by application of 6% of the value of electricity consumed.

While partly allowing appeal, the Tribunal remanded the matter to the Original Authority in case the amount is within the amount already reversed, the proceedings should be closed without any final liabilities. Shri Atul Gupta appeared for the Appellant and Smt Chitra Srivastava authorised representative appeared for the Respondent.

Relief to Bharat Petroleum: CESTAT Rules Intermixed Special Kerosene Oil Exempt from Excise Duty When Sold for Public Distribution

Bharat Petroleum Corporation Ltd. (BPCL), the appellant, operates a refinery at Mahul, Mumbai, and transports petroleum products, including Special Kerosene Oil ( SKO ), High-Speed Diesel ( HSD ), and Motor Spirit (MS), through pipelines. SKO intended for sale via the public distribution system ( PDS ) is exempt from central excise duty under relevant notifications.

The bench heard the argument of the appellant that the intermixing was a technical inevitability post-clearnance, while here no mala fide intent or diversion of SKO existed. Further, arguments in favour of this were made claiming that the SKO was cleared for public distribution. The judicial precedent of State of Haryana v. Salmia Dadri Cement Ltd., was also used for the interpretation of the phrases “for use” and “intended for use”, which ultimately support the claim for exemption.

The tribunal confirmed that intermixed SKO retains its exempt status when intended for public distribution. The tribunal set aside the demand orders and allowed the assessee’s appeal.

Notification does not Mandate IT Software Service Registration for Claiming CENVAT Credit Refund on Undisputed Exports: CESTAT

On appeal, the Commissioner of Central Excise (Appeals) ruled that registration was a prerequisite for claiming refunds and dismissed the appeal. The appellant challenged the order before CESTAT.

The precedent set by Karnataka High Court in Tavant Technologies India Pvt. Ltd. and Portal India Wireless Solutions Pvt. Ltd., held that refunds cannot be denied for unregistered periods unless explicitly mandated by law.

The tribunal observed that procedural conditions in refund notifications should not override substantive rights granted by law. The tribunal set aside the Commissioner (Appeals) order and remanded the matter to the adjudicating authority for document verification and reprocessing the refund within two months. The appeal was allowed.

Processes of Cutting, Deburring, and Broaching on Forged Blastings Deemed Manufacturing u/s 2(f) of Central Excise Act: CESTAT

The department alleged that the processes did not amount to manufacturing and issued a show cause notice demanding service tax of Rs. 81,61,363 for the period 2010-11 to 2013-14. The adjudicating authority upheld the demand, categorizing the activity as BAS and imposing penalties. Aggrieved, the appellant approached the CESTAT.

Section 66D of the Finance Act was the primary point of contention from the appellant side, according to which, manufacturing activities were exempt from service tax liability and since the department had prior knowledge of their processes, it makes the extended period of limitation and suppression allegations baseless.

The tribunal held that the processes performed by the appellant were incidental or ancillary to the completion of the manufactured product aligning with the statutory definition under Section 2(f). The tribunal set aside the service tax demand and ruled that the appellant's activities constituted manufacturing which was exempt from service tax. The appeal was allowed.

‘Existing Law’ u/s 142(4) of GST Act is Finance Act: CESTAT allows Refund of Service Tax Paid Pre-GST on Input Services for Post-GST Exports

The denial of a refund of Service Tax paid on input services used in the manufacturing of "cut and polished diamonds" during the pre-GST era has become a contentious issue.

Argument that was presented from the appellant counsel was that a denial of refund is baseless and erroneous as it is a misinterpretation of law. It had been contended that the Finance Act is not an erstwhile Act but rather is still applicable through Section 142(4) of the CGST Act, 2017. It allows refund claims related to taxes paid under ‘existing law’ to be disposed of according to the said Section.

Since no additional grounds or reasons were cited by the Commissioner (Appeals) for denying the refund, the Tribunal held that the appellant was entitled to the refund as sought under the existing law.

Customs Authorities Fail to Detail Contemporaneous Import Data for Increased CD to Company: CESTAT Remands Matter for Fair Assessment

The appellant challenged orders before the CESTAT, arguing that the authorities did not provide access to the relied-upon contemporaneous import data, preventing them from effectively challenging the valuation.

In valuation disputes, a need for evidence and procedural fairness was explained through the judgments in Dujodwala Products Ltd v.Commissioner of Customs and in Eicher Tractors Ltd. v. Commissioner of Customs by the appellant's counsel.

The tribunal observed that the Customs Valuation Rules define "similar goods" with specific criteria such as quality and reputation, and compliance with these rules must be verifiable. The tribunal found that denying access to the relied-upon bills of entry prevented Banaras Beads Ltd., from effectively challenging the re-assessment.

Penalty u/r 209A of Central Excise Limited to Individuals Dealing with Confiscable Goods, Not Applicable to Partnership Firms: CESTAT

On appeal before the CESTAT, the appellant’s counsel argued that there was no evidence to prove the alleged cash payments and that the valuation of goods for excise duty as per the proviso to Section 3(1) of the Central Excise Act which made the invoice price irrelevant.’

It was argued by the appellants that Rule 209A applied only to individuals but cannot be imposed on partnership firms. Cases cited were Woodmen Industries and R.S. Jhaveri & Co. Exports.

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

Goods wrongly loaded could not be Exported without clearance by Customs: CESTAT

Samudera Shipping Line (India), the Appellant, a steamer agent, was saddled with Rs. 2 lakh penalty for exporting goods without Let Export Order (LEO). Just before the goods were to be loaded, the exporter informed him that they were planning to cancel the exports. However, since the appellant did not get any further information from the exporter, he checked the Customs website which showed the details of the container as “ready for shipment”. Thus, the appellant presumed that there was no bar for loading the consignment.

No contravention was found in as by the provisions of the Customs Act, 1962, as was alleged.

The bench, comprising Judicial Member R. Muralidhar and Technical Member K. Anpazhakan said the same could not have been possible without clearance by the Customs Department and dismissed the penalty imposed on Appellant. It was found that the goods had been successfully exported and remittance against it had been received.

Service Tax Liability on Construction Services: CESTAT Orders Recalculation Over Misclassification and Evidentiary Gaps

The appellant submitted that the services should be classified under “ Worlds Contract Service” after July 1, 2007, after the Supreme Court decision in Larsen & Toubro Ltd. The appellant stated that villas constructed for personal use are exempt from service tax and that no advances were received before obtaining Occupancy Certificates (OCs) in most cases, negating the tax liability imposed.

A lack of evidence on the appellant’s claim that no advances were taken before OCs were issued was found by the tribunal. It also clarified that after 2007, composite contracts were taxed under Works Contact Service.

The CESTAT remanded the case to the original adjudicating authority and directed that the validity of OCs be verified and that advances be received before their issuance. The tribunal also directed the authority to assess eligibility for abatements based on Value-Added Tax compliance and recalculate the service tax liability considering the payments already made.

Non-Compliance with Section 9D, Statements Without Cross-Examination Unsustainable for Demand: CESTAT

In this case, the appellant, Shree Krishna Laxmi Steel Udyog Pvt Ltd. was engaged in the activity of clandestine manufacture and removal of goods. The show-cause notice issued to the appellant alleged that the appellant was engaged in the clandestine manufacture and removal of goods without proper records, evading excise duty and thus they are liable for duty, interest, and penalties.

A violation of Section 9D of the Central Excise Act, 1944 was observed by the CESTAT, according to which statements made under Section 14 were to be first examined by the Chief followed by a cross-examination by appellant.

The bench held that the statements recorded in the course of investigation are not sustainable due to the absence of cross examination by the appellants.

Time Barred SCN: CESTAT quashes Service Tax Demand

The case involved an appellant engaged in manufacturing HDPE and PP Laminated Paper bags. During an audit, Central Excise officers observed that the appellant had wrongly availed CENVAT credit on expenses related to vehicle repair, maintenance, insurance, and hotel services. Consequently, a show cause notice was issued to recover the inadmissible credit.

Since the disputed period was from September 2013 to September 2014 and the show cause notice was issued on January 6, 2017, the limitation period had exceeded and therefore inapplicable on the case due to the absence of suppression or any intent to evade tax.

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

Final Buyer of Goods/Recipient of Service can avail Tax Refund due: CESTAT

On November 4, 2016, the appellant/assessee, K. Ramani, paid service tax to the government account through M/s. Vedanta Brindhavan Senior Citizens Welfare and Service Trust, Coimbatore, in the amount of the "senior living fee." The appellant said that he was entitled to a refund since he had not received any setoff or provided any services to the Trust and that the payment of the sum was an error in law. The refund claim was denied by the Original Authority due to undue enrichment and limitation. In front of the Commissioner (Appeals), the appellant filed an appeal, which the commissioner denied.

With regards to the service tax paid, the tribunal was of the opinion that it was wrongly paid and may be refunded in line with Section 11B of the Central Excise Act when read with Section 83. More deliberations continued on whether the Trust alone should get the refund and not the person who had really paid the tax.

The appellant/final buyer, not the Trust, is the one who bears the ultimate incidence of the tax and is therefore able to receive the refund and is not prohibited from doing so, according to the single bench of M. Ajit Kumar (Technical Member). Since the sum was paid out of the appellant's personal funds and hasn't been proven to have been passed on, the issue of unjust enrichment also doesn't come up.

Relief for TATA Steel: CESTAT Declares Excise Demand Notice Issued After 9.5 Years as Time-Barred, Exceeding 5 Years Limit

TATA Steel Ltd (appellant) engaged in the production of Chrome concentrate which was produced at the Sukinda Plant in the State of Odisha. In the said Plant, the Chrome ore was upgraded to High-Grade Chrome concentrate which is a value-added commodity.

The tribunal noted that no proceedings were initiated within the said time. Even with evasion of duty by suppression of facts, the maximum time limit to issue notice is 5 years, in the present case the notice was issued after 9.5 years.

Therefore, the tribunal held that the demand against the appellant was barred by limitation and demands were not sustainable in the eyes of the law. The appeal was allowed.

Municipal Corporation Engaged in Commercial Activities liable to Service Tax: CESTAT

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

The counsel on the department side contended that the activities the appellant was engaged in were commercial in nature thereby justifying the demand and seeking to dismiss the appeal of the appellant.

The tribunal observed that the appellant engaged in commercial activities. The tribunal ruled that the appellant was liable to pay service tax with interest for the normal period.

Revenue Neutrality and Procedural Lapses: CESTAT quashes Central Excise Duty and Penalty Orders

In this case the appellant, M/s Allied Resins and Chemicals Limited, has challenged the demand notice of Rs. 3.14 with interest and penalties, which was upheld by the The Commissioner of Central Excise.

The bench took note of the department’s procedural lapses. This included unreliable stock verification and failure to substantiate allegations of shortages.

The CESTAT also dismissed the imposition of penalties due to the absence of intention to evade duty and procedural lapses in issuing show-cause notices. It quashed penalties imposed on the general manager, Asim Das, noting that these were beyond the scope of the notice.

Statutory Authority's Sovereign Functions exempt from Service Tax: CESTAT quashes Rs. 28 Cr. Demand for lack of evidence and limitation by time bar

ADDA contended that as a statutory authority, it performed sovereign functions, such as collecting licensing fees and development charges, on behalf of the West Bengal government and thus is exempt from service tax under the Finance Act, 1994.

Because of the lack of motive to evade tax and the issuance of the demand exceeding the time limitation, the appellant presented a meritorious case.

The CESTAT noted that the show cause notice did not contain certain details such as transaction specifics, dates, contracts, or even supporting documents like bank statements. The Tribunal also observed that the charges collected in pursuance of statutory functions are non-taxable. But it further noted that ADDA might still be liable for service tax on non-sovereign commercial activities like renting immovable property or leasing tangible goods.

Relief to TATA Beverages: CESTAT Rules SCN Issued in 2010 for Alleged IPR Service Invalid as Business Transfer Details Disclosed in 2005

The department issued Show cause notice stating that transfer of intellectual properties like Goodwill and the right to use the term ‘Kanan Devan’ is taxable under the category of Intellectual property right service (IPR service). Therefore, the department confirmed the Service tax. Aggrieved by the order, the appellant filed an appeal before CESTAT.

Due to being barred by limitation, the counsel for the appellant pressed for the setting aside of the demand raised. They also submitted that the demand of service tax for the transfer of intellectual properties was incorrect and factually misplaced.

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

No Confiscation of Seized Gold Merely for Invalid LOA: CESTAT

Officials from the Noida Special Economic Zone (NSEZ) Customs had visited the factory premises of the assessee, a partnership firm, and found the facility operational. When asked to provide supporting documentation, an individual named Sujit Kumar Bera produced all the gold stored on site, totaling 2,417 grams.

The Technical Member of the bench upheld the confiscation on the grounds that the Customs Authorities had the jurisdiction to proceed against the assessee.

With the Third Member concurring with the Judicial Member’s stance, the Tribunal allowed the assessee’s appeal. In doing so, it clarified that gold cannot be seized and absolutely confiscated under the Customs Act merely due to an invalid LOA, as jurisdiction for such issues rests with the SEZ authorities, not with Customs.

CESTAT upholds Service Tax Refund Claim Rejection on Course by YCMOU

Delivering the judgment, the Bench comprising Dr. Suvendu Kumar Pati (Judicial Member) and Anil G. Shakkarwar (Technical Member) emphasized the need for a strict reading of clause (l)(ii) under Section 66D of the Finance Act. In essence, services that form part of a curriculum for a qualification recognized by law are entitled to the negative list benefit. However, where the period in question includes both pre- and post-recognition services, a refund of the service tax paid would be permissible only if the requisite recognition was obtained from the Open University and no service tax had been collected from students in the interim.

In this case, the student fees had been collected before an agreement with an Open University was finalized in 2015. Further, the actual request to the Tribunal was filed on June 8, 2015 not in April 2015 as had earlier been contended, thereby, exceeding the time-barred limitation from March 30, 2015.

Ultimately, the Tribunal dismissed the appeal, ruling that throughout the period in question, the appellant’s course offerings did not have formal recognition from a qualifying university. Therefore, the company could not avail itself of the exemption under clause (l)(ii) of Section 66D of the Finance Act.

Dept. Fails to Verify Document Veracity with Key Parties like Suppliers, Buyers, Transporters, Agents: CESTAT Rules Investigation Faulty

The department confirmed the Excise Duty and imposed penalties upon the appellant for suppression of facts with intent to evade Excise duty. Aggrieved by the order the appellant filed an appeal before CESTAT.

The appellant contended that the demand of excise duty was based on the documents supplied by employer Sita Ram and that the department failed to verify these records and therefore unverified documents cannot be made to be sustainable in the eyes of law.

Therefore, the tribunal held the whole investigation was faulty and quashed the demand order and set aside the penalty imposed on appellants.

Cost of Parts Supplied by Principal Manufacturer not Part of Job Worker’s Assessable Value: CESTAT

Export of Counterfeit 'VimalGutkha' in Violation of Customs Act: CESTAT Reduces Penalty to ₹10 Lakh

Investigations revealed that the appellant used unauthorized personnel, failed to verify client credentials, and knowingly facilitated the export of counterfeit goods. Penalties of ₹50,00,000 were imposed under Sections 114(i) and 114AA and were upheld by the Adjudicating Authority, prompting an appeal before the tribunal.

Due to the doctrine of innocent negligence, the penalty was reduced to INR 10,00,000. Furthermore, a reduction in the penalty under Section 114AA was set aside, as the appellant was not found guilty of document forgery and worked only on the provided documents for filing shipping bills.

In short,the appeal filed by the assessee was partly allowed.

Dual Custodianship on same good Cannot be Granted: CESTAT Sets Aside penalty Imposed under Customs Act

The objection of the insurance company emanated from the fact that the appellants had no insurable interest in the matter. A Show Cause Notice was issued to the appellants seeking to impose penalties under various provisions of the Customs Act, 1962 for failure to comply with the conditions of their license of custodianship more particularly of failing to take insurance. The proposal in the show cause notice with the above allegation was decided against the appellant vide decision dated 28.12.2011 in which stoic silence has been maintained in response to the party’s defence that they could not have got the insurance done.

The Tribunal observed that the non consideration of the letter of the insurance company, which itself indicated that they were not capable of insuring the goods in the storage tank in view of there being no insurable interest was improperly not considered by the adjudicating authority in this matter. The Tribunal set aside the penalties imposed and allowed the appeal with consequential relief.

Co-Noticee can apply for waiver of Penalty under Sabka Vishwas Scheme 2019 If main Noticee Issued Discharge Certificate: CESTAT

The co-noticee had not filed the declaration after the main noticee received the discharge certificate under the SVLDR Scheme, 2019 towards the duty liability, but the bench of Binu Tamta (a judicial member) noted that this was merely a procedural error for which the appellant could not be held liable for the penalty, especially since there was no revenue loss. As a result, the co-noticee was granted the right to have the penalty waived.

In light of the relief available to them under section 124 (i)(b) of the Finance Act, 1994, the appellant would have paid "nil" rate of duty if they had applied under the SVLDR Scheme, the tribunal held, even though the appellant had not filed the declaration after the main noticees had received the Discharge Certificate towards the duty liability.

Cenvat Credit Can Be Utilised for Payment of Duty in Case of Delayed Excise Duty: CESTAT

The appellant filed a refund claim of interest amounting to Rs. 37,47,577/- on 30.11.2015, under Section 11B of the Central Excise Act, 19444, on the ground that interest was not required to be paid by them as utilisation of credit was proper at the relevant time, and there was no delay in payment warranting any interest liability.

The bench observed that CENVAT Credit cannot be utilized for payment of duty in case of delayed duty was pending before the Supreme Court. With the Revenue withdrawing their appeal, the judgment of the High Court of Gujarat which declared the provisions of Rule 8(3A) as ultra virus governs the present case.

The tribunal determined that the appellant's use of the Cenvat credit was appropriate, and as a result, no interest was due on the sum paid. Therefore, from the date of the Supreme Court's final order to the date of payment, the appellant is entitled to a refund of the amount they paid in interest on the duty that was delayed, with a rate of 12% annually.

Services Rendered to Construction of Roads Were not Exigible to Service Tax: CESTAT

The appellant/assessee, M/s Aaditya Constructions is a partnership firm engaged in providing construction services in respect of commercial or industrial buildings, civil structures and works contracts and was a recipient of “transportation of goods by road” services. It had registered with the service tax department and had been filing service tax returns.

It was submitted by the counsel for the appellants that the show cause notice failed to classify their services and it was unclear whether their demand was being made under the works contract services. But clarity was needed as it could have easily been under the construction of complex services. The contracts which had been received were for providing services along with the use of materials.

The bench of Justice Dilip Gupta (President) and P. V. Subba Rao (Technical Member) has held that demand of service tax under reverse charge mechanism on roads transport agency services on the services rendered by the individual truck owners also cannot be sustained. Since the demand of service tax cannot be sustained, the demand of interest and penalty also need to be set aside.

CESTAT Allows Refund Claims: Holds Procedural Lapses Can't Deny Exemption Benefits

The case involved two excise appeals filed by Signal and Systems India Pvt. Ltd, challenging the rejection of their refund claims under different exemption notifications. The appellant had paid over 2 Lakh in excise duty in March 2013 after being directed by the jurisdictional superintendent, despite claiming exemption under the notification. They later sought a refund, arguing that their goods met the conditions for exemption under Sl.No.336 of the notification.

Eventually, the tribunal favoured the taxpayer by allowing their refund claim. As for the second appeal, the taxpayer challenged the rejection of their refund claim under Notification No. 108/95 -C.E., which exempts goods supplied for projects financed by international organizations.

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Two Member Bench composed of Vasa Seshagiri Rao(Technical Member) and Ajayan T V(Judicial Member), emphasized that amendments to conditions cannot be retroactively applied to deny benefits for earlier periods. The ruling also underscores the importance of timely submission of required certificates to claim exemptions under specific notifications.

Relief to Axis Bank: CESTAT Allows CENVAT Credit on Tax Paid on Premium Mandatorily Required for Functioning as Bank

After a dispute over the taxability of the premium paid by all banks under the Reserve Bank of India's (RBI) mandate for insurance coverage of small deposits in the event of bank failure was resolved, the beneficiary banks utilized the tax imposed on premiums under the Finance Act of 1994, which was the subject of multiple disputes before the Tribunal. This appeal's sole concern is whether or not banks operating under the Reserve Bank of India's supervision are eligible to get the CENVAT credit for taxes paid on premiums.

The Tribunal gave merit to the ground that the insurance service provided to banks by the Deposit Insurance Corporation is an “input service” and that banks are permitted to use the CENVAT credit of service tax they have paid for this service to provide “output services”.

The Tribunal held that the eligibility for CENVAT credit of tax paid on such premium is beyond any controversy and set aside the impugned order.

No Service Tax Payable by Standard Chartered Bank India on Allocation of General Administrative Expenses by Head Office: CESTAT

Standard Chartered Bank, the appellants/assessee is a banking company operating through various branch offices situated across India and having their head office in London, United Kingdom i.e., Standard Chartered Bank, UK (SCB-UK). The SCB-UK has an extensive global network of its branches all over the world including India.

The SCB-UK is the head-office, which incurs a number of expenses under different headings to support all the global branches, these expenses include advertising, auditing fees, donations, entertainment, etc. “Head office and executive and general administrative expenses” refers to all of these costs and more such as gross emoluments, insurance, legal professional fees, etc. Costs (including national insurance contributions, pension contributions, postage, telephone, etc.) spent by the appellant's head office are allocated proportionately among several branches located in different countries based on the gross receipts of the banks operating in those nations.

The two-member bench comprising M.M. Parthiban (technical member) and S.K. Mohanty (judicial member) has noted that there is no service tax due and that the sharing of expenses cannot be regarded as services. The tribunal ruled that the Finance Act of 1994 does not allow for the imposition of service tax on "the allocation of head office executive and general administrative expenses" by the appellants' London, UK head office.

Service Tax SCN turns Invalid if Assessee Paid Tax Liability Along with Interest before issuance of SCN: CESTAT

A show cause notice dated 31.08.2018 demanding the service tax of Rs. 40,65,565/-, for the same period as audit, by invoking extended period of limitation, was issued. The appellant had already deposited service tax amounting to Rs. 40Lakh as duty noted in the show cause notice and interest amounting to Rs. 6,34,560/- before issuance of show cause notice. The adjudicating authority has confirmed demand of Rs. 46,65,565/- and have also imposed mandatory penalty of Rs. 40,65,565/- under Section 78 of the Finance Act, 1994, against which the appellant filed an appeal before the Commissioner (Appeals) who has rejected the appeal.

Shri Vikas Mehta, Consultant appearing on behalf of the appellant submits that the non-payment of service tax was on account of financial difficulty and not on account of any mala fide in as much as the same was not only duly accounted in the final tax report, the liability was also discharged and service tax returns were also filed before the issuance of show cause notice. On this basis he argued that a lenient view may be taken in penalty under Section 78 and the same may be set aside. The Tribunal found that the appellant is contesting only the penalty amount. However, there is some discrepancy in the calculation. As regard to the invoice issued by the Kalpataru, the same can be reconsidered by the adjudicating authority. Therefore, they addressed the issue only of the penalty imposed under Section 78.

Rejection of Application for Brand Rate for Exported Goods Under Duty Drawback Rules solely on Limitation: CESTAT Remands Matter for Reconsideration

M/s John Deere India Pvt Ltd , the appellant’s application for determination of ‘brand rate’ for goods exported by them under rule 6 of Customs, Central Excise Duties and Service Tax Drawback Rules, 2017 had been rejected solely on the ground that the application was barred by limitation of time prescribed therein without reference to the ‘relevant date’ as appropriate to the circumstances.

Accounting into the date on which the export was permitted under Section 51 of the Customs Act, as provided for in Section 16 which has been referred to in rule 5 of the of the Customs and Central Excise Duties Drawback Rules, 2017, the limitation had been put into effect.

As the deemed date of extension stands altered owing to its necessity before any further processing can be done, the Commissioner of Customs would need to ascertain compliance with rule 7 of Customs and Central Excise Duties Drawback Rules, 2017 to initiate the disposal of application which includes consideration of the ground for condonation of delay. The CESTAT sets aside the impugned order of rejection and directs the applications to be placed once again before the competent authority to determine the limitation period for application for brand rate.

Cenvat Credit Refund Hit by unjust enrichment When incidence of duty passed on to customers: CESTAT

The appellants filed refund claims for Rs.54,57,431/- and Rs.61,56,800/- for the relevant periods; the original authority rejected the refund claims and such rejection was upheld by the appellate authority on merits as well as on the issue of unjust enrichment.

Since there was an absence of complete records which the institutional buyers had access to, the authorities below the tribunal had no opportunity to place merits on the categorical finding. In light of the data sheets submitted, there are reasons to believe that there are supplies to other than institutional customers.

A two member S. S. Garg, Member (Judicial) and P. Anjani Kumar, Member (Technical) held that the Bench cannot sit in judgment over a record/ evidence to which the lower authorities were not privy to. The tribunal disposed of the appeals by way of remand to the original authority with a direction that the proceedings shall be completed within 12 weeks of receipt of the certified copy of the order. The appellants are also directed to submit to the original authority evidence substantiating their claims to the original authority.

Issue on Compliance of Rule 6 of CCR: CESTAT Sets aside Demand Order issued against Mahindra & Mahindra Ltd

The appellants’ manufacturing unit located at Pune avail CENVAT Credit of central excise duty paid on inputs and Service Tax paid on the input services. The Head Office of the appellants located in Mumbai is registered with the Service Tax Department as Input Service Distributor (ISD). The input service distributed under the cover of ISD invoices was availed as CENVAT Credit by the appellants’ manufacturing unit located at Pune.

It was submitted on behalf of the appellants that they are not involved in any trading activity including supply of goods from Uttranchal unit to their Pune unit and it cannot be termed as purchase of goods as any sale of these goods cannot alter the transaction to consider the sae as trading activity, as per the scope and ambit of Rule 2(e) of the Rules of 2004. The counsel further submitted that the period starting from April, 2009 to March, 2011, “trading” was not specifically defined as an exempted service therefore, the appellants were not required to comply with the provisions of Rule 6 of the Rules of 2004.

A two member bench observed that since the appellants had bonafide belief that exempted service should not be considered as trading activity for the period prior to 01.04.2011, not entering the CENVAT particulars in the ER-1 return, even though reflected in the internal records, would not call for invocation of the extended period of limitation.

CESTAT Allows Larsen & Toubro Ltd. to utilize common Cenvat Credit account for payment of Service Tax on output services provided

The appellant challenged the impugned order wherein utilization of Cenvat Credit was disallowed to the appellant for payment of service tax on the output service provided by them. The appellant is a manufacturer of excisable goods and also providing consulting engineering service and supply of tangible goods services. During the impugned period 2007-08 to 2011-12, the appellant utilized Cenvat Credit lying in their Cenvat Credit account for payment of service tax for the output service provided by them.

Judicial precedent of CCE v. S.S. Engineers (2016) was credited where it was observed that “CENAVT credit of input services-utilization thereof cross utilization no infirmity in Tribunal findings that the said credit can be utilized for payment of excise duty on goods manufactured by assessee and that such cross-utilization is neither barred nor prohibited accounting problems in such cases has been taken care of in CBEC circular dated 30-3-2010 aforesaid interpretation of Cenvat Credit Rules by Tribunal being probable and possible, is not perverse No substantive question of law, having been raised, Revenue's appeal dismissed Rule 3 and 7 of Cenvat Credit Rules/2004."

The two-member bench held that the appellant can utilize a common Cenvat Credit account for payment of Service Tax on output services provided by them. The bench set aside the whole of the demand raised against the appellant.

Provision of S. 11BB of Excise Act not applicable for Claiming Interest on Pre-Deposit: CESTAT

According to the two-member bench, the petitioner's deposit was made in accordance with a court-issued interim order and does not constitute payment of excise duty; therefore, the Central Excise Act's refund provisions would not apply. As a result, the Central Excise Act's Section 11BB, which stipulates interest on postponed refunds, would not apply. It is a well-established legal principle that the Revenue cannot be ordered to pay interest if there is no statutory provision granting the assessee the right to do so. Compliance with Section 11ABof the Central Excise Act was established and accounted for.

When dismissing the appeal, the tribunal determined that even if the petitioner had claimed interest at the rate of 18 percent, the relief requested in the application could not be granted since it was not supported by any statutory provisions.

Appellate Authority can Condone Delay upto 30 Days as per Finance Act: CESTAT

The appellant/assessee, Shri Santhosh Kumar Shetty Saja, explained the delay by stating that the appellant had "Diabetes mellites with Neuropathy Myalgia," which caused low back pain and led to hospitalization as an inpatient from November 3, 2023, to June 30, 2024. He has included an affidavit and a copy of the medical certificate as proof. They argue that the appeal could not be lodged in time for medical reasons. The application's justifications, which are backed up by an affidavit and a medical certificate, justify the delay.

The judgment noted the legislature’s intent for the appellate authority to entertain the appeal by condonation only upto 30 days after the expiry of 60 days, which is a normal period for preferring appeals. Therefore, Section 5 of the Limitation Act is totally excluded.

While dismissing the appeal, the tribunal noted that the appeal must be filed within 60 days, but under the proviso, the appellate authority may provide an additional 30 days to hear the case. Section 35's proviso to sub-section (1) makes it abundantly evident that the appellate body lacks the ability to permit the appeal to be presented after the 30-day limit. The wording makes it apparent that the legislature wanted the appellate authority to consider the appeal and only allow a delay of up to 30 days following the 60-day time that is typically allotted for prioritizing appeals.

Volvo can Import Internal Combustion Engines In Absence of Restriction in DFIA License: CESTA

The finding of the Adjudicating authority was that the internal combustion engines which could be imported under the license were to be those used for agricultural tractors, and not those used for medium and heavy commercial vehicles. This action was upheld in the first appeal.

It was submitted that the category restriction is relevant only to the goods exported. The term “internal combustion engine complete” is not qualified in any manner that would suggest that these engines must compulsorily be used for tractors and not other forms of automobiles.

The two-member bench has observed that the Appellant cannot be expected to correlate its imports with the exports of the person to whom the license was originally issued. And there is nothing in the license which restricts the import of internal combustion engines only to such internal combustion engines as would have been used in the goods which are permitted to be exported by the authorization.

SCN Demanding Service Tax on Alleged Wrongful Availment of Credit after Three Years is Not Valid: CESTAT

Since the assessee's name and correct address were missing from the input service tax credit document, the Department believed that the appellant could not have received the input service and was therefore unable to claim credit. As a result, credit was granted for an invoice that was unrelated to their unit.

The tribunal did not take into consideration the response to the show cause notice.

The CESTAT granted the appeal and determined that the ruling upholding the contested demand could not be sustained because the department had not adequately demonstrated the use of the extended period of limitation when bringing the demand.

“Premium” or “Salami” Value is Exigible to Service Tax under “Renting of Immovable Property”: CESTAT

The issue raised was whether “premium‟ or “salami‟ can be subjected to levy of service tax under “renting of immovable property‟ defined under section 65(90a) of the Finance Act. The issue that arises for consideration is regarding the taxability of the value of “premium” or “salami” for the period prior to 01.07.2012 and w.e.f. 01.07.2012 under “renting of immovable property‟.

The difference between a premium and a rent was brought out in Judicial Committee in Raja RBahadur Kamakshya Narain Singh, of Ramgarh v. Commissioner of Income-Tax, Bihar and Orissa, where it had been stated that the salami has been treated as a capital receipt. A single payment made for the acquisition of the rights of the lessees to enjoy the benefits granted by the lease.

“Premium” is a payment for being allowed to take possession of the immovable property. It is a price paid for a transfer of a right to enjoy the property. The lessor, who owns and possesses the property transfers the possession to another for a price. There can, therefore, be no doubts that “premium‟ is the amount received for “renting” of immovable property. It was observed that consideration is received in the form of premium which would be included in the definition of “renting”.

Adjustment of Refund against Confirmed Demand During Pendency of Appeal is not Permissible: CESTAT

M/s Indus Towers Limited, the appellant/assessee is registered with the Department of Telecommunication as a service provider for the provision of passive infrastructure support services to various telecom companies such as Vodafone, Bharti Airtel etc. The appellant had purchased various capital goods namely lead acid batteries, electric generator sets, air conditioners, power interface unit, Switch Mode Power Systems, battery banks etc and had availed CENVAT Credit of the excise duties paid thereon in terms of the Cenvat Credit Rules, 2004.

Sandvik Asia Limited v. Commissioner of Income Tax was referred to for delivering the judgment, according to which, the court upheld the order of granting interest on refund to assessee from the date of payment till the date of refund at 12% per annum.

The tribunal allowed the appeal and held that the appellant is entitled to receive interest on the amount deposited during investigation from the date of deposit of the amount till the date of its refund at the rate of 12% per annum.

Full Excise Duty not Demandable for Period of Non Operation of Machines: CESTAT rules in favour of Gutka Manufacturer

Even though the machines were still not working, the show cause notice requested that Pan Masala pay Central Excise duty for the entire month. A show-cause letter was sent out, requesting a Central Excise charge of Rs. 1,46,01,076 in addition to other penalties. In accordance with Section 11A of the Central Excise Act of 1944, the adjudicating authority has partially withdrawn the claim and verified the remaining duty demand.

The basic idea behind the Pan Masala Packing Machines Rule, 2008, is that the manufacturer must pay duty for the machines’ operating days.

The tribunal found that the adjudicating authority did not state in the contested order-in-original that the appellant had not adhered to the process outlined in the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.

Service Tax Not Payable by Bharti Airtel on Free Allowance Given to Employees: CESTAT

Bharti Airtel Ltd vs Commissioner of Central Goods & ServiceTax 2025 TAXSCAN (CESTAT) 193

The appellants/assessee are registered under the names "Telecommunication Service, Business Support Services, Sponsorship Service," among others, and are involved in the provision of a variety of taxable services. The appellant provides its employees with the "Airtel Employees Services Scheme" (Scheme), which exempts them from paying phone bills up to the Call Free Allowance (CFA) limit for mobile phones and fixed line connections. This waiver is only available to appellant employees, not their family members or employees of other group companies.

From the policy of Bharati Airtel Ltd, it is crystal clear that workers are permitted to use the CFA. Accordingly, only the relatives of employees and employees of the Group Company are eligible for the CFA rates, although CFA itself is applicable to these relatives.

It has observed that the Show Cause Notice is vague and does not specify the service which the appellant renders; moreover, the benefit of discounts/ free allowance is accruing to the employees rather than the appellant who is the service provider. The tribunal allowed the appeal of Bharti Airtel and quashed the order.

Import of Refrigerant Gas in Cylinder Requires Permission from Controller Of Explosive: CESTAT dismisses Appeal of CONCOR India

The appellant has not shown any proof that the container was either broken or lacked a seal when the items were placed in their custody, according to the two-member bench of Binu Tamta (Judicial Member). The Delhi High Court has already addressed the appellant's argument that the commodities were in CISF deployment, ruling that the appellant cannot avoid this burden by placing the blame on the CISF.

Since the products had not been cleared yet, the tribunal decided that the container seal had been tampered with and that the goods had been stolen. Section 45 was taken into consideration which states that the custodian bears the obligation for the safe custody of imported goods until they are approved for either domestic use or storage.

While dismissing the appeal, the CESTAT viewed that since the appellant was responsible for keeping the commodities safe and secure while in their care, no interference is required in the imposition of the penalty under Section 117 of the Act.

“Quick Lime” Properly classifiable under Harmonized System (HS) code for quicklime: CESTAT rules in Favour of Jindal Stainless Ltd

The Department claimed that the Hi Cal Quicklime was a manufactured product, obtained by calcinations and did not merit classification under CTH 25221000.

The correct classification under chapter heading 25221000 was observed by the bench regarding quicklime, slaked lime, hydraulic lime.

The bench concluded that the imported goods “Quick Lime” would be properly classifiable under Customs Tariff Item 25221000 and not as others under the Customs Tariff Act Item 28259090.

Revenue Cannot Deny CENVAT Credit After Accepting Service Tax Payment from Provider: CESTAT

On appeal, the appellant’s counsel argued that the SCNs had only alleged a lack of nexus with output services, but the adjudication order expanded the scope by denying credit based on procedural issues like document validity.

The bench mentioned that the service tax had been duly paid by SKF India Ltd., and the department had accepted the tax without dispute.

The tribunal ruled that the denial of credit was unjustified and set aside the impugned order. The tribunal held that Cenvat credit of Rs. 1,63,49,705 on Business Support Services was allowed in favor of the appellant.

No Service Tax on WCS provided to Airport and Non Commercial Governmental Authority: CESTAT

M/s Kailash Chawla, the appellant is registered for providing taxable service under the works contract services (WCS). During the audit of service tax records of Airport Authority of India (AAI), it was observed that the appellant had provided services to AAI more than the threshold limit but the appellant has not paid the service tax on the amount received for providing the said services.

It was mainly argued that the definition of works contract services excludes services provided to governmental authorities hence the services provided to CPWD are out of the scope of taxability. Any demand including value of goods involved in rendering services that goes beyond the scope of law was confirmed.

The Tribunal held that the appellant is not liable to pay service tax as confirmed against him, for the services being provided to airport and non commercial governmental authority hence there is no willful, misstatement when the appellant has filed Nil return.

No Penalty under Customs Act When Goods Transshipped from Aircrafts and Vessels traversed after fastening Duty: CESTAT

The contours of the controversy rest upon the proposition of Revenue that presumption of duty liability under Customs Act, 1962, subject to exemptions, inheres in goods landed in India and not exported therefrom. The appellants, per contra, suggest that the circumscribing effect of section 116 of Customs Act, 1962, along with section 21, section 22 and section 23 of Customs Act, 1962 invalidates the proposition to place the onus on customs authorities to evidence that goods were not taken out of India for duty liability to crystallise on goods originating from outside India. And it is between the thesis and antithesis that must look to the placement of established facts on known law to resolve the dispute.

The central notion behind the appeal was that firstly, taxable jurisdiction had been exceeded by the authorities by licit entry and secondly, a proper examination was conducted on the site of confirmation of demand or on goods that had not been cleared for consumption, going beyond the purview of Section 28 of the Customs Act, 1962.

The CESTAT held that there is no cause for confiscation of the impugned goods under section 111(n) and section 111 (o) of Customs Act, 1962 in the light of all movements having been effected under the approval of customs authorities. With lack of empowerment to invoke section 28 of Customs Act, 1962, penalties under section 114A and section 114AA of Customs Act, 1962 are without authority of law. Appeals are allowed by setting aside the impugned orders.

Excise Exemption cannot be Entirely Denied When Packaging Materials are Partially Used for Traded Goods: CESTAT

The Central Excise Department alleged that the appellant misused the exemption benefit, as the packaging materials were also used for traded goods instead of being exclusively used for the company’s own manufactured products. The department issued a Show Cause Notice (SCN) dated 06.05.2011, contending that since the company failed to maintain separate accounts, the exemption should be denied entirely.

The Excise Department, in this case, had failed to determine the actual quantity of packaging materials used for trading goods, which makes complete denial of exemption an arbitrary action. The appellant counsel put forth the argument that lack of conclusive evidence of duty evasion and the denial of exemption was grounded on assumptions rather than factual segregation of manufactured and traded goods.

The tribunal set aside the full duty demand and directed the adjudicating authority to conduct a proportionate reassessment. The appeal was allowed.

No excise duty payable for captive use of Tools and Fixtures within factory, Even if Sale Invoices are issued: CESTAT

The department issued a show cause notice dated September 27, 2010, demanding an excise duty payment of Rs. 17,83,136. The adjudicating authority confirmed the demand. On appeal, the Commissioner of Central Excise (Appeals) upheld the order. Aggrieved, the appellant approached the CESTAT.

The transfer to the Pune unit was argued to be revenue neutral as it was eligible for CENVAT Credit.

Regarding the transfer to the Pune unit, the tribunal ruled that the entire transaction was revenue-neutral and that no malafide intent was established, making the extended period of limitation inapplicable. The tribunal held that the demand was time-barred and not sustainable. The impugned order was set aside, and the appeal was allowed.

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