Annual Customs, Excise and Service Tax Case Digest: CESTAT Rulings 2025 (Part 22)

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

Trading is Not a Service under Cenvat Credit Rules: CESTAT Remands Appeal for Recalculation of Recoverable Credit and Penalty

ITW India Ltd. appealed against the Order-in-Original dated January 16, 2013, whereby the adjudicating authority confirmed the demand of recovery of irregularly availed Cenvat credit and also imposed equal penalty. Based on verification of the record for the period 2006 (October) to 2011 (March), the department noticed that the appellants were engaged in manufacture of excisable goods as well as provision of taxable services and engaged in trading activity, which was considered an exempted service. Therefore, relying on the extant provisions under Rule 2(e) of the Cenvat Credit Rules, 2004 (CCR) as well as CBEC Circular, it was held that they have not utilized credit.

Relying on the observation of Hon’ble High Court of Delhi in the case of Lally Automobiles Pvt Ltd, which was further upheld by the Hon’ble Supreme Court, the bench found that the appellants were required to reverse the amount proportionate to their trading turnover and in fact, they have apparently done so along with interest. Therefore, they would be required to reverse the proportionate amount for the entire period along with applicable interest. With respect to the invocation of extended period, the bench found that adjudicating authority has rightly sustained the invocation of extended period.

Service Tax Demand Cannot be Held as Bad in Law merely due to Payment made in Advance: CESTAT Remands Appeal for Redetermination

The appellant, Advanta India Ltd, were engaged in the research, development, breeding, producing, conditioning and marketing of various seeds and also provided business development services to M/s UPL Ltd. The appellants did not dispute that they had filed the ST3 return only after taking service tax registration under the category of BAS, although they were otherwise registered under service tax regime.

The Bench, comprising of Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member), found that the appellants were otherwise registered under service tax and the only ground taken in the SCN was that they were not registered for BAS during the time they took credit. In pursuance of this, despite not having registration during the relevant period for any output service, demands no. 1 and 2 for denial or utilization would not sustain and the impugned order is set aside to that extent.

In conclusion, the demands 1, 2 & 4 were not sustainable on merit itself. And demand 3 was sent back to the adjudicating authority for ascertaining whether the appellants had received services prior to April 18, 2006 or thereafter.

Testing and Analysis Services provided to Foreign Clients Qualify as 'Export of Services' under the FTDR Act: CESTAT

The appellants, Laxai Avanti Life Sciences Pvt. Ltd., who are 100% EOU, are engaged in providing research and development for Biotechnology and Pharmaceutical products for export. They obtained Private Customs Bonded Warehouse licence under section 58 of Customs Act, 1962 and permission for in-Bond manufacturing under section 65 of Customs Act. They also have Central Excise registration for domestic operation and service tax registration for entering into services falling under Sections 65(105)(zz), 65(105)(k) and 65(105)(zzh).

The Bench, comprising of Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member), took up both the appeals together due to the issues in both being same and the core issue was ascertained to be whether the appellants have exported their services or not.

It was noted that there is no definition of ‘export of service’ under the Customs Act or Central Excise Act, and in the absence of any specific provision in both the notifications as to how the term export of service is to be construed, the term has to be understood with respect to the FTDR Act, 1992 and not Finance Act, 1994 or Rules.

Network Company Collected Service Tax on Broadcasting Services but Failed to Deposit: CESTAT Upholds Penalty

Narne Networks Pvt. Ltd., the appellant, is engaged in providing broadcasting and advertising services. Based on an investigation, the department found that the company had collected service tax from clients for broadcasting services but did not remit it to the government. It was also alleged that the company failed to pay service tax on the sale of film rights and irregularly availed CENVAT credit amounting to Rs. 1,40,14,440.

The two-member bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) observed that the appellant had collected service tax but intentionally failed to remit it for a long period.

The tribunal pointed out that the appellant neither filed returns nor disclosed the liability despite being registered under the Finance Act and being aware of their obligation to pay service tax. It observed that such conduct demonstrated a clear mens rea to evade tax.

Semi Conductor Laboratory Not a Business Entity, Not Liable to Pay Service Tax on CISF Security Services: CESTAT

Semi Conductor Laboratory, located in Mohali, Punjab, is an autonomous body of the Government of India. It was earlier under the Department of Space and is now under the Ministry of Electronics and Information Technology.

The two-member bench comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that SCL is an autonomous government organization wholly owned and controlled by the Union Government. It pointed out that the laboratory carries out research and development activities without any profit motive and is not involved in industry, commerce, or any business.

The tribunal explained that services provided by one department of the government to another cannot be considered taxable under the Finance Act. It also observed that the protection of strategic government installations by CISF is a sovereign duty.

Entity Recognized as Exporter in Customs Documents Alone Eligible to Claim Service Tax Refund Under Notification: CESTAT

NMDC Limited, a public sector undertaking engaged in the mining and sale of iron ore, filed several refund claims under Notification No. 41/2012-ST seeking a rebate of service tax paid on input services used in the export of iron ore. The refund claims were made for services such as railway freight, terminal handling, and sampling charges connected with the export of iron ore through MMTC Limited.

The Department rejected the refund claims on the ground that NMDC was not the exporter of the goods. It observed that under the Foreign Trade Policy, the export of iron ore with more than 64% iron content was allowed only through MMTC Limited, a State Trading Enterprise.

The two-member bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) observed that the export of iron ore above 64% iron content was restricted and permitted only through MMTC as per the Foreign Trade Policy.

Discovery During Audit Alone Does Not Justify Extended Limitation u/s11A: CESTAT Sets Aside Cenvat Credit Demand and Penalty of Rs. 1.81 Crore

M/s Vacmet India Limited, a manufacturer of polyester film, filed an appeal challenging the order-in-appeal dated 17.02.2023, passed by the Commissioner (Appeals), which had upheld the order-in-original denying Cenvat credit amounting to Rs. 1,81,11,167/- for the period March 2016 to June 2017. An equal amount was imposed as a penalty under Section 11AC of the CentralExcise Act, 1944.

The tribunal observed that the only ground cited for invoking the extended period was that the irregularity was discovered during the audit. It was further noted that the discovery during the audit does not automatically imply suppression, fraud, or intent to evade duty. The appellant had filed all returns properly, and the transactions were duly recorded.

The Tribunal observed that if the assessing officer had scrutinised the returns adequately, the alleged irregularity would have been noticed without invoking the extended limitation. In the absence of evidence demonstrating willful misstatement, fraud, or suppression of facts, the invocation of extended limitation and the penalty could not be sustained.

No Evidence of Wilful Misstatement in SCN to Invoke Extended Limitation u/s 11A: CESTAT Set Aside Rs. 4.84 Lakh Duty Demand

M/s Shape Engineering Co. (P) Ltd., a registered manufacturer and supplier of turbine parts, filed an appeal challenging the Order-in-Appeal passed by the Commissioner (Appeals),. The impugned order had allowed the department’s appeal and set aside an earlier order-in-original dated by the Assistant Commissioner, who had dropped proceedings against the appellant.

The Tribunal reviewed the SCN and the orders below and observed that the extended limitation can only be invoked if one of the following elements is established: fraud, collusion, willful misstatement, suppression of facts, or violation of the Act or Rules with intent to evade duty. The tribunal found that the SCN did not provide any evidence to substantiate willful misstatement or misrepresentation by the appellant.

Given the absence of evidence, the tribunal concluded that the invocation of the extended period of limitation was unjustified. As a result, the demand covering the period from June 2010 to October 2010 was time-barred under normal limitation rules.

Transaction Value Rejected on Accuracy, Duty on Copper Scrap Re-assessed Based on Similar Imports: CESTAT Upholds Customs Valuation

M/s Mittal Appliances Ltd., Pithampur, imported copper scrap of the Birch/Cliff variety from the United Arab Emirates. The importer filed a Bill of Entry, declaring the value of the imported goods at Rs. 414.54 per kg. The duty was self-assessed based on this declared transaction value, in accordance with Section 17(1) of the Customs Act, 1962, which mandates that importers self-assess the duty payable.

After a detailed review, the tribunal concluded the Deputy Commissioner correctly rejected the declared transaction value under Rule 12 due to reasonable doubt about its accuracy. Also the reassessment based on contemporaneous imports of similar goods under Rule 5 was lawful and procedurally proper, and the Commissioner (Appeals) was correct in upholding the Deputy Commissioner’s speaking order.

Accordingly, the two-member bench of Dilip Gupta (president) and P.V. Subba Rao (Technical Member) upheld the Customs valuation and dismissed the appeal filed by M/s Mittal Appliances Ltd.

Notional Cost of Specifications Provided by Maruti Suzuki Deemed “Buyer’s Assist”: CESTAT Quashes Excise Duty Demand on Vendor

The appellant, Mag Filters And Equipment Private Limited a vendor supplying parts and components to Maruti Suzuki India Ltd. (MSIL), challenged the Order-in-Original passed by the Additional Director General (Adjudication), Directorate General of GST Intelligence (DGGI), New Delhi.

The Tribunal referred to Mangalore Refinery & Petrochemicals Ltd. vs. CC, Mangalore (2014 ), which held that costs incurred for the buyer’s specifications do not form part of the value of goods in the hands of the supplier.

It was also noted that the specifications merely guided the manufacturing process. The development cost of detailed drawings and moulds, which were necessary for production, was already included in the assessable value, leaving no further cost attributable to MSIL’s specifications.

Pre-SCN Penalty Deposit Can’t Be Reappropriated as Duty: CESTAT Upholds ₹5.32 Crore Excise Duty Demand

The disputes arose from investigations conducted by the Directorate General of Central Excise Intelligence (DGCEI) at a residential flat in Delhi. During the search, officers seized documents and electronic data pertaining to six manufacturing units of the Bansal Group, including Balaji Wire Pvt. Ltd. Mr Arun Kumar Gupta is a director of Balaji.

The Tribunal observed that Balaji had correctly adjusted the pre-SCN deposit against the 25% penalty, meeting statutory requirements. Therefore, the same amount could not also be used to reduce duty liability. The tribunal upheld the duty demand of ₹5,32,85,623/- and dismissed Balaji’s appeal.

The two-member bench comprising Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) dismissed the appeal, holding that the pre-SCN penalty deposit cannot be re-appropriated toward duty. Duty demand of ₹5.32 crore confirmed.

Fe Content of Iron Ore to Be Determined on Wet Basis: CESTAT relies on Supreme Court Ruling to set aside Duty Demand

The appeals were filed by M/s Disha Realcon Pvt. Ltd. and M/s S.M. Ayat Niryat Pvt. Ltd., iron ore exporters, along with two individuals, against a common order passed by the Commissioner of Customs (Adjudication), New Delhi. The appellants exported iron ore fines through the ports of Haldia and Paradip. Exports of iron ore fines with Fe content below 58% were exempt from export duty under Notification No. 15/2016-Cus dated 1.3.2016.

The DRI issued a show-cause notice to M/s Disha Realcon Pvt. Ltd. and M/s S.M. Niryat Pvt. Ltd., alleging underpayment of export duty on iron ore fines exported through Haldia and Paradip ports. The exemption under Notification No. 15/2016-Cus was available to iron ore fines containing Fe content below 58%.

The Bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) set aside the duty demand, penalties, and confiscations against all appellants, allowing the appeals with consequential relief.

Department Barred from Reopening Settled Classification: CESTAT Upholds Claim for Exemption of Duty on Light Green Float Glass

M/s Asahi India Glass Ltd. imported Light Green Float Glass from Indonesia, Japan, and Thailand through 220 Bills of Entry filed between 8 January 2021 and 24 February 2023. The goods were provisionally assessed under Section 18 of the Customs Act, 1962, pending resolution of a classification dispute.

The Tribunal also observed that the test reports confirmed the presence of a fluorescent tin layer on one side, qualifying as an absorbent layer under Chapter Note 2(c). Therefore, the product fulfilled the criteria for classification under CTI 7005 10 10.

The Tribunal held that Light Green Float Glass imported by Asahi India Glass Ltd. is correctly classifiable under CTI 7005 10 10; The goods are eligible for duty exemption under Notification No. 46/2011-Cus; and the Department’s reliance on CBIC Circular No. 23/2024 is misplaced, as it cannot override prior accepted appellate orders.Accordingly, the two-member bench comprising Dilip Gupta (President) and Hemambika R. Priya (Technical Member) dismissed the Department’s appeal and upheld the impugned order of the Commissioner (Appeals).

Employee Welfare Expenses Forming Part of HR Policy Eligible for CENVAT Credit: CESTAT in SBI Cards Case

SBI Cards & Payment Services Ltd., the appellant, is engaged in providing credit card services. During an audit, the department observed that the appellant had availed CENVAT credit on service tax paid for employee group insurance and mediclaim insurance.

The department alleged that such services were not used for providing output services and issued a show cause notice dated June 25, 2013, covering the period from 2008-09 to 2010-11. The adjudicating authority confirmed the demand with interest and penalty. The Commissioner (Appeals) upheld the order. Aggrieved by the decision, the appellant approached the CESTAT.

The two-member bench comprising S. S. Garg (Judicial Member) and R. Saifi (Member) observed that the Larger Bench in HCL Technologies Ltd. had clearly held that group medical insurance taken for employees qualifies as an input service because such welfare measures are connected with the efficiency and smooth functioning of business operations.

Taxpayer Not Entitled to Refund of Excess Excise Duty in Absence of Provisional Assessment: CESTAT

Super Auto (I) Ltd., the appellant, is a manufacturer of excisable goods located in Faridabad, Haryana. The appellant paid central excise duty on its clearances and later sought a refund of the excess duty paid, claiming that it had paid more duty than was actually payable.

The single-member bench comprising S. S. Garg (Judicial Member) observed that the Larger Bench of the Tribunal, through Interim Order No. 13/2025 dated September 12, 2025, had already settled the issue.

The Larger Bench, relying on the Mauria Udyog Ltd. judgment, held that an assessee who has not opted for provisional assessment is not entitled to claim a refund of excess duty paid under Section 11B of the Central Excise Act, 1944.

Service Tax Demand Notice without Category-Wise Quantification void ab Initio: CESTAT sets Aside Order

The appellant entity, M/s Nirman Construction provides taxable services under the categories of “commercial or industrial construction service”, “management, maintenance or repair service” and “works contract service”.

The appellant was served a SCN dated August 9, 2010, invoking extended period of limitation, alleging non-payment of service tax between 2005–06 and 2008–09, based on discrepancies between the company’s balance sheet and ST-3 returns.

The Bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that a demand raised without identifying the exact service categories and quantifying tax under each head is unsustainable and void ab initio.

Value Loading on Solar Imports Unjustified Without Proof of Related-Party Dealings: CESTAT Dismisses Revenue Appeal in Customs Valuation Case

The case arose from imports made by M/s Enfinity Solar Solutions Pvt. Ltd., Chennai, which had imported solar panels, photovoltaic cables, solar power inverters, and related accessories from M/s Enfinity N.V., Belgium and M/s Enfinity Asia Pacific (Trading) Ltd., Hong Kong.

The Department suspected that these entities were related parties, and in accordance with the Board’s Circular No. 11/2001 dated 23.02.2001, the transactions were referred to the Special Valuation Branch (SVB) at the Custom House, Chennai, for scrutiny.

The Tribunal emphasized that under the Customs Act, 1962, value additions or disallowances can only be made when statutory conditions are not fulfilled, and not merely based on assumptions. Since there was no material to prove that the Hong Kong entity added any mark-up or that the transaction value was manipulated, the Revenue failed to discharge its burden of proof.

Door Handle “Cap Sub-Assembly” Held Classifiable as Part of Vehicle Body: CESTAT Denies 5% Concessional Duty Benefit

The appellant, Aisin Automotive Haryana Pvt. Ltd. a manufacturer of car components, imported door handle cap sub-assemblies from Thailand and classified them under CTH 8708 99 00, claiming a concessional 5% Basic Customs Duty. Customs authorities later contended that the product was more appropriately classifiable under CTH 8708 29 00, as it formed part of the vehicle body. The Commissioner confirmed the duty demand and interest, leading to the present appeal.

The Bench observed that the concessional notification could not apply since the product did not fall under the specified tariff heading eligible for 5% duty.

The Bench comprising Dr Rachna Gupta (Judicial Member) and Ms Hemambika R. Priya (Technical Member) concluded that the Commissioner correctly classified the imported goods under CTH 8708 29 00 and upheld the ₹1.33 crore differential duty demand along with interest. The appeal was dismissed in its entirety.

CESTAT Has No Jurisdiction to Hear Appeals Involving Goods Imported as Baggage as Explicitly Barred by S. 129A(1) of Customs Act

The appeal was filed by Mr. Sonu Kumar Chaurasiya, who had arrived at CCSI Airport, Lucknow, from Dubai on 19 December 2021. On inspection, Customs officers discovered gold weighing 228.800 grams, valued at Rs. 11,64,592, concealed inside a hammer in his baggage. The gold and the hammer were seized under Section 110 of the Customs Act, 1962.

The two-member bench comprising Sanjiv Srivastava (Technical Member) and K. Anpazhakan (Judicial Member) observed that the issue involved the confiscation of goods imported as baggage. It referred to Section 129A(1), which clearly bars the Tribunal from deciding appeals against orders of the Commissioner (Appeals) when such orders concern baggage import or export.

The tribunal explained that since the appeal concerned the confiscation of goods imported as baggage, it was legally barred from being heard under Section 129A(1). The tribunal dismissed the appeal as not maintainable and directed that the appellant may seek a remedy before the appropriate forum if permitted by law.

Service Tax on Renting of Immovable Property: CESTAT Holds Demand Time-Barred Amid Conflicting Judicial Views

The appellant, Onkar Associates, had rented out its godowns to the Punjab State Warehousing Corporation and received rent for the periods between June 2007 and March 2011.

The department issued three show cause notices alleging that the appellant had provided taxable services under “Renting of Immovable Property Service” as defined under Section 65(105)(zzzz) of the Finance Act, 1994, but failed to pay the applicable service tax.

The tribunal set aside the demand of service tax, interest, and penalties, holding that the appellant was protected under Section 80(2) of the Finance Act, 1994, as the tax was paid promptly after the retrospective amendment. The appeal was allowed in full.

CESTAT Sets aside Service Tax demand on Insurance Surveyor, Cites 'No Suppression'

M/s Rajendra Dongle, an insurance surveyor, filed an appeal against an order confirming a service tax demand of ₹2,24,217/- for the financial year 2015-16. The demand was initiated after the department observed a discrepancy between the appellant's 'Nil' service tax return and an income of ₹15,46,331/- reflected in Form 26AS.

The bench, comprising Dr. Rachna Gupta (Judicial Member) held that service tax is chargeable only on the 'gross amount charged' for the taxable service (surveyor fees) and not on reimbursed expenses incurred as a 'pure agent'. It noted that the lower authorities had passed the order in "sheer ignorance of the documents on record."

Leased Dumpers and Tippers Not Registered in Service Provider’s Name: CESTAT Confirms Cenvat Credit Demand of Rs. 2.17 Cr, Sets Aside Penalty

M/s Gajraj Mining Private Limited, a provider of site preparation and mining services, held a Service Tax Registration No. AADCG9684LSD001 and was availing Cenvat credit on capital goods and input services under the Cenvat Credit Rules, 2004.

During the audit for the period up to March 2013, it was noted that the appellant had claimed Cenvat credit of Rs. 2,17,62,752 on 41 dumpers/tippers acquired through an operating lease from SREI Equipment Finance Pvt. Ltd. The vehicles, however, were registered in the financing company’s name, not in the appellant’s name.

The Tribunal examined the submissions and precedents. It noted that before Notification 25/2010, the issue of Cenvat credit on dumpers/tippers was settled in favour of service providers under Rule 4(3) and related decisions. The appellant had a bona fide belief that the credit was admissible, and there was no evidence of intent to evade tax.

CESTAT denies Rs. 8.36 Cr Excess CVD Refund Claim w/o Reassessment beyond 1 Year Limitation under Customs Act

M/s Drive India Enterprise Solutions Limited (the appellant) imported mobile phones at the Air Cargo Complex, Sanganer, Jaipur, under 77 Bills of Entry during the period from January 30, 2014, to November 20, 2014, and paid CVD at the rate of 6%.

The Tribunal observed that the refund claim under Section 27 must comply with the statutory limitation of one year unless the duty is demonstrably paid under protest. In the present case, no credible evidence was provided to establish such a protest at the time of payment.

Additionally, the Supreme Court has consistently held that a claim based on the decision in another taxpayer’s case cannot reopen a finalised assessment. The Tribunal also noted that the Chartered Accountant’s certificate did not sufficiently establish that the incidence of duty was not passed on to the buyers, as required under Section 28D of the Customs Act.

CESTAT Sets Aside Service Tax Demand on Pre-Amendment Reimbursable Expenses u/s 67 of the Finance Act, 1994

M/s Rajiv Dausage, an insurance surveyor, filed an appeal challenging the order-in-appeal dated 29 March 2019, where the Commissioner (Appeals) upheld the demand of service tax raised by the Deputy Commissioner for the financial year 2012–13.

The Tribunal, after considering the submissions, held that the reimbursements received by the appellant during 2012–13 were not part of the value of taxable services. The Tribunal emphasised that the Supreme Court judgment clearly defined that only the gross amount charged for “such service” is taxable, and any reimbursed expenses unrelated to the service itself cannot be included.

The Tribunal noted that the Commissioner (Appeals) erred in upholding the demand, as it failed to apply the law applicable during the relevant period. The CESTAT clarified that the legislative amendment of May 2015 cannot retrospectively affect earlier periods. Consequently, the impugned order demanding service tax on reimbursable expenses for 2012–13 was set aside, and the appeal was allowed.

Composite Works Contracts Not Taxable as ECIS: CESTAT Sets Aside ₹36 Lakh Service Tax Demand and Penalty

The appellant was engaged in providing installation, erection, and commissioning services, which included fixing poles, wiring, installing streetlights, laying cables, constructing tennis and basketball courts, fixing swings, and constructing railings for the Jodhpur Development Authority and other authorities. The appellant, however, had not registered under service tax for the period 2005-06 to 2009-10.

The Tribunal noted that demands for periods before 31.03.2009 were barred by limitation, and that mere non-payment of tax could not be construed as intentional evasion. The Tribunal also referred to the decision in Uniworth Textiles Ltd. vs. CCE, holding that the burden of proving malafide on the part of the taxpayer rests on the department.

In light of the above, the two-member bench of Dr Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) concluded that the demand for service tax and penalty was unsustainable. The impugned OIA confirming demand under ECIS, even for the abated amount, was therefore set aside. The appeal was allowed, and the service tax demand of ₹36.38 lakhs along with penalty was set aside.

False Claim of Lack of Air Conditioning Facility: CESTAT Upholds Rs. 4.96 Lakh Service Tax and Penalty on Restaurant

M/s Gurukripa Shahenshah Veg & Non-Veg Restaurant, a sole proprietorship operated by Sh. Charan Pal Singh provides Restaurant-cum-Bar services and was registered with the Commercial Taxes Department. The appellant challenged the Order-in-Appeal, wherein the Commissioner (Appeals) upheld a service tax demand of Rs. 4,96,013 along with equal penalties and additional penalties of Rs. 5,000 each under Sections 77(1) and 77(2) of the Finance Act, 1944.

The two-member bench comprising Dilip Gupta (President) and Hemambika R. Priya (Technical Member) affirmed the Order-in-Appeal, dismissing the appeal. The service tax demand of Rs. 4,96,013, along with equal penalties and additional penalties, was upheld.

The Tribunal concluded that the appellant’s claim of no AC facility was unsubstantiated, and the extended period of limitation was correctly invoked due to suppression and misrepresentation with the intent to evade service tax.

CESTAT Rules L&T’s Wheel Loaders Classifiable as ‘Front-End Shovel Loaders’, Quashes Extended Period Demand

Larsen & Toubro Limited, the appellant, imported Komatsu wheel loaders of different models from Japan between December 2018 and July 2021. The company classified the goods under Tariff Item 8429 5900 and claimed exemption under Notification No. 69/2011-Cus.

The two-member bench comprising P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) observed that the machines were self-propelled loaders with front-mounted buckets used to pick up and transport materials and that the end use in mining did not alter their classification. The tribunal explained that the correct classification of the goods is under Tariff Item 8429 5100.

The tribunal found merit in the appellant’s argument that there was no suppression for an extended period. The appeal was partly allowed, with the tribunal sustaining the classification under “Front-End Shovel Loaders” but granting relief to L&T by quashing the extended period demand, fine, and penalties.

Relevant Date for Export Duty is Date of Let Export Order, Not Loading Date: CESTAT in Bharat Mines Case

Bharat Mines and Minerals, the appellant, is a partnership firm engaged in the mining and export of iron ore. The department demanded differential duty based on a change in the export duty rate introduced through Notification No. 79/2008-Cus., dated 13.06.2008, arguing that the loading of goods took place after the new rate came into effect. The adjudicating authority confirmed the demand and imposed penalties.

The two-member bench comprising Ajayan T.V. (Judicial Member) and M. Ajit Kumar (Technical Member) observed that under Section 16(1)(a) read with Section 51 of the Customs Act, the applicable rate of duty must be determined based on the date of the LEO, which is the date the proper officer permits clearance and loading of goods for export.

The tribunal explained that the date of actual loading is not relevant for determining the duty rate. The tribunal pointed out that in this case, the LEO was granted on 09.06.2008, before the new notification took effect on 13.06.2008, and the revised rate could not apply.

Proceedings Against Deceased Proprietor 'Void Ab Initio': CESTAT Quashes Service Tax Demand

Manish Mehta, the legal heir of Late Smt. Pushpa Mehta, filed the appeal against an order that had dismissed his challenge to a service tax demand. The demand originated from a Show Cause Notice dated 17.10.2018 issued to M/s. Mehta & Company, a proprietorship engaged in the job work manufacturing of water meters, which claimed an exemption under Notification No.25/2012-ST.

The bench, comprising Ms. Binu Tamta (Judicial Member) and Ms. Hemambika R.Priya (Technical Member), agreed with the appellant. The Tribunal followed the principle laid down in Shabina Abraham, which held that an 'assessee' is the person liable to pay duty, and in the absence of a specific legal mechanism, proceedings cannot be continued against the legal heirs of a deceased sole proprietor.

The Tribunal noted that this principle had been subsequently upheld by the Madras High Court and in previous CESTAT decisions. The CESTAT held that the proceedings before the Adjudicating Authority had abated on the date of the proprietor's death, rendering the subsequent order-in-original 'non-est' (non-existent).

CESTAT Sets aside Service Tax Demand on Contractor, Citing 'Bona Fide Belief' to Bar Extended Period

Gurmail Singh, a small-time contractor, filed the appeal against an order that had confirmed a service tax demand for the period prior to 01.07.2012. The demand originated from a Show Cause Notice dated 20.10.2015 for services provided to Haryana State Warehousing Corporation (HSWC) from 2008-09 to 2014-15. The appellant had not registered for service tax or paid the tax.

The CESTAT bench, comprising Mr. S. S. Garg (Judicial Member) and Mr. P. Anjani Kumar (Technical Member), sided with the appellant on the issue of limitation. The Tribunal held that the appellant, a small contractor, could not be compared to a large corporate entity and that the communication from HSWC created a 'bona fide belief' regarding taxability. It rejected the Revenue's argument that the appellant's non-cooperation justified the delay, stating the department could have used its own powers to obtain information.

While the Tribunal noted that the appellant's arguments on the merits of the exemption were weak, it held that since the entire demand was for the extended period and the invocation of the extended period was not sustainable, the appeal could be allowed on this ground alone. The CESTAT set aside the service tax demand. The appeal was allowed on the ground of limitation.

Refund Claims for Unconstitutional Levies must be made in Civil Court: CESTAT Rejects Appeal, Citing Unjust Enrichment from ITC

M/s. KPR Mills Limited filed an appeal against the rejection of its refund claim for Rs. 2,86,03,528/-. This amount was paid as service tax on ocean freight under a reverse charge mechanism, a levy which was later declared unconstitutional by the Gujarat High Court. The appellant had paid the tax and subsequently availed it as ITC under the GST regime before filing for the refund.

The bench, comprising Mr. Vasa Seshagiri Rao (Technical) and Mr. Ajayan T.V. (Judicial), relied heavily on the Supreme Court's landmark decision in Mafatlal Industries Ltd. v. Union of India. The tribunal distinguished between an 'illegal levy' (handled under the Act) and an 'unconstitutional levy' (outside the Act's purview).

It held that since the refund was based on a levy declared unconstitutional, the claim did not fall within the statutory provisions and could not be adjudicated by CESTAT, with the proper remedy being a civil suit or writ petition. Furthermore, the tribunal upheld the finding of unjust enrichment.

Reliance on Form 26AS Insufficient & Notice Time-Barred: CESTAT sets aside Service Tax Demand

Manoj Kumar Anand filed an appeal against an order that upheld a service tax demand of Rs. 5,37,392/- for the period from April 2015 to June 2017. The department had initiated proceedings based on income tax details, alleging the appellant had received commission on which service tax was payable.

The core issues were whether a service tax demand can be confirmed solely based on information from Form 26AS without corroborative evidence, and whether the extended period of limitation was validly invoked.

The tribunal found the demand to be unsustainable and time-barred. The impugned order was set aside, and the appeal was allowed.

Claim for 12% Interest on Service Tax Refund: CESTAT Upholds 6% Interest

M/s. Seher, the appellant assessee filed an appeal against an order that rejected its claim for 12% interest on a sanctioned service tax refund of Rs. 30,54,449/-. The amount was originally paid under protest during an investigation and was later ordered to be refunded after the appellant won a separate appeal. The dispute centered solely on the applicable rate of interest for the delayed refund.

The tribunal distinguished the appellant's cited case of Sandvik Asia, observing that the 12% interest awarded there was as 'compensation' for an exceptional 17-year delay, not the standard statutory rate.

It observed that the tribunal is bound by the statute and does not have the inherent powers of a superior court to deviate from the rate fixed by the government.The tribunal held that the lower authorities had correctly sanctioned interest at 6% per annum. Finding no infirmity in the impugned order, CESTAT dismissed the appeal.

Relief for Blue Star: CESTAT Rules Centralized Air-Conditioning Systems Qualify for Higher Abatement

Blue Star Ltd., engaged in the installation and maintenance of air-conditioning systems, was audited by the department, which alleged short payment of service tax on Annual Maintenance Contract (AMC) services, non-payment on rental income, and wrong availment of CENVAT credit.

The Commissioner of Central Tax (Audit-I), Bengaluru, confirmed the demands with penalties. The appellant challenged the order before the CESTAT.

The tribunal remanded the issue of reimbursable expenses for verification, set aside the demand on CENVAT reversal for trading, and deleted the small demand related to photocopying charges. All penalties were also removed. The appeal was partly allowed, granting substantial relief to the appellant.

CESTAT Allows CENVAT Credit on Service Tax Paid for Construction Services as Exclusion Applied Only from April 1, 2011

Apotex Research Pvt. Ltd.,appellant-assessee,was engaged in manufacturing pharmaceutical products under Chapter Heading 3004 of the Central Excise Tariff Act, 1985. During audit, it was found that the appellant had availed CENVAT credit of Rs. 62,06,688 on service tax paid for construction services between November 2010 and May 2011.

Since construction services were excluded from the definition of ‘input service’ under Rule 2(l) of the CENVAT Credit Rules, 2004 from April 1, 2011, a show-cause notice was issued for recovery of the said credit along with interest and penalty. The adjudicating authority confirmed the demand with interest and penalty, which led to the present appeal.

The two member bench comprising D.M.Misra (Judicial Member) and Pullela Nageswara Rao (Technical Member) considered submissions from both sides and reviewed the records. It noted that the dispute centred on whether CENVAT credit on service tax paid for construction services during November 2010 to May 2011 was admissible.

Rent to Foreign Government Office Taxable Without MEA Certificate: CESTAT Confirms Service Tax Demand

P.N. Venugopal & Associates, the appellant, provided manpower recruitment services and the renting of immovable property services. During an audit for the period from June 2007 to February 2009, the department found that the appellant had not paid service tax on rent received from the Trade and Investment Office of the Department of the Premier and Cabinet, Government of Queensland, Australia.

The department issued a show cause notice and later confirmed the demand of service tax and penalties under Section 78 of the Finance Act, 1994. The appellant challenged the order before the CESTAT.

The tribunal observed that the appellant had paid the service tax and interest before 28 May 2012, so no penalty could be imposed in view of Section 80(2) of the Finance Act, 1994. The tribunal partly allowed the appeal, upholding the demand for service tax and interest but setting aside the penalty imposed under Section 78.

Restaurant Services Provided in Non-Air-Conditioned Premises Remain Exempt under Mega Exemption Notification: CESTAT

Apni Rasoi, a proprietorship firm owned by Smt. Manju Soni, operated a restaurant and outdoor catering service in Chitrakoot, Uttar Pradesh. The department compared income shown in Form 26AS with the taxable value declared in ST-3 returns and alleged short payment of service tax amounting to Rs. 3,15,482 for 2013-14 to June 2017.

The single-member bench comprising Mr. P.K. Choudhary (Judicial Member) observed that the department had issued the demand merely based on Form 26AS data without confirming the nature of receipts. It explained that not all entries in Form 26AS represent taxable income and pointed out that non-air-conditioned restaurant services are specifically exempt.

Holding the demand unsustainable, the CESTAT also ruled that there was no suppression or intent to evade tax. The appeal was allowed, and the demand, interest, and penalties were set aside.

Rajasthan State Road Transport Corp Not Liable for Service Tax on Display of Govt Advertisements on Buses : CESTAT

The appellant, Rajasthan State Road Transport Corporation (RSRTC), is a state-owned passenger transport organization registered for various taxable services, including tour operator service, renting of immovable property, and sale of space or time for advertisement.

During an audit covering the period from April 2010 to March 2013, it was found that RSRTC had received Rs. 10.48 crore from the Government of Rajasthan for displaying advertisements about government achievements on its fleet of buses.

The tribunal set aside the impugned order, holding that RSRTC was not liable to pay service tax on the amounts received for displaying government advertisements. The appeal was allowed, and the demand, interest, and penalties were quashed.

CESTAT Questions Denial of CENVAT Credit on Inox Air’s Evaporative Loss of Liquid Gases During Transit, Remands Matter

Inox Air Products Pvt. Ltd., the appellant, is engaged in the manufacture of industrial gases such as liquid nitrogen, liquid oxygen, and liquid argon and avails CENVAT credit under the CENVAT Credit Rules, 2004.

The department issued a show-cause notice alleging that the appellant had availed of full CENVAT credit on inputs, even though the actual quantity of gases received was less than the invoiced quantity due to short receipt, and proposed recovery of Rs. 2,76,984, along with interest and penalty.

The two-member bench comprising Vasa Seshagiri Rao (Technical Member) and one accompanying Member observed that the issue was identical to one previously decided in the appellant’s earlier appeal, where the matter was remanded for verification of scientific and documentary evidence explaining the loss.

CESTAT Orders Fresh Verification of BSNL Chennai Telephones’ CENVAT Credit Based on Chartered Accountant’s Certificate

BSNL Chennai Telephones (Mobile Division), the appellant, is a public sector undertaking engaged in providing telecommunication services and registered with the Service Tax Department. During an audit of the appellant’s accounts, it was found that in September 2008, CENVAT credit amounting to Rs. 82,26,311 had been taken without proper documentation.

A show-cause notice was issued on 27 July 2010 demanding recovery of the credit along with interest and penalty. After adjudication, the Commissioner of Service Tax confirmed a revised demand of Rs. 77,43,085 and appropriated Rs. 4,40,115 already paid by the appellant. No penalty was imposed. Aggrieved by the order, the appellant approached the CESTAT.

The two-member bench comprising M. Ajit Kumar (Technical Member) and Ajayan T.V. (Judicial Member) pointed out that since the appellant is a public sector unit, an opportunity should be given to verify the evidence and examine the claim afresh.

Exempted Supplies made to ICB-based Petroleum Project: CESTAT quashes ₹87 Lakh Excise Demand

The appellant, Venkay Engineering Works, engaged in fabrication of iron and steel structures such as cargo baskets, chemical racks, and cutting tanks, had supplied goods to companies like Reliance Industries Ltd (RIL) operating in the Krishna-Godavari (KG) basin. They claimed exemption under Notification No. 6/2006-CE read with Notification No. 21/2002-Cus, submitting Project Authority Certificates issued by RIL stating the goods were used in petroleum operations under licenses obtained through ICB.

It was found that the documents adduced by the appellant were sufficient enough to indicate that these materials were intended for use only in connection with the activity for which the work was awarded through ICB route. “In the facts of the case, we find there is no dispute that the appellant, as a sub-contractor, is eligible to supply materials towards a project allotted under ICB,” the Bench stated.

Allowing the appeal, the Tribunal held that the appellant was entitled to the benefit of exemption under Notification No. 6/2006-CE, and therefore, the duty demand and penalty were unsustainable.

No Service Tax on Army Housing Projects before 01. 07.2010: CESTAT Grants Partial Relief to Sub-Contractor under Finance Act

The appellant, Shivanssh Infrastructure Development Pvt Ltd, a subcontractor engaged in the construction of married accommodation projects for MES, originally awarded to Maytas Infra Pvt Ltd and Ramky Infrastructure Ltd. The Revenue initiated service tax demands on the appellant under the heads of Construction of Residential Complex Services (CRCS) for the earlier period and Works Contract Services (WCS) for the subsequent period. The department contended that the construction activities were taxable and further sought to impose penalties under Section 78 of the Finance Act, 1994.

The CESTAT bench, comprising of Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member), held that no service tax is applicable for the said period. For the period thereafter, the Tribunal acknowledged that the appellant, being a sub-contractor, may be liable to pay tax but observed that there was no intent to evade tax, and therefore, the penalty under Section 78 was unwarranted.

Accordingly, the Tribunal partly allowed the appeal, deleting the demand and penalty for the earlier period and remanding the matter back for re-quantification of liability for the remaining period, if any, in accordance with law.

Service Provided to Foreign Airline Amounts to Export of Service under Finance Act: CESTAT Quashes Service Tax Demand

The appellant, Translanka Air Travels (P) Ltd., acted as the GSA for Srilankan Airlines and received overriding commission and contract fees under the agreement. A show cause notice issued by the department demanded service tax of ₹32.13 lakhs, treating the services as taxable under the category of Business Auxiliary Services. The adjudicating authority confirmed the demand, which was upheld by the Commissioner (Appeals).

The Tribunal, comprising of Ajayan T.V. (Judicial Member) and M. Ajit Kumar (Technical Member), agreed with the appellant’s submissions and noted that in the appellant’s own earlier cases, the same issue had been settled in its favour. It was further noted that the show cause notice reveals in para 14 that in the GSA agreement there is no specific clause about payment of any amount as Contract Fees for any specific purposes.

Further, the Bench found that no specific demand for contract fees had been raised in the show cause notice, and the inclusion of reimbursable expenses was contrary to the Supreme Court’s decision in Intercontinental Consultants & Technocrats Pvt. Ltd.

No Service Tax on Reimbursable Expenses or Crane and Forklift Hire Prior to 16.05.2008: CESTAT Allows Appeal under Finance Act

The appellant, Sri Rama Vilas Services Ltd., engaged in Customs House Agent (CHA) services, warehousing, transport of goods by road, and renting of immovable property, had contested the inclusion of certain costs in taxable value. The Department had sought service tax on reimbursable charges like Forms & Stamps, Xerox, customs examination fees, and local conveyance, as well as charges collected for crane and forklift hire, treating the latter under Business Support Services.

The Tribunal bench comprising Member (Judicial) A. Ramachandran and Member (Technical) K. V. Balamurugan observed that Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006, which allowed inclusion of such costs, was struck down by the Delhi High Court and later upheld by the Supreme Court. Therefore, the Department’s demand for service tax on these expenses was unsustainable.

Regarding crane and forklift charges, the Tribunal noted that these services did not constitute Business Support Services prior to 16.05.2008, citing earlier CESTAT and High Court rulings. Consequently, the Tribunal allowed the appeals and quashed all associated penalties, emphasizing that the Department cannot levy tax or penalties based on incorrect service classification.

Penalty on Co-Noticee u/s 112(a) of Customs Act Set Aside by CESTAT: Mere Classification Dispute Not Grounds for Confiscation

The appellant, Kwick Cargo Tracers & Lifters, had challenged the Order-in-Original dated January 6, 2017 passed by the Commissioner of Customs (NS-III), Nhava Sheva. The appellant, a Customs House Agent (CHA), was a co-noticee in the impugned proceedings, while Sirthai Superware India Ltd. was the main noticee.

The issue pertained to the import of Melamine ware (Kitchenware and Tableware) by Sirthai Superware India Ltd., the main noticee. The revenue alleged misclassification of the imported goods and demanded differential duty along with penalties under Section 112(a) from both the importer and the CHA.

In light of the above, the Tribunal in the present appeal noted that since the penalty on the importer was held unsustainable and the goods were not held liable for confiscation, no penalty could be imposed on the CHA, who was merely a co-noticee in the proceedings.

Mere Procedural Lapse Not Penal Offence in Excess Customs Duty Drawback Claim: CESTAT Quashes Penalty u/s 114 & 114AA

The appellant, Janani International Pvt. Ltd., exported cotton made-ups on a CIF/C&F basis and claimed drawback after deducting freight and insurance from the declared value. The Directorate of Revenue Intelligence (DRI) alleged that the actual freight incurred was higher than the amounts declared, leading to an excess drawback of ₹10.19 lakh. A show cause notice was issued proposing recovery of the amount, confiscation of goods, and penalties under Sections 114 and 114AA of the Customs Act, 1962.

The Tribunal, presided by Vasa Seshagiri Rao (Technical Member), observed that declaring average freight in such cases was in accordance with the Board’s Circular. It was noted that while the appellants failed to review and rectify the freight declaration post-export, such lapse did not amount to misdeclaration. The Tribunal found no evidence of intentional wrongdoing or personal involvement of the Managing Director.

Accordingly, the CESTAT held that the penalties under Sections 114 and 114AA were unsustainable and ordered them to be set aside, while upholding the recovery of excess drawback and interest already paid.

Services by HIMUDA as Governmental authority like Maintenance, Conversion, and Water Charges Not Taxable: CESTAT

The Tribunal, comprising Justice S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member), was dealing with multiple appeals filed by HIMUDA against service tax demands raised under various categories including renting of immovable property, business auxiliary services, and consulting engineer services. The demands collectively covered the financial years 2007-08 to 2014-15, amounting to over ₹18 crore.

The Tribunal accepted HIMUDA’s argument, observing that the charges for maintenance, conversion, compounding, water supply, transfer fees, and other statutory levies were either regulatory or administrative in nature, forming part of the authority’s statutory mandate rather than being considered for any commercial service. It held that these receipts could not be treated as taxable services and were thus exempt under the notification.

CESTAT also agreed that construction services provided by HIMUDA to various State Government departments such as Health, Education, and Transport were non-commercial in nature, and therefore not liable to service tax.

CENVAT Credit Denied on Endorsed Bills of Entry without Hearing: CESTAT Remands Matter to Assistant Commissioner

M/s. Eversendai Constructions Pvt. Ltd., the appellant, is a structural fabrication company, which had entered into a tripartite agreement with Forum Projects Pvt. Ltd. and Larsen & Toubro Ltd. (L&T) for fabrication and erection of steel structures used in a high-rise residential project titled “Atmosphere” at Kolkata.

Under the agreement, the appellant received steel inputs supplied by Forum Projects and L&T on a free-issue basis, supported by original duty-paying documents Bills of Entry and excise invoices endorsed in their favour.

The Tribunal, comprising Judicial Member P. Dinesha and Technical Member M. Ajit Kumar, observed that the Assistant Commissioner’s letter effectively denied CENVAT credit, making the appeal maintainable.

No Service Tax on Book Reversal Entries, Security and Electricity Deposits u/s Section 67 of Finance Act: CESTAT

The appellant, PVP Corporate Parks Pvt. Ltd, engaged in the business of leasing immovable property, had acquired assets from SSI P Ltd. and AGS Holding P Ltd. in 2008. During a review of accounts, it was noted that certain electricity deposits and refundable security deposits had not been separately recorded. In 2009-10, reversal entries were made, resulting in the amounts being reflected under miscellaneous income.

A Show Cause Notice issued in August 2011 sought service tax on these entries and invoked the extended period of limitation. The appellant argued that the amounts were refundable deposits, not consideration for renting services, and that the demand was time-barred. The Additional Commissioner and Commissioner (Appeals) had upheld the demand, prompting the present appeal before the Tribunal.

In view of the above, CESTAT Chennai set aside the service tax demand, holding that the miscellaneous income entries were not consideration for renting of immovable property services. The appeal was allowed with consequential relief, emphasizing the need to distinguish refundable deposits from actual service consideration for service tax purposes.

Wipro Wins Excise Battle: CESTAT Upholds Transaction Value for Laptops Supplied to Govt Undertaking for Student Scheme

The appeal challenged an order that upheld a demand for duty on 4,661 laptops supplied by Wipro to ELCOT (Electronics Corporation of Tamil Nadu Ltd.) between July and December 2012. The core issue was whether the excise duty on the laptops should be assessed based on the 'transaction value' under Section 4 of the Central Excise Act, as adopted by Wipro, or on the higher 'Retail Sale Price' (RSP) under Section 4A, as demanded by the Revenue.

A two member bench comprising Mr. P. Dinesha (Judicial Member) and Mr. M. Ajit Kumar (Technical Member) agreed with the appellant's counsel. The Tribunal held that the activity of ELCOT—procuring laptops for free distribution to school students on behalf of the government—does not constitute a 'service industry' as contemplated in the definition of an 'Institutional Consumer'. It noted that such distribution is not a commercial activity. Consequently, as ELCOT was neither an 'Institutional Consumer' nor an 'Industrial Consumer', the provisions of Section 4A were not attracted.

Finding that Wipro was correct in assessing the duty on the transaction value, the CESTAT set aside the demand upheld by the lower authorities and allowed the appeal with consequential benefits.

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