Annual Customs, Excise and Service Tax Case Digest: CESTAT Rulings 2025 (Part 23)

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

Service Tax Not Payable on Use of Foreign Technology or Trademarks Not Registered Under Indian Law: CESTAT

M/s.Real Image Media Technologies Private Limited vs TheCommissioner of GST & Central Excise 2025 TAXSCAN (CESTAT) 1201

Real Image Media Technologies Private Limited, the appellant, is engaged in sound recording and production services. The appellant entered into a Production Services Agreement with DTS Inc., a company incorporated in the United States, under which it was appointed as a non-exclusive provider of production services for films released in India.

The two-member bench comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that the adjudicating authority’s findings were not supported by evidence. It explained that for an intellectual property service to be taxable under Section 65(55a), the right must be recognized under Indian law.

The tribunal pointed out that the authority had made a bald statement that the IPRs were covered under Indian statutes without any proof of registration or inquiry.

Penalty for Delayed Excise Duty Payment to Be Calculated Only for Actual Days of Delay, Not Entire Month: CESTAT

Arcelor Mittal Nippon Steel India Ltd vs Commissioner 2025 TAXSCAN (CESTAT) 1202

Arcelor Mittal Nippon Steel India Limited, formerly known as Essar Steel India Limited, is engaged in the manufacture of iron ore concentrate and operates a beneficiation plant in Dantewada, Chhattisgarh.

During an audit, the department found that the company had paid central excise duty for the months of January to March 2017 after the prescribed due dates.

The single-member bench comprising Dr. Rachna Gupta (Judicial Member) observed that Rule 8(3A) requires the penalty to be computed at 1% per month or part thereof, meaning it can be calculated even for part of a month on a proportionate basis.

Proforma Invoices Cannot Replace Commercial Invoices Prepared After Negotiation and Accepted by Customs: CESTAT

Saurabh Kapoor vs Principal Commissioner of Customs, ICD(Import) 2025 TAXSCAN (CESTAT) 1203

Saurabh Kapoor, the appellant, was a partner in Chandra Impex and associated with M/s Chandra Chemicals, which imported spray paints from China between 2015 and 2019. The customs department alleged undervaluation of imports based on proforma invoices retrieved from the appellant’s email account.

The two-member bench comprising Justice DilipGupta (President) and Hemambika R. Priya (Technical Member) observed that the department failed to establish any connection between the alleged proforma invoices and the actual imports.

The tribunal explained that the statement recorded under Section 108 could not be relied upon because the mandatory procedure under Section 138B was not followed. It also observed that the proforma invoices did not have evidentiary value in the absence of supporting proof.

No Service Tax on Reimbursement of Electricity Charges Collected on Actual Consumption Basis: CESTAT

M/s. Forum Project Holding Pvt. Ltd vs Commissioner of ServiceTax Audit 2025 TAXSCAN (CESTAT) 1204

This Tribunal affirmed the non-applicability of service tax while adjudicating appeals filed by M/s Forum Project Holding Pvt. Ltd. and its Manager (Accounts), Deepak Agarwal against an order of the Commissioner of Service Tax Audit, Kolkata by which the Commissioner had confirmed aggregate service tax demands of ₹5,58,73,725 for the period 2011-15. Among the contested items was a demand of ₹4,25,95,982 relating to reimbursement of electricity, water and diesel generator charges.

A Bench of Ashok Jindal, Member (Judicial) and K. Anpazhakan, Member (Technical), examined the documentary record and the terms under which charges were collected and paid.

The Tribunal found relevance in the material and evidence adduced by the appellant to contest their case and noted that the issue had been earlier discussed by the Tribunal in the appellant’s own group concern’s case in Forum Mall Management Services Pvt Ltd VS. Commissioner of Service Tax (2024) where it was held that such reimbursements are not leviable to service tax when collected on actual consumption and the appellant functioned as a ‘pure agent’.

Customs Wrongly Encashed Bank Guarantee during Appeal Pendency: CESTAT Directs Refund, Rejects Limitation Claim

Oswal Industries Limited vs Commissioner of Customs (Import) 2025 TAXSCAN (CESTAT) 1205

The factual matrix follows the appellant, M/s Oswal Industries Ltd. (Oswal Industries) who had imported goods vide three bills of entry dated August 21, 2003, and procured provisional release of the goods on January 12, 2004 against execution of a bond and furnishing of a bank guarantee of ₹10,00,000.

A show-cause notice (SCN) was issued and subsequently an original order dated June 9, 2006 which confirmed customs’ demand of ₹10,27,823. The order was challenged by the appellant before the CESTAT. However, the Customs encashed the bank guarantee and deposited the proceeds in the Government treasury on February 6, 2007.

The Bench of Ajay Sharma, Member (Judicial).analysed the scheme and language of Section 27 and observed that the provision governs claims for refund of duty or interest “paid by him” or “borne by him.”

Electricity Charges Collected by Maintenance Firm Not Taxable Under Service Tax: CESTAT

M/s. Promags vs Commissioner of GST and Central Excise 2025 TAXSCAN (CESTAT) 1206

Promags, the appellant, which provided maintenance and housekeeping services to residential complexes, had collected electricity charges from residents and paid them to the Tamil Nadu Electricity Board.

Based on investigations by the Directorate General of Central Excise Intelligence (DGCEI), the department alleged that the appellant had neither obtained service tax registration nor paid service tax under “Management, Maintenance and Repair Services (MMR)” and “Business Auxiliary Services (BAS)” during 2004-2009.

The tribunal held that the electricity reimbursements should be excluded from the taxable value and that overlapping demands under different categories were invalid. It directed recomputation of the tax liability after exclusion of electricity charges and set aside penalties where suppression was not established. The appeal was partly allowed.

CESTAT Finds Factual Error in Denial of Duty Exemption on Imported Clinical Trial Drugs, Remands Matter

Lambda Therapeutic Research Limited vs C.C.-Ahmedabad 2025 TAXSCAN (CESTAT) 1207

Lambda Therapeutic Research Limited, the appellant, engaged in conducting clinical research, imported various bioequivalence drugs for clinical trials during the years 2007-2008 to 2011-2012.

The customs department raised a demand of Rs. 6,11,800 on the ground that the imports were not eligible for duty exemption, alleging that the company had not filed the required application in “Form 44” under the Drugs and Cosmetics Act. The Commissioner (Appeals) upheld this finding, which led the appellant to approach the CESTAT.

The single-member bench comprising Somesh Arora (Judicial Member) observed that both parties agreed on the existence of a factual error regarding the filing of “Form 44.” It explained that the issue required a fresh examination of documents and that a fair opportunity should be given to the appellants to present additional material.

No Customs Penalty for Misdeclaring Goods in Airway Bills: CESTAT sets aside ₹2L Penalty on Ajanta Pharma

M/s Ajanta Pharma Ltd vs Commissioner of Customs 2025 TAXSCAN (CESTAT) 1208

The appeal pertained to 43 export consignments of medicines used in the treatment of erectile dysfunction, that were shipped between September 11, 2018 and March 10, 2021.

The bench of Dr. Suvendu Kumar Pati, Member (Judicial) observed that it is confined to penalties for contraventions of the Customs Act or for abetment thereof where no express penalty is provided elsewhere.

The Bench noted that the show-cause notice and the order-in-original alleged breach of the Foreign Trade Policy by the freight forwarder, and that that no provision of the Customs Act was either alleged to have been contravened by the exporter.

Adjournments Cannot Be Granted Mechanically When Appellant Untraceable: CESTAT Dismisses Appeal for Default under Rule 20

M/s. Bhagirathi Agencies vs Commissioner of GST and CentralExcise 2025 TAXSCAN (CESTAT) 1209

The Bench comprising Ajayan T V (Judicial Member) and Ajit Kumar (Technical Member) relied on Section 35C of the Central Excise Act, 1944, and Rule 20 of the CESTAT (Procedure) Rules, 1982. The Tribunal observed that no adjournment can be granted more than three times during the hearing and that in case of default in appearance, the appeal may be dismissed.

The Bench also referred to the Supreme Court judgment in Ishwarlal Mali Rathod v. Gopal & Ors., wherein the Apex Court deprecated the practice of granting adjournments mechanically, holding that repeated delays corrode the justice delivery system and weaken public confidence in it.

The Tribunal reasoned that deciding the appeal on merits in the absence of the appellant would deprive it of a fair hearing and compel unnecessary litigation before higher forums. The tribunal noted that even after exhausting all modes of service, the appellant’s whereabouts remained unknown and concluded that the appellant was not interested in pursuing the matter.

Import of Yogurt Flavoured Milk Drinks through Unauthorized Port Violates Livestock Import Norms: CESTAT Upholds Redemption Fine

M/s. A.K. Jain Sales & Marketing Pvt. Ltd vs Commissioner ofCustoms 2025 TAXSCAN (CESTAT) 1210

The appellant, A.K. Jain Sales & Marketing Pvt. Ltd had imported 4,600 cartons of yogurt flavoured milk drinks through the Changrabandha Land Customs Station (LCS) vide Bill of Entry No. 6672215 dated 29.01.2020.

Changrabandha is not one of the ports authorized for the importation of livestock products under the Notification issued by the Department of Animal Husbandry, Dairying and Fisheries, Ministry of Agriculture. At the time of importation, the appellant could not produce any veterinary certificate and later submitted one issued by the Department of Livestock Services.

The Tribunal relied on the decision in Broadway Overseas Ltd. v. Commissioner of Customs, Amritsar (2014), which was affirmed by the Punjab & Haryana High Court, and the Tribunal held that import through an unauthorized port is contrary to statutory restrictions and justified the confiscation and imposition of a redemption fine. The Tribunal found no infirmity in the order of the Commissioner (Appeals) and rejected the appeals filed by the appellant.

Notice u/s 28(6) of Customs Act Mandatory when Officer Finds Short Payment of Duty or Penalty: CESTAT sets aside order against L&T

M/s. Larsen & Toubro Ltd vs The Commissioner of Customs 2025 TAXSCAN (CESTAT) 1211

M/s Larsen & Toubro Ltd. (L&T), which had imported used machinery from Dubai and was accused of suppressing freight and other charges in its import declarations. The customs department alleged that L&T had understated freight charges in the bills of entry and issued a show cause notice proposing re-determination of value under Rule 9 read with Rule 10 of the Customs Valuation Rules, 2007, and Section 14 of the Act.

The notice also sought recovery of differential duty, interest, and imposition of penalties under Sections 112(a), 114A, and 114AA. L&T contested the demand, asserting that it had already paid duty on freight, overhead, and yard charges, and that since it had made a voluntary payment under Section 28(5), the proceedings could not continue unless a notice was issued under Section 28(6).

The Tribunal further held that the department’s failure to issue such a notice rendered the proceedings invalid.

Non-Filing of ST-3 is Positive Act of of Evading tax: CESTAT holds Extended Limitation Rightly Invoked

Anil Gaur vs Commissioner of Central Excise and CGST 2025 TAXSCAN (CESTAT) 1212

The appellant, Anil Gaur, a commission agent registered under Business Auxiliary Services, was found to have received ₹17,53,015 as commission between April 2016 and June 2017 without paying service tax or filing the mandatory ST-3 returns.

The department issued a show cause notice demanding ₹2,77,952 in service tax, along with interest and penalties. The adjudicating authority confirmed the demand, and the Commissioner (Appeals), Jodhpur, upheld the order, leading to the present appeal before the Tribunal.

The bench of Dr. Rachna Gupta (Judicial member) held that this pattern of non-compliance amounted to suppression of facts and willful misrepresentation, thus validating the department’s invocation of the extended limitation period.

Relief to Johnson & Johnson: CESTAT Allows CENVAT Credit Distribution through ISD for Both Manufacturing & Trading Units

Johnson and Johnson Pvt. Ltd vs Commissioner of CGST & CE 2025 TAXSCAN (CESTAT) 1213

The present dispute arose from a show cause notice (SCN) issued by the Commissioner of Central Excise, Belapur Commissionerate to M/s Johnson & Johnson Pvt. Ltd. The notice alleged that the company’s head office, registered as an ISD, had irregularly distributed CENVAT credit to two of its manufacturing units without proper apportionment as required under the CENVAT Credit Rules, 2004.

The Bench comprising S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) examined the statutory scheme under the CENVAT Credit Rules, particularly Rule 3, which permits manufacturers of excisable goods to take CENVAT credit on input services received by manufacturing units.

The Bench held that the embargo under Rule 6 for maintaining separate accounts or payment of a specified amount did not apply in this case, as the manufacturing units were not engaged in trading.

Lubricating Oils and Greases Manufactured by Balmer Lawrie Eligible for Exemption: CESTAT

M/s. Balmer Lawrie and Company Limited vs Commissioner ofC.G.S.T. and Central Excise 2025 TAXSCAN (CESTAT) 1214

Balmer Lawrie and Company Limited, based in Kolkata, manufactured lubricating oils and greases and claimed exemption under Notification No. 120/84-CE. The department denied the benefit, stating that the exemption applied only to goods under Chapter 27 and not to those under Heading 34.03.

The adjudicating authority and the Commissioner (Appeals) both confirmed the demand. On appeal, the Tribunal in 2004 had remanded the matter, directing the authorities to verify whether the goods satisfied the definition in the notification and were ordinarily used as lubricants.

The two-member bench comprising R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) observed that the lower authorities failed to follow the tribunal’s earlier directions. It observed that the notification did not mention any tariff heading and granted exemption to all lubricating oils and greases obtained by blending mineral oils.

Short Delay in CENVAT Debit Not Non-Payment of Duty: CESTAT Quashes ₹12.59 Crore Demand Against ITC Limited

M/s. ITC Limited vs Commissioner of Central Excise 2025 TAXSCAN (CESTAT) 1215

ITC Limited, Paperboards and Specialty Papers Division, Tribeni Unit, discharged its excise duty liability partly through CENVAT credit and partly through cash payment. During departmental scrutiny, it was found that for thirteen months between April 2010 and November 2012, ITC had debited its CENVAT account a few days after the due date, ranging between one day and sixteen days.

The department treated the delay as non-payment of duty and issued a show cause notice demanding the entire amount with interest and penalty. The adjudicating authority confirmed the demand and also imposed a personal penalty on the company’s finance head, Mr. Sanjay Chowdhury.

The two-member bench comprising R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) observed that ITC had enough CENVAT credit balance at the end of each month and that the only issue was the timing of debit.

CENVAT Credit Allowed on Mining Services Used for Bauxite Extraction: CESTAT Dismisses Revenue Appeal Against Bharat Aluminium

The Commissioner vs M/s. Bharat Aluminium Co. Ltd 2025 TAXSCAN (CESTAT) 1216

The department had issued multiple show cause notices alleging that the mining services used for bauxite extraction were not input services under Rule 2(l) of the CENVAT Credit Rules, 2004. It also argued that BALCO was not entitled to credit because its job worker, Vedanta Aluminium Ltd., did not avail the exemption under Notification No. 214/86-C.E., dated March 25, 1986.

The two-member bench comprising Justice Dilip Gupta (President) and P. Anjani Kumar (Technical Member) agreed with BALCO’s arguments. The tribunal observed that the extraction of bauxite and its conversion into alumina were essential parts of the aluminium manufacturing process.

It explained that without bauxite there can be no alumina, and without alumina there can be no aluminium, establishing a clear production link. The tribunal also observed that Rule 3(1)(xi)(ii) applied only when a job worker availed the exemption under Notification No. 214/86, which was not the case here, as Vedanta had paid duty.

Service Tax Demand Based on Photocopy of Bill Unsustainable when Marriage Palace’s Receipts Below Exemption Limit: CESTAT

M/s. Payal Marriage Palace vs Commissioner of Central Excise& CGST 2025 TAXSCAN (CESTAT) 1217

Payal Marriage Palace, located in Alwar, Rajasthan, provided “Mandap Keeper” services. Based on departmental information, officers recovered a photocopy of Bill No. 37 dated October 20, 2011, showing Rs. 9,00,000 allegedly billed to one Mr. Iqbal Singh.

The department claimed that the appellant had not obtained registration or paid service tax between 2011–12 and 2014–15. A show cause notice demanded Rs. 7,46,482 with interest and penalties. The adjudicating authority confirmed the demand, which was later upheld by the Commissioner (Appeals).

The tribunal set aside the impugned order and allowed the appeal, holding that the service tax demand, interest, and penalties were unsustainable as the receipts remained below the exemption limit.

CESTAT Quashes Penalty on Customs Officer Accused of Abetting Smuggling as Statement Recorded under Duress

Shri Pramod Kumar Verma vs Commissioner of Customs (Preventive) 2025 TAXSCAN (CESTAT) 1218

Shri Pramod Kumar Verma, an Air Customs Officer at Varanasi Airport, was penalised under Section 112(b) of the Customs Act for allegedly facilitating smuggling of gold and foreign cigarettes.

The single-member bench comprising Judicial Member P.K. Choudhary observed that the department relied solely on the retracted statement and third-party confessions without corroboration.

The tribunal further observed that the cash recovered from the appellant’s home could not be treated as proceeds of smuggling merely because it was found during the same period, especially when the appellant’s explanation had not been disproved.

Clinical Trial/Testing Services Conducted Outside India but Reports Delivered to Indian Recipient Liable to Service Tax: CESTAT

M/s. Biocon Limited vs Commissioner of Central Excise &Service Tax 2025 TAXSCAN (CESTAT) 1219

Biocon Limited, a Bengaluru-based biopharmaceutical company, had engaged foreign laboratories to conduct clinical trials and analysis of its drug formulations. The entire testing was performed abroad, and Biocon paid the service providers in foreign currency.

During an audit, the department observed that Biocon had not paid service tax under the reverse charge mechanism and issued a demand for the period May 2006 to March 2011.

The two-member bench of P.A. Augustian (Judicial) and R. Bhagya Devi (Technical) observed that although the clinical trials were performed abroad, the reports were received and used in India, completing the service within the taxable territory. The tribunal explained that delivery of the report is an integral part of the service, making Biocon liable to pay service tax for the normal period.

CENVAT Credit Allowed on Hazardous Waste Disposal under Input Services: CESTAT Holds Waste Removal an Integral Part of Manufacturing Process

Endurance Technologies Ltd vs Commissioner of Central Tax 2025 TAXSCAN (CESTAT) 1220

The appellant, Endurance Technologies Ltd, a manufacturer of parts of motor vehicles, had availed credit of service tax paid on services rendered by Maharashtra Enviro Power Ltd, Maharani Paints Pvt. Ltd, and Maharani Innovative Paints Pvt. Ltd, who were contracted to undertake the processing and disposal of hazardous chemical waste accumulated in the factory.

Before the Tribunal, the appellant argued that in an earlier identical case, the Tribunal had already held that such services were eligible for CENVAT credit. The appellant relied on Endurance Technologies Ltd. v. Commissioner of Central Excise & Service Tax (2018), where the Tribunal had ruled that the disposal of hazardous waste and chemicals was an essential activity in relation to the manufacture of excisable goods.

The Revenue contended that waste disposal was a post-manufacturing activity and therefore not connected to the manufacture of finished products on which excise duty is leviable.

CESTAT Sets Aside Order as Confiscation and Penalties Unsustainable Once Duty and Penalty Paid u/s 11AC(1)(d)

M/s Silver Rose Overseas Pvt. Ltd vs Commissioner, CGST 2025 TAXSCAN (CESTAT) 1221

The assessee-appellant, Silver Rose Overseas Pvt. Ltd., was engaged in the manufacture of various types of bags and kites, but it was not registered with the department or paid the central excise duty.

The case arose from a visit by the officers of the Central Excise Department to the factory premises of the assessee, where shortages of finished goods and inputs were detected on verification of stock.

Accordingly, the CESTAT set aside the order passed by the Commissioner (Appeals) and held that the confiscation of goods and penalties imposed on the assessee and its directors were unsustainable, as the matter stood concluded upon payment of duty, interest, and penalty under Section 11AC(1)(d) of the Central Excise Act, 1944.

CESTAT Holds Type Test Charges Not Liable to Excise Duty Under Section 4: Quashes Demand and Penalty Against Crompton Greaves

Crompton Greaves Ltd vs Commissioner of CGST & CentralExcise Navi Mumbai 2025 TAXSCAN (CESTAT) 1222

The appeal arose from the order passed by the Commissioner (Appeals), confirming a duty demand of ₹2,20,875 for the period April 2015 to October 2015, along with interest under Section 11AA of the Central Excise Act, 1944, and a penalty of ₹22,088 under Rule 25 of the Central Excise Rules, 2004.

The original authority had held that such “type test” charges, conducted before clearance from the factory, formed part of the sale value and were therefore includible under Section 4 of the Central Excise Act.

The Tribunal found no justification for levying central excise duty on type test charges and held that such consideration, being for a separate service activity, could not form part of the assessable value under Section 4 of the Central Excise Act, 1944.

Mere Price Difference is No Proof of Misdeclaration: CESTAT Partly Allows Appeal in Customs Valuation Dispute

CONTINENTAL TRADING CO vs PRINCIPAL COMMISSIONER, CUSTOMSNEWDELHI(ICD TKD) 2025 TAXSCAN (CESTAT) 1223

The Tribunal partly allowed the importer’s appeal, ruling that the rejection of transaction value, along with the resultant confiscation and penalties, was legally unsustainable.

The assessee, M/s Continental Trading Co., is an importer, who challenged the Order-in-Original dated January 24, 2022, passed by the Principal Commissioner of Customs, Inland Container Depot (ICD), New Delhi.

The dispute arose when the customs authorities found that the declared prices of bearings imported by the appellant were lower than those declared by another importer for identical goods from the same overseas supplier.

CESTAT Rules Department Cannot Reopen Final Refund Order Without Statutory Authority, Sets Aside Recovery against Ahluwalia Construction Group

M/s. Ahluwalia Construction Group vs Commissioner of CGST

2025 TAXSCAN (CESTAT) 1224

The appellant, Ahluwalia Construction Group, registered for providing works contract services, had undertaken construction of a hostel building for Jamia Hamdard University, New Delhi, during the Financial Year ( FY ) 2012-13.

The service tax was deposited under the category of “commercial or industrial construction services.” Later, Jamia Hamdard University informed that construction for educational institutions was exempt from service tax under Notification No. 12/2012. The appellant filed a refund claim of ₹66,44,351 on 29 March 2013.

The Bench held that once an order granting refund attains finality, any subsequent proceeding contrary to it is not sustainable in law by relying on Commissioner of CGST, New Delhi v. Santee Exim Pvt. Ltd. (2019) and the Supreme Court’s decision in Collector of Central Excise v. Flock (India) Pvt. Ltd. (2000).

CESTAT Rules Re-determination of Value Based on Unsustainable Forensic Data Invalid

KDS EXPORTS vs COMMISSIONER OF CUSTOMS

2025 TAXSCAN (CESTAT) 1225

The appellants, KDS Exports, and others had imported artificial flowers from China via the Inland Container Depot (ICD), Tughlakabad, New Delhi during the years 2002-2006. Investigations into claims that the imported items were undervalued were started by the DRI.

The tribunal observed that the DRI had adopted the highest value amongst the multiple sets of values on record without proper justification. Thus, reaffirming Section 14, the tribunal ruled that the value must reflect the price at which goods are ordinarily sold in international trade, not a value selectively derived from questionable data sources.

The redetermination of value, the corresponding duty demand, and the penalties imposed on the appellants were held to be unsustainable. Accordingly, CESTAT set aside the order of Commissioner of Customs and granted consequential relief, allowing the appeal.

Buyer cannot be Denied CENVAT Credit if Supplier does not Avail Advance Authorisation Duty Exemption: CESTAT in Galaxy Surfactants’ Case

Commissioner of CGST and Central Excise vs Galaxy SurfactantsLtd

2025 TAXSCAN (CESTAT) 1226

The matter surrounds Galaxy Surfactants Ltd., a prominent manufacturer of OSAA-Sodium Lauryl Sulphate (SLS) and Sodium Lauryl Ether Sulphate (SLES) etc., that are covered under Chapter Heading No. 3402 of the First Schedule to the Central Excise Tariff Act, 1985.

Regarding the case of M/s Oleofine Organics (supra), CESTAT noted that the case had been dismissed by the Bombay High Court, thus rendering finality to the matter.

Accordingly, CESTAT found no infirmity in the adjudicating authority’s decision to drop the proposals in the SCN and dismissed the Revenue’s appeal, upholding Galaxy’s entitlement to CENVAT credit.

When Goods Are Sold on FOR Basis, Buyer’s Premises is Treated as Place of Removal and Freight Forms Part of Assessable Value: CESTAT

M/s Jain Metal Works vs Commissioner of Central Excise andService Tax

2025 TAXSCAN (CESTAT) 1227

Jain Metal Works, the appellant, manufactured copper ingots and cleared them on payment of excise duty by availing Notification No. 56/2002-CE dated 14 November 2002.

The audit objected that the appellant had wrongly included freight in the assessable value, leading to an alleged excess refund of Rs. 10,09,684. A show cause notice was issued alleging inflation of assessable value to claim a higher refund.

The tribunal explained that freight charges are rightly includable in the assessable value, and duty paid on such value is proper. It also pointed out that the refund sanctioned earlier had attained finality and could not be reopened under Section 11A of the Central Excise Act. The appeal was allowed with consequential relief.

CENVAT Credit on Tippers/Dumpers Used For Site Formation Services Not Admissible Prior to Oct 1, 2010: CESTAT

Kandla Earth Movers vs C.C.E & Customs

2025 TAXSCAN (CESTAT) 1228

Kandla Earth Movers, the appellant, was registered for providing “Site Formation and Clearance, Excavation and Earth Moving Services.” The appellant availed CENVAT credit on tippers, hydraulic cabs, and boomers classified under Chapters 87 and 96 of the Central Excise Tariff. These vehicles and machines were used to provide taxable output services.

The department objected to the credit taken, stating that such goods were not covered under the definition of “capital goods” under the CENVAT Credit Rules, 2004, prior to 1 October 2010.

The tribunal allowed the appeal partly. It upheld the finding that CENVAT credit on tippers and dumpers was not admissible before 1 October 2010 but restricted the recovery to the normal period of limitation and set aside the penalties.

Interest Payable on Entire Amount Deposited During Investigation, ‘Interest On Interest’ also Admissible When Refund is Delayed: CESTAT

M/s Anand Engineering Ltd vs Commissioner of Central Excise& CGST

2025 TAXSCAN (CESTAT) 1229

Anand Engineering Ltd., formerly Bajaj Infrastructure Development Co. Ltd., had deposited sums of Rs. 32,77,968 and Rs. 35,02,129 as service tax along with interest during investigation in two separate cases. The Commissioner of Central Excise and Service Tax, Lucknow, confirmed the service tax demands in 2016.

Later, in 2019, the tribunal set aside the entire service tax liability. Following this, the appellant sought a refund of the deposited amounts. The Assistant Commissioner sanctioned the refund of the principal amounts and granted interest for the delay in refund, including additional interest on the delayed payment of interest.

The single-member bench of P.K. Choudhary (Judicial Member) observed that once the tax demand was set aside, the sums deposited during investigation no longer represented tax but money held without authority. The tribunal explained that such deposits cannot be governed by Section 11BB, which applies only to duty refunds, because the sums were never tax liabilities.

Coke Breeze Qualifies as Metallurgical Coke When Used in Sintering: CESTAT Grants Exemption to Jindal Steel

Jindal Steel & Power Ltd vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 1230

Jindal Steel & Power Ltd., the appellant, operates an integrated steel plant at Raigarh, Chhattisgarh. The company imported Chinese coke breeze through two Bills of Entry dated 21 December 2013 and 30 January 2014 and claimed exemption from basic customs duty under the said notification, which exempts metallurgical coke.

The customs department later disputed the classification, alleging that coke breeze and metallurgical coke are commercially distinct products, and denied the exemption. A show cause notice was issued demanding differential duty and imposing penalties. The adjudicating authority confirmed the demand and imposed a penalty of Rs. 1 crore.

The tribunal held that the appellant was eligible for exemption under the notification and set aside the order confirming duty and penalty. The department’s cross-application was dismissed as infructuous.

Not Disclosing Fibre Length in Import of ‘Para-Aramid Pulp’ not Suppression: CESTAT Bars Extended Limitation by Customs

M/s Leakless Gasket India Pvt. Ltd vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 1231

The case arose after the Customs authorities at ICD, Patparganj, New Delhi examined consignments of Twaron Para-Aramid Pulp imported by M/s Leakless Gasket India Pvt. Ltd. during the period between 2018-19.

The Bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Member Technical) agreed with the appellant, observing that suppression under Section 28(4) required that deliberate concealment with intent to evade duty be done.

It was noted that the Bill of Entry only required the nature of the goods to be declared and not all the parameters of the test reports. Noting that the assessing officers had the opportunity to determine fibre characteristics during examination, it was observed that such omission could not be treated as suppression by the importer.

CENVAT Credit on Balance 50% of Capital Goods Can Be Availed in Subsequent Years: CESTAT Holds Rejection Unsustainable

Navin Fluorine International Limited vs Commissioner, CGST andCentral Excise

2025 TAXSCAN (CESTAT) 1232

In an appeal filed by Navin Fluorine International Limited, challenging the Commissioner’s order that had confirmed excise duty demand and disallowed credit on the ground of alleged delay in availing capital goods credit.

The Tribunal examined the findings of the Commissioner, who had held that the assessee wrongly availed credit on capital goods beyond the prescribed one-year period.

However, after analysing the statutory framework, the tibunal observed that Rule 4(2)(a) explicitly allows a manufacturer to avail only 50% of the capital goods credit in the year of receipt and to take the remaining 50% in any subsequent financial year, with no time restriction.

Post-Closure Invoices Invalid for CENVAT Credit Transfer: CESTAT Rejects RSPL’s Claim of ₹26 Lakh

M/s Rohit Surfactants Pvt. Ltd vs Commissioner, Central Excise& CGST

2025 TAXSCAN (CESTAT) 1233

The appellant, M/s. Rohit Surfactants Pvt. Ltd. (RSPL Ltd.) was engaged in the manufacture of detergent cakes and powders and was registered with the Central Excise Department at its Delhi unit. On 18.12.2009, the appellant surrendered its registration certificate upon shifting its manufacturing activity to Sahibabad, Uttar Pradesh.

The bench of Dr. Rachna Gupta, Judicial Member observed that the six invoices were all dated between January and July 2010, whereas the appellant had surrendered its registration in December 2009. Therefore, the invoices could not establish that the services were received prior to the surrender.

Although the appellant produced ledger extracts and e-challans, the bench noted that these documents did not correspond to the six invoices or establish any nexus between the services and the manufacture of final products. It was further observed that under Rule 10 of the CENVAT Credit Rules, transfer of unutilized credit is allowed only if such credit exists at the time of shifting.

Service Tax Demand Based Solely on Income Tax Data Set Aside by CESTAT

M/s Kirodiwal Associates vs Commissioner, CGST & CentralExcise

2025 TAXSCAN (CESTAT) 1234

The appeal was filed by M/s Kirodiwal Associates, an Indore based service provider engaged in construction-related taxable services. During a departmental verification exercise based on third-party data received from the Income TaxDepartment for the Financial Year 2015-16, it was observed that the gross receipts declared in the appellant’s Income Tax return were ₹1,24,91,872, whereas the value of taxable services shown in the Service Tax returns was ₹1,08,11,345.

The bench of Dr. Rachna Gupta, Judicial Member observed that the demand was raised solely by comparing figures declared in the Income Tax return with those in the ST-3 return, without any independent verification.

The Tribunal observed that the Service Tax returns were duly filed, and the nature of services as “construction of residential complex service” was clearly disclosed, along with a specific claim for exemption under Notification No. 25/2012-ST.

Sending Testing Samples to In-House Laboratory Not Exciseable Activity: CESTAT quashes Excise ₹2.57 Crore Demand against Navin Fluorine

Navin Fluorine International Limited vs Commissioner CGST andCentral Excise

2025 TAXSCAN (CESTAT) 1235

A show cause notice issued on 7 September 2020 under Section 11A of the Central Excise Act, 1944, alleging that the company had removed finished goods without payment of duty by disguising them as samples sent for testing. The appellant, Navin Fluorine International Limited approached the tribunal.

The department depended on the similarity of product names in various annexures to conclude that the goods sent to the Surat laboratory were complete finished products and not trial samples.

It further alleged that since no permission was obtained under Rule 16C of the Central Excise Rules, 2002, the removals were in violation of law and amounted to clandestine clearances.

Construction of Buildings for Educational Institutions Not “Primarily for Commerce or Industry”: CESTAT sets aside Service Tax Demand

M/s. JM Constructions vs Commissioner of GST and Central Excise

2025 TAXSCAN (CESTAT) 1236

The appellant, M/s J.M. Constructions, Coimbatore engaged in civil construction for Karunya Institute of Technology and Sciences, a charitable educational institution, had neither obtained service tax registration nor filed returns during 2009 - 2014. Based on departmental investigation, a show cause notice demanded Rs. 87.23 lakh invoking the extended period under Section 73(1) of the Finance Act, 1994. The adjudicating authority confirmed part of the demand after classifying the activity under “Works Contract Service” as per Section 65(105)(zzzza).

The Tribunal comprising Vasa Seshagiri Rao (Technical Member) and P. Dinesha (Judicial Member) noted that the construction undertaken was for an educational institution registered under Section 12AA of the Income Tax Act and not primarily for “commerce or industry.” Referring to judicial precedents including SRM Engineering Construction Ltd. [2018 (11) GSTL 174], Banna Ram Choudhary [2017 (3) GSTL 338], and Jatan Construction Pvt. Ltd. [2019 (24) GSTL 552 (Raj.)], the Bench held that such works were non-commercial and hence, not exigible to service tax prior to July 1, 2012.

Following the Supreme Court’s ruling in Commissioner v. Bhayana Builders (P) Ltd. [2018 (10) GSTL 118 (SC)], the Tribunal held that the cost of materials supplied free of charge by the recipient cannot be added to the taxable value. It directed the adjudicating authority to recompute liability for 2012 - 2014 after allowing cum-tax benefit and excluding free-supplied material costs.

Service Tax Payable on Complimentary Room Nights and Food Discounts Given by Hotel - Lessee to Lessor of Building: CESTAT

M/s. Hotel President Planet vs Principal Commissioner of CGST& Central Excise, Indore

2025 TAXSCAN (CESTAT) 1237

The tribunal confirmed the findings of the lower authorities that such privileges received by the lessor were part of the overall rental consideration for the “Renting of Immovable Property Service.”

The CESTAT observed that the free stays and discounts were granted by virtue of the leasing arrangement and were not independent hospitality privileges, as they arose directly from the commercial agreement governing the property rental.

The Tribunal also dismissed the appellant’s plea regarding alleged over-calculation of the value of complimentary stays and discounts, noting that no documentary evidence had been produced to substantiate this claim. It held that reassessment of the value was not permissible at the appellate stage.

Refundable Loans Not Taxable as Service Advances under Finance Act: CESTAT Allows Appeal

M/s. Forum Projects Private Limited vs Commissioner of ServiceTax Audit

2025 TAXSCAN (CESTAT) 1238

The appeal arose from an Order dated 19.01.2017, issued by the Commissioner of Service Tax Audit, Kolkata, confirming a demand of ₹2,41,78,784 against Forum Projects Pvt. Ltd., for the period 2010–11 to 2013–14, along with interest and penalties.

The department alleged that appellant Forum Projects Pvt. Ltd., engaged in construction of commercial complexes, failed to pay service tax on advances received from clients, and import of services under the Reverse Charge Mechanism (RCM).

The CESTAT conclusively held that refundable loans cannot be equated with taxable advances, and revenue neutrality bars extended limitation and penalty.

CENVAT Reversal to be Computed Only on Common Input Services, Not Total Credit: CESTAT Allows Appeal

M/s. MSP Steel and Power Ltd vs Commissioner of Central ExciseAnd Customs

2025 TAXSCAN (CESTAT) 1239

The appellant, MSP Steel & Power Ltd., engaged in the manufacture of sponge iron and billets, had installed a captive power plant and used part of the generated electricity for internal manufacturing and partly supplied the balance to the Chhattisgarh State Electricity Board (CSEB).

The Tribunal held that “the authorities have seriously erred in applying the pre-amended provisions to the post-amended period. The demand for the said period is not maintainable and is hereby set aside.”

The Tribunal further reaffirmed that the amendment carried retrospective effect, as its purpose was merely to clarify the computation mechanism and not to alter the underlying principles. The Bench found that the Revenue’s computation based on total input service credit was contrary to the settled legal position.

Revenue Neutral Transactions Between Sister Units Not Liable for Excise Demand: CESTAT

M/s. Bharat Roll Industry Private Limited vs Commissioner ofCentral Excise

2025 TAXSCAN (CESTAT) 1240

In this ruling, two sets of appeals were heard together and the dispute pertained to valuation of goods/scrap cleared by M/s. Bharat Roll Industry Private Limited (Units I & II), engaged in manufacturing rolls for rolling mills, from one unit to another within the same corporate entity.

The Tribunal comprising R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member observed that the goods cleared were scrap, which arises incidentally during manufacture and cannot be treated as “manufactured goods” under Section 2(f) of the Central Excise Act. Further, the Revenue’s insistence on applying CAS-4 for determining value of scrap was “beyond comprehension” since costing principles under CAS-4 apply to manufactured goods and not waste or by-products. It was held that since the receiving unit availed CENVAT credit of the duty paid, the entire transaction was revenue neutral.

Accordingly, the Tribunal found no merit in the Revenue’s appeal and dismissed it.

Service Tax on Renting of Immovable Property Payable Only for Normal Period: CESTAT Partly Allows Appeal

M/s. Gwalior Trade Fair Authority vs Commissioner of CGST

2025 TAXSCAN (CESTAT) 1241

The Bench comprising Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) examined whether the extended period of limitation could be sustained under the circumstances. It observed that the appellant’s belief of non-liability was supported by the High Court’s earlier judgment, creating a reasonable and bona fide belief that service tax was not applicable to its activities.

Holding that the Authority’s operations were transparent and under direct government supervision, the Bench added that the Department’s own audit office operated within the Trade Fair premises, paying rent to GTFA, showing that the Department was well aware of the renting activity. Accordingly, the Tribunal ruled that while tax liability existed for the normal period, the invocation of the extended period under the proviso to Section 73(1) was unsustainable.

The Tribunal conclusively held “In view of the Madhya Pradesh High Court’s earlier ruling and the appellant’s bona fide conduct, the invocation of the extended period is not justified..”

Custodian, Steamer Agent and Employees Liable for Illegal Removal of Seized Goods: CESTAT Confirms Penalties under Customs Act

M/s. Gateway Distriparks South (P) Ltd vs M/s. Volkart FlemingShipping and Service Limited

2025 TAXSCAN (CESTAT) 1242

The Tribunal ruled that the custodian and steamer agent acted with mens rea and violated Section 45(2)(b) and Section 111(j) of the Customs Act, 1962.

The case stemmed from the clearance of thirty-two used printing mini-offset machines originally imported in the name of M/s. Gold Line Offset Printers and seized by the DRI under a mahazar dated 14.10.1999, on grounds of violation of the EXIM Policy. The goods were deposited at M/s. Indev CFS (later renamed M/s. Gateway Distriparks South Pvt. Ltd.), the appointed custodian.

The Tribunal held that the appellants as custodian, steamer agent, and responsible employees had knowingly aided the unauthorized clearance of DRI-seized goods and thus were rightly penalized.

Advertisement and Promotional Expenses Incurred “On Own Account” Cannot be Added to Customs Value of Imports: CESTAT

M/s. Triumph Motorcycles vs Addl. Director General

2025 TAXSCAN (CESTAT) 1243

The CESTAT bench delivered the ruling while allowing the appeal filed by the company against the order of the Additional Director General (Adjudication), DRI, New Delhi, dated 24.09.2020.

Triumph Motorcycles India, a wholly-owned subsidiary of Triumph Motorcycles (Singapore) Pte. Ltd., imports and distributes motorcycles, parts, and accessories from Triumph Motorcycles Ltd., UK and Triumph Motorcycles (Thailand) Ltd.

The Tribunal comprising Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) observed that the Distributor Agreement between Triumph UK and the Indian subsidiary only required the latter to promote and advertise the brand at its own cost. These were activities undertaken by the appellant “on its own account” to develop sales in India and not as a precondition for import of goods.

Demurrage and Despatch Money Related to Vessel Detention, Not Freight: CESTAT Favours Vedanta

M/s.Vedanta Ltd. vs The Commissioner of GST & Central Excise

2025 TAXSCAN (CESTAT) 1244

Vedanta Ltd., formerly known as Sesa Sterlite Ltd., imported raw materials on CIF contracts. Under these contracts, the company was required to unload cargo within a specified laytime. If unloading exceeded this period, Vedanta had to pay demurrage to the vendor. If the unloading was completed earlier than the permitted time, the vendor was required to pay despatch money to Vedanta.

The department issued a show cause notice proposing to tax despatch money under “Port Service” for the period from April 2008 to June 2012. The Commissioner upheld the demand through the Order-in-Original dated 29.05.2015, treating despatch money as remuneration for facilitating early release of the vessel and holding demurrage as consideration for a corresponding service rendered by the vendor. Penalties were also imposed.

Aggrieved by the Commissioner’s order, Vedanta approached the CESTAT. Counsel for the appellant, Vishal Agarwal and Akshit Malhotra, argued that demurrage and despatch money were only consequences of contractual terms and were not payments for any service.

Clandestine Removal must be proven through Complete Chain of Evidence, Not Estimates or Assumptions: CESTAT

M/s. Sri Poovathal Polymers vs Commissioner of GST and CentralExcise

2025 TAXSCAN (CESTAT) 1245

Sri Poovathal Polymers (SPP), the main appellant, is a manufacturer of polybags falling under Chapter Heading 3923. Several other connected units were also issued demands. The department alleged that SPP had engaged in clandestine manufacture and clearance between March 2015 and June 2017.

The show-cause notice relied on a pen-drive seized from the residence of a partner, electricity consumption figures, and statements from certain buyers to compute unaccounted production.

The two-member bench comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) agreed with the appellants’ arguments. The tribunal observed that the electronic evidence did not comply with the statutory requirements under Section 36B and could not be treated as admissible.

Customs Duty Exemption on Fertilizer Import: CESTAT Remands case for Proper Interpretation of Notification on Tata Chemicals’ Claim

Tata Chemicals Ltd vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 1246

A Bench comprising C J Mathew, Member (Technical) and Ajay Sharma, Member (Judicial) examined the language of the exemption notification and the amendment history.

The Bench observed that a plain reading of the amended notification renders goods in Chapter 31, except those specifically excluded to be eligible for nil rate of tax. The Bench noted that the exclusion is qualified by the phrase ‘clearly not to be used’, and therefore disentitlement must be shown by evidence making it unmistakably apparent that the imports were not for use in manufacture of fertilisers.

The Tribunal concluded that the lower authorities had proceeded on an impermissibly narrow scope of exclusion of the amended text.

Pre-2007 Composite Work Contracts for Hydro & Road Projects Not Taxable Under CICS: CESTAT

M/s ECI Engineering & Construction Company LtdvsCommissioner of Central Tax Rangareddy - GST

2025 TAXSCAN (CESTAT) 1247

The ECI Engineering & Construction Company Ltd filed an appeal before the CESTAT challenging the order dated 29.01.2013, which confirmed service tax demands for the period April 2006 to March 2010.

The department, based on a report from the Comptroller & Auditor General of India (CAG), alleged that the appellant provided Commercial or IndustrialConstruction Service (CICS) up to March 2007 and Works Contract Service (WCS) thereafter.

The two-member bench comprising AK Jyothishi (Technical Member) and Angad Prasad (Judicial Member) quashed the service tax demand for pre-2007 works contracts and remanded the post-2007 levy for detailed, contract-specific examination, ensuring that exemptions, abatement, and the nature of each project component are properly assessed.

Supreme Court Ruling Invalidates CVD Refund Claims on CNG/LPG Vehicle Kits: CESTAT Upholds Recovery of ₹1.79 Cr Refund With Interest

M/s Standard Consultants Ltd vs Pr. Commissioner of CustomsHyderabad - Customs

2025 TAXSCAN (CESTAT) 1248

M/s Standard Consultants Ltd, engaged in importing kits for converting motor vehicles to CNG or LPG, had filed for refunds of the Central Value Added Duty (CVD) paid during imports.

The appellant relied on earlier favourable decisions of the CESTAT (Bangalore) in 2008 and subsequent orders of the Tribunal in 2015 and 2016, which interpreted Notification No. 21/2002-Cus, S.No. 229, as allowing refunds when Column 5 indicated “–” (Nil). Based on these orders, the company had successfully received refunds from the department.

Despite these submissions, the two-member bench of AK Jyotishi(Technical member) and Angad Prasad (Judicial Member) observed that the Supreme Court had set aside the Tribunal’s orders, leaving no legal ground to sustain the refund claims.

Unauthorized Benami Shipping Bills: CESTAT Upholds Rs. 10 Lakh penalty against Custom Broker

M/S PLANET WORLD CARGO vs COMMISSIONER OF CUSTOMS EXPORTNEWDELHI ICD TKD

2025 TAXSCAN (CESTAT) 1249

The Appellant, Planet World Cargo, a Custom Broker, filed this appeal challenging an order dated 15.11. 2022 passed by the Commissioner of Customs (Appeals). The order upheld a penalty of Rs. 10 Lakhs imposed on the appellant under section 114(iii) of the Customs Act, 1962, by the Joint Commissioner on 13.7.2021.

The Tribunal stated that since the appellant had Benami (pseudonymous) Shipping Bills in the name of KKS, at the behest of Mohd. Najib Abdulsattar Memon they were fully responsible for any fraud or misdeclaration. It also held that penalties under CBLR, 2018 and Section 114 of the Customs Act, 1962 were distinct and could be imposed independently.

Thus, the impugned order was upheld and the appeal was dismissed. The Order was pronounced on 13.11.2025.

Failure to Consider Superintendent’s Certification and Defence Evidence: CESTAT Remands Matter in Exemption Case

M/s Gilco Steel Limited vs Commissioner of Central Excise

2025 TAXSCAN (CESTAT) 1250

The appellant, Gilco Steel Limited engaged, in the manufacture of black and galvanized pipes/tubes and electrical poles, was availing the area-based exemption.

The Bench Comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) noted that the Commissioner selectively relied on the visit report of 06.04.2010 while completely overlooking the Superintendent’s later certification that the unit was operational as on 31.03.2010.

The Tribunal found that no enquiry was conducted into transportation, manufacture, or financial transactions to support allegations of manipulation. It also observed that submissions regarding purchase of raw materials for expansion and clerical errors in khasra numbers were not addressed. A Khasra number is a unique identifier of each plot of land in rural areas, similar to a survey or a plot number in urban areas.

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