Annual Customs, Excise and Service Tax Case Digest: CESTAT Rulings 2025 (Part 27 - Final Part)

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

Customs Cannot Withhold Provisional Release of Used Highly Specialised Equipment in Absence of Centralised Monitoring: CESTAT

M/s. Atul Automation Private Limited vs Principal Commissioner of Customs 2025 TAXSCAN (CESTAT) 1401

Atul Automation Pvt. Ltd., Ace Office Solutions, Teqnozo Ceramics Pvt. Ltd., and Mech and Tech, the appellants, imported used digital multifunction print and copying machines classified as highly specialised equipment through Kolkata Port during February and March 2025. Bills of Entry were filed by each importer, and the consignments were subjected to 100% examination in the presence of a government-approved Chartered Engineer and customs officers.

The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) examined the records and submissions. The Tribunal observed that the goods were admittedly used highly specialised equipment and that the Ministry’s clarification stated that the 100-unit limit applies collectively across ports and importers.

The Tribunal observed that no centralised monitoring mechanism had been put in place by Customs even after several years, resulting in inconsistent practices across ports. It also observed that earlier orders of the Calcutta High Court, affirmed by the Supreme Court, had directed provisional release of similar goods against bond and bank guarantee without imposing quantity restrictions.

Limitation Act Does Not Apply to Conversion of Shipping Bills u/s 149 of the Customs Act: CESTAT

Commissioner of Customs vs ADF Foods Ltd. 2025 TAXSCAN (CESTAT) 1402

ADF Foods Ltd., the respondent, is an exporter who had filed Shipping Bills under the Duty Drawback Scheme over a period of more than ten years. At a later stage, the exporter sought conversion of these Shipping Bills from the Duty Drawback Scheme to the DFIA scheme by filing an application under Section 149 of the Customs Act.

The two-member bench comprising Dr. Suvendu Kumar Pati (Judicial Member) and M.M. Parthiban (Technical Member) observed that, as per Supreme Court decisions including M.P. Steel Corporation, the Limitation Act applies only to proceedings before courts and not to tribunals or quasi-judicial authorities. The tribunal observed that Article 137 applies only to applications filed before civil courts and not to applications made under Section 149 of the Customs Act.

The tribunal dismissed the appeal filed by the Customs Department and upheld the validity of conversion of Shipping Bills in favour of the exporter.

Laying of Telecom and Optical Fibre Cables Under or Alongside Roads Not Taxable to Service Tax: CESTAT

M/s. Precision Trenchless Laying Private Limited vs Commissioner of Service Tax-II 2025 TAXSCAN (CESTAT) 1403

Precision Trenchless Laying Pvt. Ltd., the appellant, is a specialised contractor engaged in laying underground telecom and optical fibre cables using trenchless technology and conventional trenching methods for major telecom operators such as BSNL, Airtel, Vodafone, Reliance, and Tata during the period from 2008-09 to 2012-13.

The scope of work included route survey, obtaining right-of-way permissions, trenching or HDD drilling, laying of ducts, cable pulling and blowing, jointing, installation of chambers, road restoration, and maintenance.

The Tribunal pointed out that since the service tax demand itself could not be sustained, interest and penalty also did not survive. The appeal was allowed, and the entire demand along with interest and penalty was set aside, with a clarification that no refund would be available for tax already collected from clients and deposited with the government.

Penalty on CHA Not Sustainable When Classification Dispute is Settled in Favour of Importer and No Misdeclaration is Established: CESTAT

Narendra Forwarders Pvt. Ltd. vs Commissioner of Customs (Import), Nhava Sheva 2025 TAXSCAN (CESTAT) 1404

Narendra Forwarders Pvt. Ltd., the appellant, is a licensed Customs House Agent. During November and December 2007, the appellant acted as CHA for Wadhwa Associates and Realtors Pvt. Ltd. for clearance of fabricated aluminium products including glass and accessories through three Bills of Entry.

The two-member bench comprising Dr. Suvendu Kumar Pati (Judicial Member) and M.M. Parthiban (Technical Member) observed that the statement did not amount to an admission of misclassification as understood under law. It observed that the appellant had only stated that the exemption was claimed as per the importer’s instructions and that this could not be treated as a deliberate act of misclassification.

The Tribunal explained that claiming an exemption linked to a classification, which was later upheld by the Tribunal itself in the importer’s case, cannot be treated as misdeclaration by the CHA. It also pointed out that once the importer’s classification was held to be correct and penalty on the importer was set aside, penalty on the CHA could not be sustained.

Extended Limitation Not Invocable when CENVAT Credit Availed was Disclosed in Returns: CESTAT Grants Relief to HCL Technologies

HCL Technologies Ltd vs Commissioner of Central Excise 2025 TAXSCAN (CESTAT) 1405

HCL Technologies Ltd., the appellant, is engaged in providing information technology software services and other taxable services, a significant portion of which were exported. Since the output services were exported, the appellant accumulated CENVAT credit on various input services and filed refund claims under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 5/2006-CE (NT).

The two-member bench comprising P. Dinesha (Judicial Member) and Sanjiv Srivastava (Technical Member) examined the records and observed that the appellant had consistently filed ST-3 returns and refund claims disclosing the CENVAT credit availed.

The Tribunal observed that the statutory returns did not require service-wise or invoice-wise disclosure and that all documents were already available with the department during refund processing. The Tribunal explained that extended limitation cannot be invoked merely because the department chose to scrutinize the documents in detail at a later stage.

Relief for Reliance Industries: CESTAT allows Proportionate CENVAT Credit on Insurance Services Spanning Pre-And Post-Taxable Period

COMMISSIONER OF CENTRAL GST AND CENTRAL EXCISE-RAJKOT vs RELIANCE INDUSTRIES LTD 2025 TAXSCAN (CESTAT) 1406

Reliance Industries Ltd., the respondent, entered into a service agreement dated 26 December 2002 with Reliance Infocomm Ltd. for providing Business Auxiliary Services such as marketing, billing, collection, and allied support services. As part of this agreement, Reliance Industries was required to obtain insurance policies as directed by Reliance Infocomm.

The two-member bench comprising a Judicial Member and a Technical Member examined the service agreement and observed that taking insurance was an integral part of providing Business Auxiliary Services under the contract. The bench observed that the insurance services were not fully consumed before 1 July 2003 and continued to cover the period during which the output service became taxable.

Excise Refund Claim cannot be Reopened Once Earlier Appellate Findings Attains Finality: CESTAT Dismisses BHEL Appeal

Bharat Heavy Electricals Ltd. vs Commissioner, CGST & Central Excise, Kanpur 2025 TAXSCAN (CESTAT) 1407

Bharat Heavy Electricals Ltd (BHEL), the appellant, is a public sector undertaking engaged in the manufacture of transformers, diesel locomotives, and parts thereof. The appellant paid central excise duty on clearances made between January 2014 and March 2014, even though the goods were exempt under Sl. No. 336 of Notification No. 12/2012-CE dated 17 March 2012.

The two-member bench comprising P. Dinesha (Judicial Member) and Sanjiv Srivastava (Technical Member) examined the record and observed that the findings recorded by the Commissioner (Appeals) in the earlier round had not been challenged by either side.

The Tribunal observed that those findings, including the determination of the relevant date under Section 11B, had attained finality and were binding in subsequent proceedings. The Tribunal pointed out that allowing the appellant to reopen settled issues would be contrary to the principles of res judicata and judicial discipline.

Relief to Indiamart: CESTAT Rules Refund of Excess Service Tax Paid on Unused Subscription Amounts Not Time-Barred Post-GST

Indiamart Intermesh Ltd vs Commissioner, CGST 2025 TAXSCAN (CESTAT) 1408

Indiamart Intermesh Ltd., the appellant, is engaged in providing online marketplace services through its web-based portal. The appellant offers subscription-based services to its customers for different durations and collects the entire subscription amount in advance. Service tax was paid on the full subscription value at the time of receipt.

The two-member bench comprising Ms. Binu Tamta (Judicial Member) and Mr. P.V. Subba Rao (Technical Member) examined the records and observed that there was no dispute that service tax had been paid on amounts which were later refunded to customers due to non-provision of service.

The tribunal observed that under the service tax regime, the appellant was entitled to take credit for such excess tax under Rule 6(3) without any limitation period. The tribunal explained that the right to credit had already accrued under the existing law and pointed out that Section 142(3) of the CGST Act mandates payment of such accrued amounts in cash.

Customs Cannot Reject Declared Value of LED TVs Based on Third-Party Documents Without Independent Evidence: CESTAT

ABC Overseas vs Principal Commissioner of Customs

2025 TAXSCAN (CESTAT) 1409

ABC Overseas, the appellant, is engaged in the import and trading of goods, including LED TVs and drywall screws. The appellant imported a consignment of unbranded 17-inch and 19-inch LED TVs from Thailand under a Bill of Entry dated 27 January 2018.

The two-member bench comprising Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) examined the record and observed that the department itself accepted that the goods matched the declared documents during the 100 percent examination.

The tribunal observed that the LED TVs could not be treated as branded products merely because one internal component carried a brand sticker, especially when such branding was discovered only after dismantling. The tribunal explained that certificates of origin issued by a foreign government authority cannot be discarded without evidence of collusion or falsification by the importer.

Sale of Food And Beverages at Cinema Counters Not a Taxable Service: CESTAT in Cinepolis India Case

M/s Cinepolis India Private Limited vs Additional Director General 2025 TAXSCAN (CESTAT) 1410

Cinepolis India Private Limited, the appellant, operates multiplex cinema halls across India. Apart from exhibiting films, the appellant sells food and beverages such as popcorn, snacks, soft drinks, and packaged water through counters located inside the cinema premises. These counters are accessible only to movie ticket holders, and the food items are sold across the counter during intervals.

The two-member bench comprising Ms. Binu Tamta (Judicial Member) and Mr. P.V. Subba Rao (Technical Member) examined the matter and observed that the issue involved was squarely covered by the earlier decision of the Tribunal in the case of PVR Limited. The tribunal observed that sale of food and beverages at cinema counters is a sale of goods and does not involve provision of any service.

The tribunal explained that customers purchase food items across the counter and consume them at their seats, and there is no element of service such as table service or assistance by staff.

Change in Ownership Does Not Restore Excise SSI Exemption If Turnover Limit Was Crossed Earlier: CESTAT

Pankil Textiles vs Commissioner of Central Excise & ST,Surat-1 2025 TAXSCAN (CESTAT) 1411

Pankil Textiles, the appellant, had taken over a manufacturing unit earlier operated by Pimtex Texturising Private Limited. The previous owner had two manufacturing units and, during the financial year 1995-96, the aggregate value of clearances from both units exceeded the prescribed limit under the SSI exemption notification. As a result, the factory was not eligible for SSI exemption in the following year.

The two-member bench comprising Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) observed that there was no dispute that the aggregate clearances of the factory exceeded the prescribed limit in the preceding financial year.

The tribunal explained that even though the previous owner later paid differential duty, the fact remained that concessional duty had been availed during part of the year, which attracted the bar under the SSI notification for the subsequent year. The tribunal observed that the notification links eligibility to the factory and its past clearances, and a mere change in ownership does not reset the eligibility conditions.

DGFT Export Restrictions on Garnet Not Limited To Beach Sand Minerals, Apply Regardless of Source: CESTAT

Payal Synthetics vs Commissioner of Customs

2025 TAXSCAN (CESTAT) 1412

The two-member bench comprising Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) observed that the DGFT notification does not restrict its application only to beach-origin garnet. The tribunal explained that the purpose of the notification was to regulate export of garnet due to concerns relating to rare earth elements, and such concerns are not confined only to beach sand minerals.

The Tribunal further observed that the test report identifying the goods as garnet was not disputed by the appellant. The Tribunal pointed out that exporting the goods without routing them through the canalising agency amounted to violation of the export policy. The Tribunal explained that declaring the goods under an alternate tariff heading amounted to misdeclaration.

No Abetment without Knowledge or Intent to evade: CESTAT Sets Aside ₹15 Lakh Customs Penalty On CFO

Asheesh Chatterjee vs Commissioner of Customs (Airport & Cargo) 2025 TAXSCAN (CESTAT) 1413

Asheesh Chatterjee, the appellant, was the Chief Finance Officer of Moser Baer India Ltd., which had imported recorded media containing foreign feature films. The Directorate of Revenue Intelligence initiated an investigation alleging that the company had undervalued the imports by not including licence or royalty fees paid to foreign suppliers in the assessable value.

The single-judge bench comprising Ajayan T.V., Member (Judicial) observed that while mens rea may not be required for imposing penalty on a person directly involved in acts rendering goods liable to confiscation, abetment requires knowledge and conscious assistance or encouragement.

The tribunal pointed out that neither the show cause notice nor the adjudication order clearly explained how the appellant had knowingly instigated, aided, or encouraged the alleged undervaluation.

Recovery Notice Falls for Want of Non-Obstante Clause: CESTAT Rules Pre-Liquidation Dues Cannot be Fastened on Purchasers

Fmn Enterprise vs Commissioner of Customs.-Ahmedabad 2025 TAXSCAN (CESTAT) 1414

The appeals were filed by Fmn Enterprise along with connected appellants, who had purchased assets of Varun Seacon Ltd., a one-hundred percent Export Oriented Unit, through an official liquidation process supervised by the Gujarat HighCourt. The company was declared a sick industrial unit by the Board of Industrial and Financial Reconstruction and was subsequently ordered to be wound up.

The Bench comprising Somesh Arora, Judicial Member, and Satendra Vikram Singh, Technical Member, set aside the recovery notices and allowed all appeals. The Tribunal held that pre-liquidation dues were to be settled only in accordance with the Companies Act, 1956, and that the purchaser was liable only for statutory dues arising after the winding-up order or taxes applicable on the sale transaction.

The Tribunal noted that no fiscal statute cited by the department contained any non-obstante clause permitting revenue authorities to override the liquidation framework under the Companies Act, 1956, or to bypass the official liquidator.

Textile Job Work on Per-Kg / Output Basis Is Not Manpower Supply: CESTAT Quashes Service Tax Demands

N D Enterprises vs COMMISSIONER OF CGST & CENTRAL EXCISE 2025 TAXSCAN (CESTAT) 1415

N D Enterprises, the appellant, is a proprietorship concern engaged in textile processing activities such as dyeing and hydro processing of yarn for a principal manufacturer. The work was carried out on a job-work basis at the premises of the principal, and payment was made on a per-kilogram basis. The raw material, machinery, and consumables were supplied by the principal manufacturer.

The two-member bench comprising Dr. Ajaya Krishna Vishvesha (Judicial Member) and Satendra Vikram Singh (Technical Member) observed that the issue was already decided in favour of Singh Labour Contractor in an earlier decision of the Tribunal.

The tribunal observed that the contracts placed on record clearly showed that the appellants were engaged for specific textile processing jobs and were paid on a per-kg or per-unit basis, irrespective of the number of workers employed.

Management Consultancy Services Covered by Rule 6(5): CESTAT Declares Cenvat Credit Reversal Void

M/s. LAPP India Private Limited vs The Commissioner of Central Tax Bengaluru South Commissionerate 2025 TAXSCAN (CESTAT) 1416

The core issue related to whether proportionate reversal of Cenvat credit was required on Management Consultancy Services when the appellant had already discharged service tax under the reverse charge mechanism and claimed credit under Rule 6(5) of the Cenvat Credit Rules, 2004. The appellate authority, during the de novo proceedings, upheld the reversal of Cenvat credit, leading to the present appeal.

The Tribunal noted that the earlier order had conclusively allowed the appellant the benefit of full credit under Rule 6(5) for Management Consultancy Services. Therefore, directing proportionate reversal in the remand proceedings was contrary to the statutory provision and to the Tribunal’s own findings.

As a result, the impugned order was set aside, and the appeal was allowed with consequential relief.

No Extended Limitation allowable without Mens Rea: CESTAT Quashes ₹18.95 Crore Service Tax Demand

M/s KEC International vs Commissioner of CGST & Central Excise 2025 TAXSCAN (CESTAT) 1417

The Bench consisted of S. S. Garg, Judicial Member and P. Anjani Kumar, Technical Member held that none of the statutory conditions for invoking the extended period under Section 11A of the Central Excise Act, 1944 were met.

The Bench stressed that terms such as “fraud,” “collusion,” “wilful misstatement,” and “suppression of facts” require deliberate action and clear intent to evade payment of duty. Mere errors, interpretational differences, or omissions without intent cannot justify extended limitation.

The Tribunal observed that the appellant had consistently filed statutory returns disclosing its credit reversals. If the computation method was questionable, the department could have verified it through routine scrutiny. The failure of departmental officers to examine the returns could not be converted into an allegation of suppression.

Adjournment Not a Matter of Right: CESTAT Refuses to Entertain Late E-mail Request after Pronouncing Order in Open Court

M/s Purple Products Pvt. Ltd. vs Commissioner, Customs, Noida 2025 TAXSCAN (CESTAT) 1419

Purple Products Pvt. Ltd. (appellant) filed an appeal against an Order-In-Appeal dated April 16, 2025, passed by the Commissioner (Appeals), Noida. The lower authority had dismissed the appellant's case without touching upon the merits because it was filed beyond the statutory limitation period prescribed under Section 128 of the Customs Act, 1962.

The single Member Sanjiv Srivastava (Technical Member) proceeded to decide the matter based on the available records and observed that the appellant became aware of the demand via a recovery notice received on August 16, 2021. Despite this "communication," the appeal was only filed over three years later.

The bench held that the delay of nearly 20 months far exceeded the 90-day maximum window (60+30) that the Commissioner (Appeals) was legally empowered to condone.

Higher Sale Value of ‘Inputs Cleared as Such’ Attracts Liability u/s 11D: CESTAT upholds Excise Duty Demand

SATYENDRA PACKAGING PVT LTD vs COMMISSIONER OF CENTRAL EXCISE 2025 TAXSCAN (CESTAT) 1420

Satyendra Packaging Pvt Ltd (appellant) is a manufacturer that also cleared certain inputs "as such" without undergoing any manufacturing activity. During an audit, officers discovered that the appellant was selling these inputs at a significantly higher value than their original purchase price.

The tribunal observed that under Rule 3(5), when inputs were removed "as such," the manufacturer must pay an amount equal to the credit availed. It highlighted that Section 11D required that any person who has collected an amount from a buyer "in any manner as representing duty of excise" in excess of the duty assessed or determined must forthwith pay that amount to the credit of the Central Government.

The tribunal observed that adding freight costs and profit margins to the purchase price for "as such" removals implies the appellant was undertaking trading activities under the guise of a manufacturing registration.

Settlement Amount Paid Towards Outstanding Rent Not Taxable as ‘Declared Service’: CESTAT Set asides Service Tax Demand Under RCM

CHAROTAR GAS SAHKARI MANDALI LIMITED vs Commissioner of CGST 2025 TAXSCAN (CESTAT) 1421

Charotar Gas Sahkari Mandli Ltd (appellant), an authorized distributor of PNG and CNG, had a long-standing dispute with the Vallabh Vidhyanagar Nagarpalika (VVNA) regarding rent for laying underground pipelines. The total outstanding rent and penalty accumulated to approximately ₹98.89 lakhs.

The tribunal observed that the appellant provided proof that VVNA had already paid service tax on the ₹60 lakhs under Renting of Immovable Property. The tribunal held that the same amount cannot suffer service tax twice.

The bench noted that for a service to fall under Section 66E(e), there must be an agreement to refrain from or tolerate an act for a consideration. The tribunal found these elements missing, as the payment was clearly for use of land (rent).

Director Cannot Be Penalised Without Personal Involvement in Service Tax Evasion: CESTAT

Ali Akbar Ratansi vs Commissioner of CGST 2025 TAXSCAN (CESTAT) 1422

The appellant had stopped being a director in October 2017. The show cause notice was issued later, in September 2020. He also said the final order did not explain how he was responsible for the company's work or how he knowingly broke the rules.

The tribunal found that the show cause notice only made general blames and did not explain how the appellant was personally involved in the evasion. The tribunal also said the final order did not show any real facts or proof that the appellant knowingly took part in the wrongdoing.

Since there were no specific blames or proof about the appellant's knowing involvement and responsibility for the business, the tribunal said the penalty could not stand. The CESTAT cancelled the Rs. 1 lakh penalty on the appellant.

Accident Surcharge Not Insurance Service: CESTAT Sets aside Rs 2.2 Crore Service Tax Demand on Rajasthan SRTC

Rajasthan State Road Transportation Corporation vs The Principal Commissioner of Central Goods and Service Tax and Central Excise Commissionerate, Jaipur 2025 TAXSCAN (CESTAT) 1423

The Appellant, a Rajasthan State Government corporation, provides passenger transportation services and issues tickets. The Appellant also collected an 'accidental compensation surcharge' with each ticket to compensate accident victims.

The decision held that for the pre-2012 period, the appellant was not rendering general insurance service and no service tax was payable. For the post-2012 period, passenger transportation fell under the negative list and was thus exempted.

Further, the Tribunal stated that even if accident compensation was considered an additional service, it was bundled with transportation which gave the service its essential character, thus attracting no service tax. Following the precedent, the Tribunal held the impugned order unsustainable and set it aside.

CESTAT Sets Aside ₹1,398 Crore CENVAT Credit Demand on Indian Oil Petronas on Limitation Grounds

Indian Oil Petronas vs The Commissioner of GST & Central Excise 2025 TAXSCAN (CESTAT) 1424

Indian Oil Petronas, a joint venture between Indian Oil Corporation Ltd. and Malaysia-based Petronas, is engaged in the manufacture of Liquefied Petroleum Gas (LPG). For setting up its LPG plant, the company had entered into a lump-sum turnkey Engineering, Procurement, Construction and Commissioning (EPCC) contract with Punj Lloyd. Various capital goods and components were procured from third-party manufacturers and delivered directly to the appellant’s factory, while service tax was discharged by the contractor on the service portion of the works contract.

The Tribunal Bench, comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member), noted that the availment of CENVAT credit was duly reflected in the ER-1 returns regularly filed by the appellant and the Department had verified the relevant details well before issuance of the show cause notice. In this light, it ruled out allegations of suppression or wilful misstatement as all material facts were available on record and examined by the Department.

Relying on settled principles laid down by the Supreme Court in cases such as Pepsi Foods Ltd., Hindustan Steel Ltd., and Canon India Pvt. Ltd., the Tribunal held that extended limitation cannot be invoked merely on a change of interpretation when the assessee had made full disclosure. The Bench emphasized that payment of duty and regular filing of returns negated any intent to evade tax.

Rule 3(a) Interpretation: CESTAT Rejects Revenue’s Attempt to Reclassify Specific Goods Under Residuary Headings

Arun Industries vs Commissioner of Customs 2025 TAXSCAN (CESTAT) 1425

The appeal was filed by Arun Industries, which had imported Polyvinyl Chloride (PVC) Suspension Resin SP 660 and classified the goods under Customs Tariff Heading 39042110 as non-plasticised PVC resin. On this basis, the appellant availed the benefit of concessional basic customs duty under Notification No. 46/2011-Customs. The department disputed the classification and proposed reclassification under CTH 39041090, alleging that the goods were PVC not mixed with any other substances.

Relying on its own earlier decisions and consistent judicial precedent, the tribunal held that the lower appellate authority erred in departing from an already settled position of law.

Accordingly, the tribunal set aside the impugned order passed by the Commissioner (Appeals) and allowed the appeal, holding that the imported goods were correctly classifiable under CTH 39042110 and eligible for the concessional rate of duty. Consequential relief was granted to the appellant in accordance with law.

No CENVAT Reversal Required on Sale of Empty Packaging Material: CESTAT Holds Rule 6 Inapplicable to Non-Manufactured Goods

Mahindra Agri Solutions Limited vs Commissioner CGST & Central Excise, Vadodara 2025 TAXSCAN (CESTAT) 1426

The Appeal was filed by the appellant which challenges the order dated 28.10.2021 passed by the Commissioner, CGST & Central Excise (Appeals), Vadodara, and upheld the Order-in-Original passed by the Adjudicating Authority.

The Tribunal consisted of Judicial member, Dr. Ajaya Krishna Vishvesha, heard and reviewed the matter challenged by the appellant.

The Tribunal, after considering the submissions made, held that the lower authorities erred in not properly appreciating the provisions of Notification No. 6/2015-CE(NT) dated 01.03.2015. Rule 6(3) of CCR, 2004 applies only when a manufacturer produces two classes of goods - exempted and non-exempted goods. In this case, the appellant manufactured only one kind of goods (fertilizers, insecticides, fungicides), and the used drums were not manufactured by the appellant but were merely empty packaging material in which inputs were received.

Rule 8(3A) of Central Excise Rules already Declared Unconstitutional by Gujarat HC: CESTAT sets aside ₹14.14cr Demand

Rathi TMT Saria Pvt. Ltd. vs Commissioner of Central Excise 2025 TAXSCAN (CESTAT) 1427

The appeal was heard by a Bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member). During the proceedings, it was also noted that the appellant, M/s Rathi TMT Saria Pvt. Ltd., was undergoing insolvency proceedings and an Interim ResolutionProfessional had been appointed pursuant to an order of the National Company Law Tribunal, New Delhi.

Before the Tribunal, the appellant contended that Rule 8(3A), to the extent of mandated payment of duty without utilisation of CENVAT credit, had been struck down by the Gujarat High Court in Indsur Global Ltd. v. Union of India as arbitrary and violative of Articles 14 and 19(1)(g) of the Constitution.

The Tribunal observed that the decision in Indsur Global had been consistently followed by the Allahabad, Punjab and Haryana, Delhi and Madras High Courts. It also took note of the fact that the civil appeal filed by the department against the Gujarat High Court judgment was dismissed.

Unconstitutional Restriction on CENVAT Credit: CESTAT Sets Aside Penalty and Demand Based on Invalid Rule 8(3A) of Central Excise Rules

Finproject India Pvt. Ltd. vs Commissioner of CGST & Central Excise 2025 TAXSCAN (CESTAT) 1428

During the course of hearing, reliance was placed on the decision of the Gujarat High Court in Indsur Global Ltd. v. Union of India, wherein the condition under Rule 8(3A) mandating payment of duty without utilisation of CENVAT credit was struck down as arbitrary, unreasonable and violative of Articles 14 and 19(1)(g) of the Constitution.

The Tribunal noted that the judgment in Indsur Global had been followed by several other High Courts, including the Allahabad, Punjab and Haryana, Delhi and Madras High Courts. The departmental representative conceded that the issue was covered by the decision in Indsur Global.

In view of the settled legal position and the declaration of unconstitutionality of Rule 8(3A), the Tribunal held that the demand raised under the said provision could not be sustained.

Relief for Bridgestone India: CESTAT Sets Aside ₹96 Lakh Excise Demand for Alleged Excess CENVAT Credit

M/s Bridgestone India Pvt. Ltd. vs Commissioner of Central Excise & CGST 2025 TAXSCAN (CESTAT) 1429

The appeal was filed by Bridgestone India Private Limited, challenging an order passed by the Commissioner (Appeals), which had upheld the confirmation of excise duty demand for the period from April 2017 to June 2017 along with interest and penalty. The demand arose following an audit objection alleging excess availment of CENVAT credit distributed by the Input Service Distributor in violation of Rule 7 of the CENVAT Credit Rules, 2004.

Before the tribunal, the appellant contended that all necessary disclosures had been made in the statutory ER-1 returns and that there was no wilful suppression or intent to evade duty. It was argued that the mere fact that the issue was detected during audit could not justify invocation of the extended period of limitation.

The bench, comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member), examined the scope of Section 11A(4) of the Central Excise Act and reiterated that suppression of facts must be wilful and accompanied by an intent to evade payment of duty.

CESTAT Sets Aside Section 114AA Penalty Due to Failure in Establishing Proof of Intentional Use of Manipulated Scrip

M/S GFC WELD HOUSE vs PRINCIPAL COMMISSIONER 2025 TAXSCAN (CESTAT) 1430

The appeal arose from proceedings relating to the misuse of a Focus Market Scheme scrip that was originally issued for a nominal value but was fraudulently enhanced and registered in the Customs EDI system. In this case, GFC Weld House, the appellant, had used the scrip to discharge customs duty on imported goods. Following an investigation, the Department alleged that the scrip had been manipulated and issued a show cause notice demanding duty with interest and proposing penalties.

The matter was heard by a Bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member). The Tribunal noted that the issue of duty demand and penalty under Section 114A was no longer res integra in view of the Supreme Court’s decision in Munjal Showa Ltd., which held that forged or fake duty credit scrips are void ab initio and that fraud vitiates all transactions.

The Tribunal emphasised that Section 114AA specifically requires proof of knowledge or intent, which was absent in the present case. Accordingly, the Tribunal partly allowed the appeal by setting aside the penalty imposed under Section 114AA, and upheld the remaining portion of the impugned order.

CESTAT Quashes Service Tax Demand on Cross-Border Cost-Sharing, Holds Downward Price Adjustments are Not Consideration

Intellect Design Arena Limited vs Commissioner of GST and Central Excise 2025 TAXSCAN (CESTAT) 1431

The appeal arose from an order confirming Service Tax demands on payments made to overseas subsidiaries during the period April 2014 to June 2017, treating them as consideration for manpower and software support services. In the present case, Intellect Design Arena Limited, the appellant, develops software and licenses it to overseas group entities, which in turn enter into implementation agreements with foreign customers. Where part of the implementation work was performed by the overseas entities, the corresponding cost was adjusted against the implementation fee payable to the appellant.

The matter was heard by a Bench comprising P. Dinesha (Judicial Member), and Vasa Seshagiri Rao (Technical Member). The Tribunal examined the inter-company agreements, customization and implementation contracts, and debit notes relied upon by the Department. It noted that the contractual framework clearly established the appellant as the primary service provider to the overseas licensees and not the recipient of any service from them.

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