Annual Customs, Excise and Service Tax Case Digest: CESTAT Rulings 2025 (Part 3)

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

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

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

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

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

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

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

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

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

CESTAT Orders Customs Duty Evader to Pay After Dept Made Bonafide Error in Not Applying Mandatory Penalty

Sarvatra International, the appellant, was suspected of attempting to avoid customs duties by misclassifying and misdeclaring the item as "100% Polyester Knitted Fabric" in order to import the 100% polyester knitted cut pile fabric under two Bills of Entry.

Under section 111(m) of the Act, the goods may be seized in addition to a redemption fine because there appears to have been a misrepresentation in both the description and the value of the commodities. The proviso to paragraph (1) of section 28 of the Act provides for the recovery of duty based on the same logic and comparison. As a result, the adjudicating authority's differential customs duty calculation for the two bills of entry was upheld. The application of the penalty under section 114A of the Act must be sustained since the appellant used fact suppression to avoid fulfilling his obligations.

Dept cannot Invoke Extended Period of Limitation merely because Returns were Self-Assessed: CESTAT

The assessee, Wellworth Project Developers Private Limited, claimed to have paid service tax on the construction services it provided for commercial and industrial buildings. According to the assessee, it used the reverse charge mechanism to fulfill its service tax obligation on advance revenues for legal and construction services.

According to the two-member bench consisting of Justice Dilip Gupta (President) and P. V. Subba Rao (Technical Member), "the proviso to section 73(1) of the Finance Act does not allow for the extended period of limitation to be invoked by merely suppressing facts." The show-cause notice must explicitly state the reason why the assessee concealed information in order to avoid paying service tax, as the suppression must be done with the intention of avoiding payment of service tax.

The Tribunal has consistently maintained that the appropriate officer can always ask the assessee for information, even under the self-assessment scheme, and that it is the responsibility of the appropriate officer to carefully examine whether the duty assessed by the assessee is correct. The mere fact that the returns were self-assessed does not allow the department to claim the longer period of limitation. Since the appropriate officer may have discovered the facts, the Commissioner erred in ruling that the extended period of limitation could be used if the department learned of them during an investigation.

Residential Property not Subject to 'Rental Services of Commercial Property' Charges: CESTAT

Gujarat State Electricity Corporation Ltd, appellant-assessee, contested a duty demand of Rs. 13,11,317/- for rent paid on residential accommodation provided to the employee of one of its contractors between April 2011 and June 2015. The assessee asserted that the accommodation was residential in nature and not a commercial property, as there was no evidence to suggest any commercial renting or use of the property.

A two member bench comprising Somesh Arora ( Judicial Member ) and C.L.Mahar ( Technical Member ) In light of these considerations and the fact that both parties had no objections, the matter was expedited for decision. The undisputed fact that the property was used solely for residential purposes led to the conclusion that it did not qualify for a duty charge under commercial property rental services.

Given the lack of evidence supporting the classification of the property as commercial, the tribunal set aside the order of the lower authority. Consequently, the appeal was allowed, and the assessee was granted the appropriate relief.

Gujarat Alkalies And Chemicals Ltd,appellant-assessee,contested the liability to pay 8%/10% on the value of electricity sold to the State Electricity Board under Rule 6(3A) of the Cenvat Credit Rules, 2004, due to the use of common inputs and input services for both excisable goods and exempted electricity.

A single member bench comprising Ramesh Nair ( Judicial Member ) noted that since the reversal had been made, the demand for 8%/10% was unsustainable, supported by various judgments. The Revenue's counsel reiterated the impugned order’s findings, but the tribunal found that the reversal of credit negated the demand.

The matter was remanded for the adjudicating authority to decide afresh, considering the assesse’s monthly reversal in most appeals, with no case for the demand of 8%/10%.

Non-Submission of A1/A2 Certificate Not Grounds for Denying Service Tax Exemption on SEZ Services: CESTAT

Geo Dyanamics, appellant-assessee, provided services to the SEZ, but the exemption was denied for not producing the A1/A2 certificate.

The assessee's counsel, argued that while the A1/A2 certificate was not submitted in some cases, the service provided to the SEZ was undisputed. He claimed that non-submission of the certificate was a procedural lapse and that the exemption should apply, citing Section 26(1)(e) of the SEZ Act and Rule 31 of the SEZ Rules. He relied on the Tribunal's judgment in M/s Anjani Excavation Operation vs. Commissioner of Central Excise & ST, Bharuch, Final Order No. 11444/2023.

A single member bench comprising Ramesh Nair (Judicial Member) noted that the only issue with the appellant was the non-submission of the A1/A2 certificate for the service provided to the SEZ, though the service itself was undisputed.

CESTAT sets aside Service Tax Demand on Export Commission and Advertisement Expenses due to Time Bar [Read Order]

Time Limit For Filing Refund Application Cannot Rejected Merely Because of Unauthorized Tax Collection: CESTAT

In accordance with Section 102 of the Finance Act, 1994, Deepak Pandey, the assessee, submitted an application to be reimbursed for the service tax paid on government employment between April and December 2015. Because the application was submitted after the six-month period allowed by Section 102 of the Finance Act, it was denied.

The reimbursement application was denied by the Assistant Commissioner on the grounds that it was past due. Disappointed with the Assistant Commissioner's ruling, the assessee appealed to the Commissioner (Appeals), who dismissed the appeal and maintained the Assistant Commissioner's order. Before the Tribunal, the assessee has contested the Commissioner's (Appeals) ruling.

The two member bench of Justices Dilip Gupta (President) and P. V. Subba Rao (Technical) while dismissing the appeal has noted that the appellant cannot use sub-section (1) of section 102 to request a refund of service tax, but they also argue that the requirement in sub-section (3) of section 102 of the Finance Act should be disregarded.

'Royalty' inclusion in transaction valuation: CESTAT sets aside order for lack of Jurisdiction

A show-cause notice was issued on 24th September 2019 proposing additions to the declared value. An order dated 27th November 2019 finalized the assessments, ruling that the royalty should not be included in the transaction value.

The appellate tribunal pointed out that appeals should stem from a final assessment under section 17 or section 18 of the Customs Act, 1962. In this case, the ‘proper officer’ should have either accepted the declared duty or reassessed it, including provisional assessments. Since the finalization of the provisional assessments had not occurred, the first appellate authority’s decision was made without jurisdiction.

As a result, the tribunal set aside the impugned order and clarified that the decision did not affect any remedies related to the finalization of the provisional assessments by the ‘proper officer’.

CESTAT denies Concessional Duty Benefit Citing use of Imported Consumables instead of Raw Materials

On appeal, the Commissioner of Central Excise (Appeals) upheld the demand and dismissed the appellant's challenge vide order dated 22.07.2013. Aggrieved by this decision, the appellant approached the CESTAT.

The revenue countered that Notification No. 23/2003-C.E. explicitly required raw materials to be domestically sourced, and the appellant's failure to meet this condition made them ineligible for concessional duty. The department contended that the use of imported inputs violated the statutory provisions, justifying the duty demand and penalties imposed.

The tribunal held that the denial of concessional duty was justified, as the appellant failed to meet the domestic sourcing requirement of the notification. The appeal was dismissed.

CESTAT upholds Rejection of Nil CVD Benefit Claim for Failing to Meet Updated Conditions

Goyal Impex and Industries Ltd.,appellant-assessee,filed 11 Bills of Entry between 28.11.2015 and 18.01.2016 for the import of Polyester Knitted Fabric, claiming Nil CVD (Countervailing Duty) under Notification No.30/2004-CE. However, the Revenue rejected the claim, stating the import occurred after the notification was amended by Notifications No.34/2015-CE and No.37/2015.

The Revenue Counsel countered, arguing that the assessee did not meet the conditions specified in the amended exemption notifications and cited the Supreme Court's decision in Dilip Kumar (2018). They asserted that the CVD ensures fairness for domestic manufacturers, and the SRF Ltd. decision was outdated.

The two member bench comprising P. Dinesha (Judicial Member) and M. Ajit Kumar(Technical Member) found no error in the lower authorities' decision and dismissed the appeal, ruling that the assessee was not eligible for the Nil CVD benefit under Notification No. 30/2004-CE. The claim was rejected because the assessee did not fulfill the updated conditions in the amended notifications.

Excise Order against Liquidated Company is not sustainable: CESTAT

The appellant, Transstroy (India) Ltd. challenged the Order-In-Appeal No. passed by Commissioner of Central Excise (Appeals), Madurai. Shri G. Natarajan, Advocate who filed vakalat earlier in this matter brings to the notice of the Bench that NCLT vide order dt. 18.09.2019 has ordered liquidation of the appellant-company and produced a copy of same. Shri Harendra Singh Pal appeared for the Respondent.

The NCLT had allowed the application of the Resolution Professional and ordered liquidation of the Company/Corporate Debtor. Hence, the present appeal could not survive, since the appeal would stand abated, in view of the decision of the Apex Court in the case of Ghanashyam Mishra and Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Ltd. & Ors.

A two member bench of P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member(Technical) found that the present appeal is filed by the appellant-assessee, who is praying for the closure of appeal in view of their resolution plan being accepted by the NCLT. Respectfully, therefore following the above ratio of the coordinate Bench, the bench held that the present appeal shall also stand abated.

Undenatured Ethyl Alcohol not Excisable, Not Exempt under Rule 6(3) of CCR: CESTAT

Until 28.02.2005, the ‘Undenatured Ethyl Alcohol’ was classifiable under the ̇ heading 2204 titled “Ethyl Alcohol of any strength whether denatured or not, but not including alcoholic liquor for human consumption.” There were two sub-headings under this heading: 2204.10 is “Denatured Ethyl Alcohol of any strength” while 2204.90 is “other.” Therefore, ‘Undenatured Ethyl Alcohol’ would fall under 2204.90 and the rate of duty was Nil.

Even after 28.02.2005 (i.e., from 01.03.2005 until 31.12.2005), the Appellant claims that it proceeded on the misconception that the same position would continue to apply and continued to pay amounts equivalent to the aforesaid CENVAT credit. It is the Appellant’s contention that subsequently, the Appellant discovered that since Undenatured Ethyl Alcohol found no mention in the tariff on and after 01.03.2005 it was no longer an item of ‘exempted goods’ but were not ‘excisable goods’ at all, and accordingly, filed a claim for the refund of the CENVAT credit paid by it on the basis of this ‘mistake’, for the period from 01.03.2005 to 31.12.2005.

Following the decision of co-ordinate Bench in the Appellant’s own case, the two member bench of P. Dinesha, Member (Judicial) and Vasa Seshagiri Rao, Member (Technical) held that the Undenatured Ethyl Alcohol is not excisable.

Relief to Hyundai Motors: Cenvat Credit on roadside assistance not Input Service under Rule 2(l) of CCR

The Assessee who is engaged in the manufacture and trading of motor cars had availed irregular Cenvat Credits during the period from 2009-10 to 2011-12 and had reversed the credits amounting to Rs.2,75,51,787/- subsequently on being pointed out by the Revenue. However, the Revenue felt that such reversal of wrong Cenvat credit was liable to be recovered along with interest of Rs. 79,32,352/-under Rule 14 of CCR.

The two-member bench of Vasa Seshagiri Rao, Member (Technical) and Ajayan T.V., Member (Judicial) modified the impugned Order-in-Original to the extent of demand of service tax of Rs.15,45,000/- taken on the service of Study on Investment, and the assessee is required to discharge the liability of wrong Cenvat credit availed.

Owners Must Pay Duty on Redeemed Confiscated Goods, Regardless of Who Imported It: CESTAT

On appeal before the CESTAT, the appellant’s counsel argued that the appellant was a bona fide purchaser and not the importer, asserting that duty liability should rest solely with the original importer, Basab Paul, under Section 28 of the Customs Act. The counsel argued that as a post-import buyer, he should not be held responsible for misdeclarations made at the time of import.

The two-member bench comprising R. Muralidhar (Judicial Member) and Rajeev Tandon (Technical Member) observed that ownership of confiscated goods carries an inherent duty liability upon redemption. The tribunal observed that Section 125(2) mandates duty payment by the owner of the goods, separate from any obligations imposed on the importer under Section 28.

The tribunal explained that the appellant could not selectively claim ownership for redemption while disclaiming liability for duty. The tribunal ruled that duty is an unavoidable consequence of exercising the redemption option under Section 125(2). The tribunal upheld the Commissioner (Appeals)’s decision and dismissed the appeal.

Excise Duty on Aluminium Circles for Utensil Manufacturing: CESTAT Sets Aside Demand and Grants Exemption

Mayur Aluminium Industries Private Limited,appellant-assessee,operated an integrated unit manufacturing aluminium utensils. The process involved melting ingots in a furnace, rolling them into aluminium circles, and using these circles to make utensils. These circles, classified under CETH 7606 91 10, attracted a 10% excise duty.

The assessee's counsel argued that the aluminium circles were used to make utensils, qualifying for exemption under Notification No. 67/95-CE dated 16.03.1995. Since duty was paid on the final goods, the counsel contended that the duty demand was not justified.

In conclusion,the appeal filed by the assessee was allowed for consequential relief.

When There is no Revenue Loss, Liberal View Needs to be Taken: CESTAT quashes Excise Duty Demand

Before the CESTAT, the appellant’s counsel argued that the total tax liability had been paid to the government and the credit denial was a mere procedural issue without any revenue loss.

The tribunal referenced the Supreme Court’s ruling in Sugandhi v. P. Rajkumar case where it was held that if a procedural mistake does not harm the other party, courts should focus on delivering fair justice rather than strictly enforcing technical rules. It also explained that litigation is meant to uncover the truth, which is the foundation of justice, and courts should take necessary steps to ensure fairness in every case.

The tribunal set aside the demand with interest and penalty order. The tribunal allowed the appeal, granting consequential relief to the appellant.

Relief to Maruti Suzuki: CESTAT Rules Education Cess should be calculated on Net Service Tax

The assessee paid education and secondary education cess only on the net service tax after deducting the R&D cess. Following an audit, a show cause notice was issued in April 2011, invoking the extended period of limitation. After the due process, the Commissioner confirmed the demand, including interest and penalties. The assessee appealed before the tribunal.

The tribunal confirmed that the assessee had correctly paid the education cess and secondary & higher education cess on the net service tax after deducting the R&D cess.

In short,the appeal filed by the assessee was allowed for consequential relief.

CESTAT Sets Aside Demand and Penalty, Confirms 23.03.2004 as Date of Commercial Production for EOU De-bonding

In February 2012, the Customs Audit Department raised concerns regarding the assessee’s claim for excess depreciation on imported capital goods. The Customs department issued an audit query, which led to the issuance of a show-cause notice demanding a duty of Rs.58,68,773/- along with interest, along with penalties for the excess claim of depreciation. The matter was adjudicated, and the proposed demand along with interest was affirmed, and a penalty was imposed on the assessee.

The two member bench comprising Ashok Jindal (Judicial Member) and Rajeev Tandon(Technical Member) heard the parties and reviewed the records. The main issue was whether the date of commercial production should be 23.03.2004 or 27.11.2004, the date of the assessee's first export.

Since the production date was confirmed as 23.03.2004, the tribunal found that no demand was due from the assessee, and the depreciation was correctly calculated. As a result, the tribunal set aside the entire demand and ruled that no penalty could be imposed.

Stock Transfers Not Barred from Cenvat Credit Under Rule 9(1)(b): CESTAT

The main issue in this case is whether the appellant could avail of Cenvat credit on supplementary invoices issued for duty paid on stock transfers. The department had denied the credit, invoking Rule 9(1)(b), which restricts credit on supplementary invoices issued due to fraud, collusion, or willful misstatement with intent to evade duty.

The bench relied on several precedents, including the Karnataka High Court's decision in Karnataka Soaps & Detergents Ltd Vs. CCE Mysore/Bangalore- 2005 (192) ELT 892 (Tri.-Bang.) which held that stock transfers are not subject to the restrictions under Rule 9(1)(b).

The CESTAT, comprising Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member), allowed the appeal in favour of the assessee and set aside the impugned order.

CESTAT Upholds Rs. 9.56 Crore Excise Demand due to Fraudulent Refund Claims and Cenvat Credit Misuse

The adjudicating authority imposed a duty liability of Rs. 9.56 crore on Koolmint under Section 11D of the Central Excise Act, along with an equal penalty under Section 11AC. Kaizen Organics was also held liable for recovering Cenvat credit of Rs. 95.57 lakh, along with interest and penalties. The authority found that the entire scheme was orchestrated by the proprietors of Koolmint and Kaizen, who were father and son, to defraud the government by claiming undue refunds and passing on ineligible Cenvat credit.

CESTAT held that the appellants had deliberately defrauded the government by misusing the exemption notification and passing on ineligible Cenvat credit.

The CESTAT, comprising R. Muralidhar (Judicial Member) and Rajeev Tandon (Technical Member), dismissed the appeal filed by the appellants.

CESTAT Grants Refund of Reversed Cenvat Credit as Exported Exempted Goods Qualify Under Rule 6(6)(v) of Cenvat Credit Rules

The assessee appealed to the Commissioner (Appeals), who upheld the order-in-original. The assessee then appealed before the tribunal.

The assessee's counsel, stated that the tribunal had already ruled in a similar case that no amount was payable under Rule 6(3) due to Rule 6(6)(v) of the Cenvat Credit Rules, 2004. She argued that the issue was settled and the reversed amount should be refunded, citing relevant judgments.

The two member bench comprising Ramesh Nair(Judicial Member) and C.L.Mahar(Technical Member) reviewed the submissions and records, finding that the assessee had reversed the amount under Rule 6(3) for exempted goods cleared for export and filed a refund claim. In a similar case, the tribunal had ruled that the assessee was not required to pay under Rule 6(3) for goods exempted under Notification No. 4/2006-CE, as the notification was conditional.

Service Tax Demand not valid when Tax and Interest Paid much before Issuing SCN: CESTAT

On appeal before the first Appellate Authority the Commissioner (Appeals) upheld the Order-in-Original and rejected the appeal before him. Hence, the present appeal before the Tribunal. Departmental Authorized Representative justified the impugned order and prayed that the appeal being devoid of any merits may be dismissed.

In the case of Venu Enterprises, the following has been held that, ”Admittedly, the tax as well as the interest has been paid much before the issuance of SCN; even the SCN does not point out to suppression of fact, fraud or misstatement etc., the alleged activity was observed by the Audit Party from the appellant’s ST-3 returns only and it is not the case of the Revenue that there was gross violation by act of suppression, etc. In this background and on the above factual position, I am of the opinion that the bonafides of the appellant could not be doubted and hence, it is a fit case to invoke Section 80 of the Finance Act.”

The single member bench of P.K. Choudhary, Member (Judicial) found no merits in imposition of the penalties under Section 78(1) of the Finance Act, 1994 and accordingly the same is set aside. The appeal filed by the Appellant is allowed in the above terms with consequential benefit.

Failure to maintain record of goods received on subcontracting: CESTAT upholds Confiscation u/s 111 of Customs Ac

The Adjudicating Authority in order to establish jurisdiction of Customs Officers in the instant matter has invoked Section 111 (o) of the Customs Act, 1962 . The Adjudicating Authority records that illegal possession of seized goods without any valid documents by Appellant No.1 and not having valid LOA makes the subject goods liable for absolute confiscation under Section 111(O) of the Act.

Further, as per Rule 42 (4) of the SEZ Rules, 2006 unit may sub-contract a part of production or production process in another unit within the same SEZ if the movement of goods has been recorded under serially numbered challans and the record of movement has been maintained. In the present matter, Appellant No.3 is maintaining records of movement of goods sub-contracting under serially numbered vouchers and has also maintained a job work register showing inward and outward movement of goods. Therefore, as far as Appellant No.3 is concerned, it has maintained a complete record as per the requirement of the law.

It has been found that Appellant No.1 not only failed to maintain any record of the goods received on subcontracting but also did not have valid LOA. It is apparent from the record that neither the Appellant No.3 nor its partner Appellant No.4 had any knowledge about the fact that the Appellant No.1 did not have valid LOA.

Assessment of Two or More Bills of Entry or Shipping Bills Together is not Permissible: CESTAT

The assessee, Disha Realcon Pvt Ltd, exported iron ore under a number of shipping bills. Following processing, shipments covered by two or more shipping bills were placed into the vessel's same hatch without regard to the cargo's quality. The assessee claimed exemption and failed to pay duty in those bills where the Fe content was less than 58%. However, other bills paid export duties.

While allowing the appeal, the bench added that “The fact that the goods under both Shipping Bills were loaded in the same vessel or even in the same hatchet of the vessel or exported to the same party would make no difference. It does not give the department the power to re-determine the duty. Conversely, if after mixing the goods exported under different Shipping Bills and drawing a sample, the Fe content falls below the threshold, the exporter cannot claim exemption for all the Shipping Bills. Each Shipping Bill must be assessed individually,”.

Penalty on Co-Noticee not Sustainable when Main Case Settled under SVLDRS: CESTAT

The SVLDRS-2019 was launched in 2019 to resolve pending service tax and excise duty disputes. It allowed taxpayers to settle by paying a reduced amount, with relief from interest, penalties, and prosecution. The scheme applied to unresolved cases as of June 30, 2019, and was available until December 31, 2019, helping clear pending disputes and reduce the burden on taxpayers and the government.

CESTAT Chandigarh Rules IT and Business Support Services are not Intermediary Services

The CESTAT ruled that the company was not acting as an intermediary for either ITSS or BSS and was therefore eligible for a refund. The tribunal observed that the definition of intermediary services under Rule 9 of the Place of Provision of Services Rules, 2012, does not apply to a company directly providing services to a foreign client without facilitating transactions between two separate parties.

The tribunal noted that the Adjudicating Authority incorrectly classified ITSS as intermediary services, despite agreements showing that the company provided software development, coding, and testing services directly to a foreign bank, not to any third party. The tribunal ruled that such core IT functions are not intermediary activities.

Additionally, the tribunal instructed the adjudicating authority to recalculate the eligible refund based on Foreign Inward Remittance Certificates ( FIRC ) and allow the claim accordingly.

CESTAT Kolkata: Sovereign Functions Exempt from Service Tax

The tribunal examined whether ADDA’s activities were taxable under the Finance Act, 1994. It found that ADDA was created under a specific statute and functioned entirely under the control of the State Government of West Bengal. The tribunal referred to Section 66D of the Finance Act, which provides a negative list of services exempt from service tax, including services provided by the government or local authorities.

Since ADDA collected development charges, licensing fees, and land-related fees as part of its statutory obligations, the tribunal held that these activities were in the nature of sovereign functions and thus not liable to service tax.

On the issue of time limitation, the tribunal found that the show cause notice for the period 2007-08 to 2011-12 was partly time-barred. It observed that ADDA’s financial records were audited and regulated by the State Government, and the Revenue could not establish any intent to evade tax. Since all transactions were disclosed in financial statements, the tribunal ruled that the extended period for issuing a demand was not applicable, making the confirmed demand legally unsustainable.

Reversal of Cenvat Credit on Trading of Exempted Goods: CESTAT Remands matter for Verification

Mistaken Service Tax Payment not Subject to Refund Limitation u/s 11B of the Central Excise Act: CESTAT

Following these precedents, the bench ruled that the refund claim was valid and not subject to Section 11B. The case was sent back to the adjudicating authority for reconsideration, with a directive to decide within three months.

Discrepancy in Excise Duty Computation: CESTAT Directs to recompute after Deducting Value of Bought out items, value of clearances to SEZ units etc

M/s. Sabari Kitchen Services (P) Ltd. ,the Appellant-A1 and Mr. M. Thangavelu, Managing Director the Appellant-A2 filed the appeal as aggrieved by the impugned Order-inOriginal. The Appellant-A1 was engaged in the manufacture and clearance of various kitchen equipmentequipments under their brand name “SaBari” which was used on all their manufactured products since 01.01.2004. They have also mentioned the brand name in their invoices, products and brochures. The Appellant-A1 was availing the benefit of SSI Notification No. 8/2003-CE dated 01.03.2003. DGCEI conducted an investigation during January 2014, and it was alleged that appellant was using the brand name “SaBari”, which belonged to others and hence not eligible for SSI exemption and therefore liable to pay duty during the period from March 2010 to December 2014.

It was submitted that, (i) they were the owners of the brand name; (ii) they have been using it since 01.01.2004; (iii) their brand name is mentioned in all their invoices and products; (iv) no other person has objected to the usage; (v) the unique red flame differentiates their brand name from others; (vi) their bona fide belief is that they are eligible for the exemption under Notification No. 8/2003-CE; (viii) they have not suppressed any information deliberately with an intention to evade the duty; therefore, the demand of duty upto Feb, 2014 is hit by limitation.

The order is modified to the extent of re-computation of duty payable after allowing the SSI exemption benefit for normal period in respect of Appeal No. 40988 of 2016 and allowed the appeal by way of remand.

Averment in Service Tax Appeals as Date on adjudication orders is earlier than Order's dispatch date: CESTAT directs read judication

The single bench of P.K. Choudhary, Member (Judicial) viewed that there is no dispute over the fact that the Appellant was earlier issued Service Tax registration in Form ST-2 dated 14.01.2009 which mentions the address ‘221A, Rachna Sector-3A, Vaishali Ind Estate, Ghaziabad, Uttar Pradesh’ (‘old address’) and upon enforcement of GST regime, the Appellant migrated to GST and was issued registration certificate in Form GST REG0-06 dated 28.07.2018 which also mentions the same old address. Thus, there is no dispute that till 28.07.2018 the Appellant was operating from the same old address.

The Appellant while filing the two appeals, not only himself disclosed the date of service of Adjudication orders as 19.04.2022 but also requested for condonation of delay. On perusal of record, it clearly transpires that the two orders were dispatched by the Department much after 19.04.2022, which fact is also corroborated from the contents of the letter dated 09.12.2024 of the Assistant Commissioner, CGST, Division-VI, Ghaziabad.

In view of these facts supported by Affidavit and also in absence of any contrary material on record, the inescapable conclusion is that the two appeals were filed within the statutory time period and were therefore not barred by limitation. The impugned orders are, therefore, not sustainable and consequently set-aside.

CESTAT Sets Aside Service Tax Demand, Remands Case for Re-Evaluation Over Form 26AS Reliance

The appellant’s counsel contended that the department failed to provide the relevant documents along with the show cause notice, leaving the appellant unable to explain the reasons for the alleged non-payment of service tax.

The counsel on behalf of the department argued that the original adjudicating authority had passed a detailed order after considering all relevant documents and arguments. The counsel argued that the appellant had not raised the issue of non-receipt of documents during the personal hearing or in their reply to the show cause notice.

The bench noted that the appellant had stated several reasons, including the COVID-19 pandemic and a fire accident in their office, for their inability to provide the necessary documents and explanations during the adjudication process.

'Even on the Strength of endorsed bill of entry, CENVAT Credit is admissible': CESTAT

In this case, the revenue has appealed against the order passed by the adjudicating authority, which ruled in favour of the assessee.

The counsel on behalf of the department submitted that during the relevant period, the endorsed bill of entry is not a valid document for availing the Cenvat credit in terms of Rule 9 of the Cenvat Credit Rules, 2004.

The bench relied on the judgment of CESTAT Ahmedabad in the case of Khushboo beauty care 2021 (7) TMI 1231 in which the CESTAT held that “if the Bill of Entry supported with declaration given by the importer is a valid document for availing the credit by the job worker, therefore, in view of my above observation coupled with the judgment in the case of Trichem Lab (Bombay) Pvt. Ltd.(supra), I am of the clear view that the appellant is entitled for Cenvat credit on the strength of Bill of Entry even though the same is in the name of M/s Marico Limited but with a declaration in favour of the appellant. Accordingly, the impugned order is set aside. The appeal is allowed.”

CESTAT allows Cenvat Credit on Capital Goods Used for Both Dutiable and Exempted Products

The department was of the opinion that under Rule 6(4) of the Cenvat Credit Rules, 2004, the company was not entitled to claim Cenvat Credit since the capital goods were used for manufacturing exempted products.

It was argued by the revenue that the main product, fertilizer, was exempted, and the emergence of the by-product was not verified at the time of availing the Cenvat Credit.

The bench found no merit in the Revenue’s appeal. The Tribunal noted that it was undisputed that the capital goods in question were used to produce phospho-gypsum, a dutiable product. Therefore, the denial of Cenvat Credit on these capital goods was unjustified, and the provisions of Rule 6(4) were not applicable in this case.

Co-Owners not an Association of Persons: CESTAT Quashes Service Tax Demand on Rent Receipts

In this case, the appellants, who were the co-owners of a commercial property, rented it to M/s. Astron Research Limited for office purposes, and each of the co-owners was paid their separate share of rent, which was less than 10 lakhs for a year.

Extended Limitation cannot be Invoked Twice for the Same Issue: CESTAT

Neo Metaliks Limited,appellant-assessee,challenged the Order-in-Appeal, where the Commissioner (Appeals) upheld the Deputy Commissioner's decision confirming a demand of Rs. 58,938, including cess, along with interest and an equal penalty. The dispute involved the denial of CENVAT credit for services availed by the Head Office in 2008-09, including courier, rent, retainership fees, air tickets, commission, bus rental, labor charges, telephone, and car hire.

Citing the Supreme Court’s ruling in Nizam Sugar Factory v. CCE, the tribunal held that once a demand was raised using the extended period, another demand could not be issued for the same issue in a later period. Therefore, it concluded that the demands in the subsequent notices were not sustainable.

Clandestine Removal of Fatty Acid as RPO: CESTAT Sets Aside Rs. 53.38 Lakh Duty Demand Due to Lack of Evidence

The notice alleged the clandestine removal of 1157.346 MT of Fatty Acid as RPO between November 29, 2007, and December 3, 2008, based on Free Fatty Acids(FFA) levels in the Lab Register. The FFA content was recorded as 4.8% to 5.6%, but only 2% to 4% of Fatty Acid was shown as recovered. A duty demand of Rs. 53,38,184/- was raised and confirmed in the impugned order. The assessee contested the demand in the appeal.

Service Tax on R&D and Consultancy under RCM: CESTAT sets aside Extended Limitation due to Lack of Willful Suppression

Mec Shot Blasting Equipment P Ltd., appellant-assessee, manufactured excisable goods under Chapter 84 and availed Cenvat credit on inputs and input services. It was also registered under Section 69 of the Finance Act, 1994, for service tax compliance.

Through an order dated January 24, 2017, the department confirmed the tax demand with interest and imposed an equal penalty. The Commissioner (Appeals) later upheld this order.The assessee appealed before the tribunal.

Citing Supreme Court rulings, the tribunal held that suppression must be willful and aimed at evading tax, which was not established in this case. Since the assessee had acted under a bona fide belief and the department failed to prove intent to evade tax, the extended limitation period was not applicable.

CESTAT Sets Aside ₹10 Lakh Penalty under Rule 26(1) Due to Lack of Goods Confiscation

Ramesh Garg, appellant-assessee,challenged the order dated March 30, 2017, issued by the Joint Commissioner, imposing a Rs. 10,00,000 penalty under Rule 26(1) of the Central Excise Rules, 2002.The assessee remained unrepresented in this and previous hearings.

Failure to File Application within time for Continuation of Appeal even after Death of Proprietor: CESTAT Dismisses Appeal

It was submitted on behalf of the appellant that the proprietor had died and a photocopy of the Death Certificate was furnished. On that date, therefore, the Tribunal was inclined to close the appeals, but on the request of the Counsel for Respondent-Revenue, time was granted. Thereafter, on November 13, 2024 the Respondent ultimately filed a submission purporting to be a miscellaneous application seeking that the proceedings be continued in accordance with that Rule as the proprietary concern continues.

M/s. Tamil Nadu State Marketing Corporation Ltd. (TASMAC), a 100% Government of Tamil Nadu undertaking is a company incorporated under the Companies Act, 1956 and the appellant is vested with the exclusive privilege of wholesale distribution as well as retail vending of Indian Made Foreign Liquor (IMFL) in the State of Tamil Nadu under the Tamilnadu Prohibition Act, 1937. The retail vending of IMFL is done through its outlets located throughout the State of Tamil Nadu.

CESTAT Dismisses Customs Appeal on Approval of Resolution Plan by NCLT

Service of Drilling Rig for Exploration Activities of Cauvery Block in India not falls under ‘Consulting Engineers: CESTAT

The appellants M/s. Nikoresources (NELPV) Ltd. (‘Niko’), are registered with the Service Tax Department and are in the business of exploration, development and production of mineral oil and natural gas. Niko has signed a ‘Production Sharing Contract’ with Government of India for exploration and development of Cauvery Block, with 100% participating interest. In furtherance of this activity, they sourced various services from foreign companies who are not having fixed establishment in India in connection with survey, geological studies, seismic analysis, reservoir estimation, drilling etc.

The bench found that the dispute pertains to the classification of service received by the appellant from an oversea supplier, based on an agreement. Section 2(h) of the Indian Contract Act, 1872, states that an agreement enforceable by law is a contract. A contract comprises the joint intent of the parties. It has to be understood that the contract between the parties is in the realm of private law. It is not a statutory contract. It has hence to be understood by the intent of the parties to the contract.

Since the revenue has not been able to discharge their burden of proof, the impugned order confirming the demand for service tax, merits to be set aside.

Date of Cenvat Credit Refund Claim is to be taken as Date on which Original Refund Claim was Acknowledged by Excise Dept: CESTAT

CESTAT Sets aside Demand of Service Tax under “Manpower Recruitment Supply Agency Service” in absence of Supply of Any Labourers

The Tribunal found that there is a reference to the said letter in the OIO at para 14.4 but unfortunately, the Adjudicating Authority has not given finding on this factual aspect. Hence, it is to be accepted that the Appellant undertook various activities like grinding, RT upgradation, gouging, machining, etc., which were claimed to be used as components of the boilers used in the thermal/nuclear power plants and therefore, the said activities undertaken by the appellant would amount to “manufacture” as claimed by the Appellant. By this, therefore, the authorities below have erred in ignoring this specific plea which otherwise would have entitled the appellant to the benefit of Notification No. 8/2005 supra.

Rule 8 of Central Excise Valuation Rules Applicable only when Manufactured Goods are Captively Consumed by Manufacturer: CESTAT

An appeal was filed by Perfect Mechanical Industries (Perfect Mechanical), an entity engaged in fabricating and mounting vehicle bodies on duty-paid chassis against an Order of Commissioner of Central Goods and Service Tax, Faridabad.

Orders-In-Original to be Posted at Conspicuous Part of Factory u/s 37(1) Excise Act before Posting on Dept. Notice Board: CESTAT

The facts leading up to the institution of the present case follow the attempt to serve an Order-In-Original at the Appellant’s factory premises. Rahul Gajera, counsel appearing on behalf of the appellant submitted that at the time of service, Patel Steels’ factory was closed and the excise department attempted to serve the Order-In-Original via registered post which was returned undelivered.

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CESTAT Sets Aside Order for Failure to Examine Unjust Enrichment Aspect in LNG Import Duty Dispute

Ratnagiri Gas & Power Pvt. Ltd. entered into an agreement with Gas Authority of India Limited (GAIL) on 02.02.2012 for the purchase of 1960086.950 MMBTU (85,000 cubic meters) of LNG on a high-seas sale basis. GAIL had initially imported 3,000,000 MMBTU (129,500 cubic meters) of LNG from Excelerate Energy Limited, Texas, USA. Of this, 1960086.950 MMBTU (85,000 cubic meters) was sold to RGPPL. When the vessel arrived at the port, both RGPPL and GAIL filed Bills of Entry (B/E) for their respective imports. RGPPL's B/E No. 04/2011-12 dated 27.03.2012 was filed for provisional assessment. However, due to a technical glitch in the LNG terminal, unloading was terminated midway, and only 311837.03 MMBTU (12,000 cubic meters) of LNG was discharged. The remaining quantity was not imported and was later exported back.

CESTAT reviewed the case and noted that the authorities had failed to examine the unjust enrichment aspect thoroughly. The tribunal observed that RGPPL had submitted financial records, Chartered Accountant certificates, and ledger accounts to substantiate its claim that the duty burden had not been passed on. It found merit in RGPPL’s argument that in cases of provisional assessment where the entire quantity is not discharged, unjust enrichment should not apply. CESTAT referred to previous decisions in Petronet LNG Ltd. and Hazira LNG Pvt. Ltd., supporting the contention that duty on un-imported goods should be refunded.

Leasing of Scaffolding Equipment liable to VAT as "Deemed Sale", no Transfer of Ownership: CESTAT quashes Service Tax Demand

Between 2012-13 and 2016-17, Standard Belex India Pvt Ltd leased various scaffolding items including U heads, base jacks, and planks to multiple parties. Under the terms of the lease agreements, the lessees were granted full rights to use and control the equipment, with the lessor retaining ownership.

Presiding over the matter, Judicial Member Ramesh Nair and Technical Member C L Mahar examined the contractual clauses in detail. The tribunal observed that the agreements provided for the lessee’s exclusive right to use, possession, and control of the equipment during the lease term, clearly satisfying the criteria for a deemed sale under Article 366(29A)(d) of the Constitution.

Consequently, the tribunal set aside the service tax demand, reinforcing the legal interpretation that leasing transactions of this nature fall squarely within the ambit of VAT on deemed sales.

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