CESTAT Weekly Round-up

Relief for Oman Air: CESTAT Rules Non-Reporting in ST-3 Returns Does Not Extinguish Validly Availed CENVAT Credit

CITATION : 2025 TAXSCAN (CESTAT) 840 The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that valid CENVAT credit does not lapse simply because it was not reported in the ST-3 returns and that such non-reporting is only a procedural lapse which cannot take away the taxpayer’s right to use the credit. The two-member bench comprising C.J. Mathew (Technical Member) and Ajay Sharma (Judicial Member) observed that there was no allegation that the credit was wrongly availed or used improperly. It further observed that the non-reporting of the credit in ST-3 returns did not amount to a violation of any substantive law.

Relief for Maruti Suzuki: CESTAT Rules CENVAT Credit on Input Services Used for Business or Personal Use Valid if Availed Before April 2011 Amendment

CITATION : 2025 TAXSCAN (CESTAT) 843 The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that CENVAT credit on input services is valid if availed before the April 2011 amendment, regardless of whether the services were used for business or personal purposes. The two-member bench comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that there was no evidence to show the vehicles were used solely for personal purposes, and found that the services were closely linked to the company’s business activities.

Mere Purity of Gold would not make it as Foreign origin: CESTAT sets aside Confiscation of Gold Bars in absence of Corroborative Evidence

CITATION : 2025 TAXSCAN (CESTAT) 845

The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal(CESTAT) has held that mere Purity of Gold would not make it of foreign origin and set aside the Confiscation of gold bars under Customs Act in the absence of corroborative evidence. It is further submitted on behalf of the appellant that he has two Gold Jewellery shops viz. one in Hooghly, West Bengal and the other in Guwahati, Assam. The Counsel for the appellant informs as an internal process in the course of their jewellery business, gold is transferred from one branch to another i.e., Kolkata to Guwahati and Guwahati to Kolkata, which is for the purpose of making gold jewellery in the normal course of their business. It is also submitted that such transfer of gold depends upon their requirement and it is purely a business arrangement.

CESTAT allows CENVAT credit on inputs and input services utilized as output service

CITATION : 2025 TAXSCAN (CESTAT) 846 The Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) allowed the CENVAT credit on inputs and input services utilized as output service. The issues involved is denial of cenvat credit on various input services namely, Architects Service, Banking service, Business support Service, Chartered Accountant service, Commercial or industrial construction service, Design service, Insurance service, Management consultant service and Real Estate Agent service., which were used for rendering service under Renting of Immovable Properties, commercial and industrial construction services, etc.

Value of Clearances of Proprietorship and Pvt. Ltd. Firm cannot Be Clubbed for SSI Exemption: CESTAT

CITATION : 2025 TAXSCAN (CESTAT) 850 The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the value of clearances made by a proprietorship firm and a private limited company cannot be clubbed to deny Small Scale Industry (SSI) exemption under Notification No. 8/2003-CE. The revenue counsel argued that the proprietorship and private limited firm were controlled by family members and shared office premises, indicating that one was merely a front to split production and wrongfully claim SSI exemption. The counsel argued that the close relationship and administrative overlap justified treating them as one unit.

Customs cannot Confiscate Already Exported CD-ROMs with Inflated Freight on Board Value: CESTAT quashes ₹25L Penalty u/s 114

CITATION : 2025 TAXSCAN (CESTAT) 844 The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a penalty of ₹25,00,000 imposed by the Commissioner of Customs under section 114 of the Customs Act, 1962 on an assessee,and observed that the penalty could not be sustained as the goods had already been exported. In the impugned order, the Commissioner of Customs had imposed a penalty of ₹25,00,000 under section 114 of the Act, relying mainly on statements made by the appellant and others under section 108 of the Customs Act.

Delay in filing Service Tax Refund Application not Condonable in Absence of Proper Explanation: CESTAT

Commissioner, Central Tax vs M/sNSC Projects (Private) Limited

CITATION : 2025 TAXSCAN (CESTAT) 847 In a recent case, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that delay in filing a service tax refund application is not condonable in the absence of proper explanation. Since the refund claim was filed on 10.2.2017, it was beyond six months from 14.05.2016. Hence it is liable to be set aside as being barred by time. The order is accordingly, prayed to be set aside and appeal be accordingly allowed.

Sulphur Limit in IS 17049 Applies to Calcined, Not Raw Petroleum Coke: CESTAT upholds DGFT Clarification

CITATION : 2025 TAXSCAN (CESTAT) 852 The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the sulphur content requirement under Indian Standard IS 17049 applies to calcined petroleum coke (CPC), not to raw petroleum coke (RPC) at the time of import. The tribunal also observed that the customs department could not overrule or reinterpret the licensing conditions clarified by the DGFT. The tribunal explained that the import was in line with the policy and quota issued by the competent authority and that applying CPC standards to RPC was a misreading of the policy.

Penalty u/s 114 Unsustainable as Goods Already Exported: CESTAT quashes Customs Order in DEPB Evasion Case

CITATION : 2025 TAXSCAN (CESTAT) 842 The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside the penalty of ₹3,00,000 imposed by the Commissioner of Customs under section 114 of the Customs Act, 1962, and observed that the penalty could not be sustained as the goods had already been exported. It was alleged by the department in the show cause notice that the company Sundram Export, to which the Appellant was connected, had exported 96,800 pieces of CD-ROMs at a highly inflated Freight on Board value of US$19 per piece, which were used to import goods without paying customs duty.

Excess amount of service tax paid cannot be alleged to be with malafied intention in absence of Evidence: CESTAT

CITATION : 2025 TAXSCAN (CESTAT) 848 The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that an excess amount of service tax paid cannot be alleged to be with malafied intention in absence of evidence. Consultant for the appellant submitted that lower authorities have not disputed the fact that the appellant had paid excess amount of service tax in the earlier period, but for the procedural lapses narrated in the show cause notice. Hence, the department cannot deny the adjustment on the ground of procedural lapses once there is no dispute about excess payment of service tax by the appellant.

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Reimbursed Expenses Like "Other Expenses" and "Extra Hour Service Charges" Not Taxable Under Service Tax: CESTAT

CITATION : 2025 TAXSCAN (CESTAT) 849 The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that reimbursed expenses such as "Other Expenses" and "Extra Hour Service Charges" are not includible in the assessable value for service tax calculation under pre-2015 law. The tribunal also held that service tax liability on renting of immovable property was under legal dispute during the period, and interest could not be demanded retrospectively. Since the appellant failed to register under the required service category, a nominal penalty under Section 77 was held to be justified.

No Chinese Link Found in Alloy Wheel Imports from Taiwan: CESTAT quashes ₹4.62 Crore ADD Demand

CITATION : 2025 TAXSCAN (CESTAT) 851 The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that anti-dumping duty (ADD) could not be imposed on Neo Wheels Ltd. for importing semi-finished aluminum alloy wheels, as there was no evidence proving the goods originated from China. The tribunal explained that suspicion cannot replace proof and that all assessments were finalized lawfully without being appealed by the revenue. As there was no valid basis to demand an anti-dumping duty or impose penalties, the tribunal set aside the order and allowed all three appeals.

Setback for Godrej: CESTAT rules Buyer-Facilitated Duty-Free Benefits via LoIs Constitute Additional Consideration

CITATION : 2025 TAXSCAN (CESTAT) 853 The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that buyer-facilitated duty-free import benefits through Letters of Invalidation (LoIs) are considered additional consideration under Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The department’s counsel pointed to invoice comparisons showing that buyers who provided LoIs were charged lower prices. They argued that the price advantage was made possible only because of the buyer’s action of transferring duty-free import rights, which reduced the seller’s cost and must be treated as indirect monetary benefit.

Relief for Malayala Manorama: CESTAT Allows Classification of Imported Paper in Reels as "Newsprint" Due to Non-ISO Testing

CITATION : 2025 TAXSCAN (ITAT) 1373 The Bangalore Bench of Customs, Excise andService Tax Appellate Tribunal ( CESTAT ) allowed relief to Malayala Manorama Company Limited by classifying imported paper in reels as “newsprint” under Customs Tariff Heading 480180, due to testing not being conducted as per International Organization Standardization (ISO). The authorities had tested the samples at Cochin Customs Laboratory and later at CRCL, New Delhi. Both reports found the Mechanical Wood Pulp (MWP) content to be less than 65%, which disqualified the goods from being classified as newsprint.

99-Year Land Lease with One-Time Premium Is a Sale of Immovable Property, Not a Taxable Service: CESTAT

CITATION : 2025 TAXSCAN (CESTAT) 854 The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that leasing out land for 90 years against a one-time premium constitutes a transfer of immovable property and is not subject to service tax. The appellant’s counsel argued that the lease agreement created rights akin to ownership over immovable property for a 90-year term and was a transfer of immovable property, not a taxable service. It was further argued that the one-time premium was not a consideration for a service but rather a charge for the transfer of land rights.

Cenvat Credit on Sales Commission to Agents Admissible: CESTAT

CITATION : 2025 TAXSCAN (CESTAT) 855 The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that Cenvat credit on sales commission paid to agents is admissible. The tribunal explained that the Gujarat High Court’s Cadila Healthcare decision was based on facts where the commission agents did not engage in sales promotion, unlike in the present case, where evidence of sales promotion by agents was available. It also held that since the appellant disclosed the credit availed in statutory returns and there was no evidence of suppression or intent to evade duty, the extended period invocation and penalty under Section 11AC were not sustainable.

CESTAT Allows Concessional Duty Benefit on Aluminium Based Laminates Used in MCPCBs

M/s. Arktron Electronics vsCommissioner of Customs (Preventive)

CITATION : 2025 TAXSCAN (CESTAT) 857 The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) allowed the benefit of concessional customs duty on aluminium-based copper clad laminates used in the manufacture of metal clad printed circuit boards (MCPCBs). In another case,Principal Commissioner of Customs vs. B.S. Electronics Private Limited,the Tribunal reiterated that metal clad printed circuit boards (MCPCBs) qualified as printed circuit boards and that the exemption covered laminates with a metal core, including aluminium-based ones.

Relief for BHEL: CESTAT rules Reimbursed Freight Charges Not Taxable as Service, quashes ₹16 Cr Demand

M/s. Bharat Heavy ElectricalsLtd vs Commissioner of GST and Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 858

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that Bharat Heavy Electricals Ltd. (BHEL) was not liable to pay service tax on reimbursed freight charges, as the company had not provided a taxable service by arranging transportation through third-party transporters.

The revenue counsel argued that BHEL had facilitated the transport of goods and had received consideration for that service, making it taxable. They also argued that the company had not declared these freight incomes in their service tax returns and that the issue only came to light during an audit.

Relief for BPL Ltd: CESTAT Rules Payment Received from JVA as Pure Reimbursement for Business Transfer Delay, Not Manpower Supply

M/s.BPL Limited vs The Commissioner of Service Tax

CITATION : 2025 TAXSCAN (CESTAT) 860

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the payments received by BPL Ltd from its joint venture partner were pure reimbursements for salaries and rent during a business transfer delay and were not liable to service tax under the category of manpower supply.

They relied on the Supreme Court’s decision in Intercontinental Consultants, which held that reimbursements are not taxable, and also cited decisions in Spirax Marshall and UTI Asset Management, which held that deputation reimbursements do not fall under manpower supply service.

Relief to Bosch: CESTAT Rules Notional Cost of Free Designs from Maruti Not Part of Excise Duty Valuation

M/s. Bosch Ltd. vs Commissionerof CGST & Central Excise, New Delhi

CITATION : 2025 TAXSCAN (CESTAT) 861

The Delhi Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) granted relief to Bosch Ltd and ruled that the notional cost of free design and drawings provided by Maruti Suzuki could not be included in the excise duty valuation of parts and components supplied by vendors.

The two member bench comprising Justice Dilip Gupta ( President ) and P.V.Subba Rao( Technical Member) examined the issue in detail in the case of Denso India Private Limited vs. Additional Director General (Adjudication) and held that the notional cost of drawings and designs supplied free of cost by Maruti could not be included in the assessable value of parts and components manufactured by vendors and cleared to Maruti for excise duty purposes.

CESTAT Quashes Customs Duty Demand on Re-Imported Rejected Diesel Generator Sets Citing Lack of Suppression

Sterling Generators Pvt Limitedvs Commissioner CGST & Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 856

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that customs duty demands on re-imported rejected DG sets are unsustainable when the extended period is wrongly invoked and facts were disclosed in returns.

During a later CERA audit, the department objected, claiming that the re-import of rejected DG sets was done beyond the permissible period of one year under condition no. 15 of Notification No. 52/2003-Cus, and hence, the exemption was not available. A show cause notice was issued in January 2014, demanding Rs. 1.03 crore as customs duty with interest and proposing penalties under Section 112 and Section 114A of the Customs Act, 1962, along with confiscation of the re-imported DG sets.

CESTAT sets aside Revocation of Customs Broker License as Proceedings Violated Mandatory Timelines under CBLR

Commissioner of Customs (Import)vs M/s. Raj Brothers Shipping Pvt. Ltd.

CITATION : 2025 TAXSCAN (CESTAT) 863

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in its recent decision set aside the revocation of license issued to Raj Brothers Shipping Pvt. Ltd., holding that the disciplinary proceedings under the Customs Brokers Licensing Regulations, 2013 (CBLR) were vitiated by non-compliance with mandatory procedural timelines.

The declared value was redetermined and Show Cause Notices were issued to both the importer and the CB. The Commissioner of Customs initially suspended the CB’s license. After due process, the Commissioner revoked the suspension. Subsequently, another Show Cause Notice was issued under Regulation 20.

CESTAT Sets Aside Enhanced Penalty on Visa Steel Ltd., Restores Original ₹20k Fine as Delay Not Attributable to Importer

M/s. Visa Steel Ltd vsCommissioner of Customs (Preventive)

CITATION : 2025 TAXSCAN (CESTAT) 862

The Kolkata Benchof the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in its recent ruling set aside the enhanced penalty imposed on Visa Steel Ltd. and held that the revenue’s delay in finalizing the Bills of Entry was not attributable to the importer.

The Revenue filed an appeal before the Commissioner (Appeals) seeking to enhance the penalty to ₹4,00,000 arguing that in respect to the 8 Bills of Entry yet to be assessed by the adjudicating authority, a penalty of ₹50,000 should have been imposed for each Bill of Entry.

‘Half-Hearted Investigation by DRI’: CESTAT Remands Genuineness of Manufacturing Activity Matter for Reinvestigation

M/s.Welcord Component Industriesvs The Commissioner of GST

CITATION : 2025 TAXSCAN (CESTAT) 865

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) remanded a case back to the adjudicating authority, holding that the investigation conducted by the Directorate of Revenue Intelligence (DRI) into the genuineness of the appellant’s manufacturing activity was incomplete and lacked proper verification.

The department argued that the appellant did not possess the required manufacturing facility and had claimed input credit fraudulently. The adjudicating authority confirmed the demand, interest, and penalties through a common Order-in-Original dated March 14, 2017. Aggrieved by this, the appellant, along with its partners, approached the CESTAT.

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