CESTAT Weekly Round-up

The Bombay Flying Club vsCommissioner of Service Tax CITATION : 2025 TAXSCAN (CESTAT) 870

The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has given relief to The Bombay Flying Club by quashing service tax demands made on its aircraft maintenance engineering training programs and aircraft repair services provided to its members
On relying on the Delhi High Court’s judgment in Indian Institute of Aircraft Engineering v. Union of India (2013), the Tribunal held that training that is recognized by law, even if followed by a licensing exam, does not lose its legal recognition. It referred to Rule 133B of the Aircraft Rules, 1937 and a DGCA letter dated 19.05.2011, confirming that such training is necessary for getting the eligibility for the license.

Coaching Centre Not a Recognised Educational Institution: CESTAT upholds Service Tax under ‘Commercial Training or Coaching Service’ for Normal Period

The New Delhi Bench of the Customs, Excise and Services Tax Appellate Tribunal (CESTAT) upheld the levy of the service tax under “Commercial Training or Coaching Service” for the normal period and noted that the appellant was not a recognised educational institution as defined in law.
The Tribunal held that the appellant provided coaching services in the manner of distance education. Since the appellant did not meet the requirements of a recognised educational institution under the Finance Act, the services rendered were liable to service tax under “Commercial Training or Coaching Services.”

Bus Services for Transporting Employees and School Children Qualify for Service Tax Exemption Under Entry 23(b) of Notification: CESTAT

M/s. Century Pulp & Paper vsCommissioner of CGST CITATION : 2025 TAXSCAN (CESTAT) 871

The CESTAT held that bus services used by Century Pulp and Paper to transport its factory employees and school-going children are exempt from service tax under Entry 23(b) of Notification No. 25/2012-ST, as the vehicles were used as contract carriages and not for tourism or hire.

The appellant's counsel argued that the bus services fall under the definition of “contract carriage” and were used solely for transporting employees and school children, not for tourism or charter purposes. They further argued that such services are specifically exempt under Entry 23(b) of Notification No. 25/2012-ST. The counsel also pointed out that similar contracts had been held exempt by the Tribunal in other cases.

Manufacturer Cannot Pay Duty on One Brand and Claim SSI Exemption on Another in Same FY: CESTAT

M/s. Switz Foods Pvt. Ltd. vsCommr. of Central Excise, Kolkata-V CITATION : 2025 TAXSCAN (CESTAT) 873

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that a manufacturer cannot pay excise duty on one brand and simultaneously claim Small Scale Industry (SSI) exemption on another brand from the same manufacturing unit within the same financial year.

The revenue countered that the SSI Notification does not allow partial application of exemption and duty within the same financial year from a single unit. According to them, the exemption scheme requires consistency, and once opted for, it must be applied to all eligible goods for that year.

Coaching Centre Had No Intent to Evade Tax: CESTAT Quashes ₹3.06 Cr Extended Period Service Tax Demand and Penalty

Soft Dot Hi-Tech Educational andTraining Institute vs Commissioner of Service Tax CITATION : 2025 TAXSCAN (CESTAT) 872

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside a ₹3,05,92,67 service tax demand by the Department for the extended period of limitation and held that there was no intent to evade tax.

The Tribunal only upheld the demand for the normal period of limitation and remanded the matter to the revenue to examine only what portion of the demand falls within the normal period of limitation under section 73(1) of the Finance Act. Then, consider whether the penalty under sections 77 and 78 of the Finance Act should be leviable on the appellant for this period and to determine the amount of the penalty.

CESTAT Rules Mining Services Between Distinct Entities Taxable, Not “Self‑Service”, Rejects Refund Claim

M/s. Mayur Inorganics Limited vsCommissioner of CGST & Central Excise- JodhpurCITATION : 2025 TAXSCAN (CESTAT) 874

The Delhi Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) rejected the refund claim of the assessee, ruling that mining services provided by Rajasthan State Mines and Minerals Limited (RSMML) were taxable as transactions between distinct entities and not “self‑service.”

The two member bench comprising Dr.Rachna Gupta Judicial Member) and P.V.Subba Rao (Technical Member) heard both sides and examined the case records.It noted that the Commissioner (Appeals) had rejected the refund claim because RSMM charged service tax on limestone mining, and both RSMM and the assessee were separate legal entities. The tribunal held that the activity could not be treated as “self service.”

Relief for Mahindra: CESTAT Rules CENVAT Credit on Factory Canteen Services Admissible Except for Employee-Recovered Amounts

M/s Mahindra And Mahindra Ltd.vs Commissioner of Central ExciseCITATION : 2025 TAXSCAN (CESTAT) 876

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that Mahindra and Mahindra Ltd. was entitled to claim CENVAT credit on outdoor catering services provided at its factory canteen, except to the extent of cost recovered from employees.

The appellant's counsel argued that the canteen was mandatory under the Factories Act and the credit was taken only after informing the department. They further submitted that the appellant had already reversed a large portion of the credit voluntarily, retaining only Rs. 27,905.

Alleged DFIA Authorization Misuse for Textile Imports: CESTAT remands Matter considering conflict with test report of CRCL with Textile Committee

Titanium Ten Enterprises Pvt Ltd vs Commissioner of Customs (Export) CITATION : 2025 TAXSCAN (CESTAT) 879

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Mumbai, has remanded to the original authority the matter involving M/s Titanium Ten Enterprises Pvt. Ltd.’s alleged misuse of DFIA authorization for importing 29,506 metres of 100% cotton fabrics.
Consequently, the CESTAT “set aside the impugned order and remanded the matter back to the original authority for referring the samples to the Director, Central Revenue Control Laboratory (CRCL) for undertaking final and definitive tests before deciding the assessment afresh”.

“Enormous Push to Environmentally Safer and Friendly Vehicles”: Delhi HC reduces CESTAT Pre-Deposit to ₹5.5 Lakh on E-Rickshaw Import Classification

SONI EVEHICLEPRIVATELIMITED vsCOMMISSIONEROFCUSTOMSICDTUGHLAKABAD CITATION : 2025 TAXSCAN (HC) 1571

The High Court of Delhi, in a matter concerning the classification of imported e-rickshaw consignments, reduced the pre-deposit to ₹5.5 lakh and directed Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) to hear the petitioner’s and its Director’s appeals on merits.
The Order-in-Original dated 20th August 2020 reclassified the petitioner-assessee’s imports under CTSH 8703 9010 (up to 31st December 2016) and CTSH 8703 8040 (thereafter). It ordered confiscation of goods covered under six live Bills of Entry worth ₹1.18 crore with a redemption fine of ₹12 lakh, and goods under 13 previous Bills of Entry worth ₹2.65 crore with a fine of ₹27 lakh.

Relief for JSW Steel: CESTAT Rules Corrigendum Issued After 5 Years to Original SCN Amounts to Fresh Notice, Quashes Demand as Time-Barred

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that a corrigendum issued five years after the original show cause notice, which materially altered its contents, amounted to a fresh notice. The tribunal held that it was time-barred under Section 28 of the Customs Act.
The department’s counsel argued that the omission of the legal section in the original notice did not render it invalid and that the corrigendum simply clarified and corrected minor errors. They relied on decisions to support the view that as long as the demand was clear, the notice stood valid.

Relief for One97: CESTAT Rules Paytm Soundbox is a 2G Device Not 4G/LTE Compliant, Quashes Customs Duty Demand

One97 Communications Limited vsPrincipal Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 88

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the Paytm Soundbox is a 2G-only device and not 4G/LTE compliant, and therefore eligible for concessional basic customs duty. The tribunal set aside the customs duty demand raised by the department on the imports made by One97 Communications Limited.
The tribunal further held that reliance on Wikipedia pages and blogs could not be accepted as legal evidence in classification disputes. It explained that the opinion from the IIT professor was misread by the adjudicating authority and clarified that the professor had only used a railway track analogy to explain that a 2G device can work in a 4G environment without becoming 4G in nature.

MRP Labelling Not Mandatory for Industrial Use or Packages Above 25 Kg/Litre: CESTAT in BEML Case M/s.BEML Ltd. vs

TheCommissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 882

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that mandatory MRP labelling does not apply to packages meant for industrial use or those weighing more than 25 kilograms, and such imports cannot be assessed on the basis of maximum retail price under customs law.
The bench comprising Justice P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) explained that the Legal Metrology and Packaged Commodities Rules apply only to retail packages, and that Rule 34 specifically excludes packages intended solely for industrial use.

Partial Relief for British Airways: CESTAT Upholds Service Tax on Excess Baggage Charges for Normal Period, Drops Demand for Extended Period

M/s British Airways PLC IndiaBranch vs Commissioner of Central Goods & Service Tax CITATION : 2025 TAXSCAN (CESTAT) 883

The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that British Airways is liable to pay service tax on excess baggage charges collected from passengers during the normal limitation period but not for the extended period as there was no suppression of facts.
The tribunal comprising Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) found that British Airways had been filing returns and paying service tax regularly and had disclosed the relevant details to the department. It pointed out that the department was aware of the issue as early as 2006 and there was no evidence of suppression or deliberate misstatement.

Relief for Suzuki: CESTAT Rules Excess Transit Insurance Charges Collected Excluded from Assessable Value, Not Liable to Excise Duty

Commissioner of C G S T vs M/sSuzuki Motorcycle India Pvt Ltd CITATION : 2025 TAXSCAN (CESTAT) 884

The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that excess transit insurance charges collected by Suzuki Motorcycle India Pvt. Ltd. from its dealers are not includible in the assessable value of goods and are not dutiable under excise law.
The tribunal explained that under Section 4(1)(a) of the Central Excise Act, the assessable value of excisable goods is the transaction value at the place and time of removal. The tribunal explained that the place of removal was the factory gate, and the insurance charges collected after that point could not be included in the assessable value. The tribunal further observed that these charges were like profit and had no nexus with manufacturing activity.

Relief for Indian Oil: CESTAT Holds No Service Tax Payable on Reimbursable Expenses Incurred for CISF Security Services

The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that Indian Oil Corporation Ltd. (IOCL) is not liable to pay service tax on reimbursable expenses paid to the Central Industrial Security Force (CISF) in connection with the deployment of security personnel.
The tribunal also pointed out that Rule 5 of the Service Tax (Determination of Value) Rules, which allowed such additions, had already been held ultra vires by the Supreme Court. Following the reasoning laid down by the Ahmedabad Bench and consistent judicial precedents, the Chandigarh Bench set aside the orders of the Commissioner (Appeals) and allowed both appeals filed by Indian Oil Corporation Ltd.

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