CESTAT Weekly Round-up

This weekly round-up analytically summarizes the key stories related to the Customs Excise and Service Tax Appellate Tribunal (CESTAT) reported at Taxscan from August 18, 2025 to August 23, 2025.

Excise Duty Evasion and Fraudulent Cenvat Credit Availment: CESTAT upholds Penalty

M/s. Kaizen Organics Pvt. Ltd.vs M/s. Commissioner of Central Excise & Service Tax, Guwahati CITATION: 2025 TAXSCAN (CESTAT) 907

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) upheld the penalty imposed against Excise Duty Evasion findings of a manufacturing company. The department concluded that Koolmint had manipulated valuation, transport, and production records to fraudulently claim duty refunds amounting to about ₹40.99 lakh. It was also alleged that by this method, ineligible Cenvat credit was passed to Kaizen Organics. As a result, Koolmint was charged with deliberate misdeclaration, suppression of facts, and fraud with intent to evade duty, and a show cause notice was issued under the extended limitation period of Section 11A(1) provision of the Central Excise Act, 1944.

Mere Assembly of Imported Components can make “e-Rickshaw”: CESTAT upholds Differential Customs Duty Demand, Penalty and Interest

M/s Y. C. Electric Vehicle vs PRINCIPAL COMMISSIONER CITATION: 2025 TAXSCAN (CESTAT) 910

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench at New Delhi, has held that the import of essential components of an electric rickshaw (E-rickshaw), even in semi-knocked down (SKD) or completely knocked down (CKD) condition, amounts to import of a complete vehicle and hence attracts classification under CTH 8703 9000 (Motor Vehicles) rather than CTH 8708 9900 (Parts & Accessories). On appeal, the assessee argued that the imported goods, by themselves, did not constitute complete rickshaws, as major parts like chassis, tyres, and batteries were sourced locally. They stressed that only as “presented” before Customs should the classification be judged, not by possible assembly in India. Reliance was placed on judicial precedents including Sony India Ltd. (SC) and ITC Ltd. (SC) decisions.

Construction of Independent Residential Houses for Personal Use Not Taxable as ‘Residential Complex Service’: CESTAT

PRINCIPAL COMMISSIONER CGST& CENTRAL EXCISE vs M/s AAKRITI CONSTRUCTION CITATION: 2025 TAXSCAN (CESTAT) 911

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the construction of independent residential houses for personal use does not fall within the scope of “Construction of Residential Complex Service” and is not taxable. The two-member bench comprising Binu Tamta (Judicial Member) and P. V. Subba Rao (Technical Member) observed that the definition of residential complex services under the Finance Act expressly excludes houses constructed for the personal use of individuals. The tribunal explained that the certificates filed by the house owners supported the assessee’s claim that the construction was for personal use and not for commercial exploitation.

Construction Services Provided to Educational Institutions and Hospitals Are Not Taxable: CESTAT

PRINCIPAL COMMISSIONER CGST& CENTRAL EXCISE vs M/s AAKRITI CONSTRUCTION CITATION: 2025 TAXSCAN (CESTAT) 911

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that construction services provided to educational institutions and charitable hospitals are not liable to service tax. The revenue’s counsel argued that since the assessee was engaged in commercial construction services, the work done for educational and hospital buildings should also be taxed. They argued that there was no exemption available to the assessee under the service tax law.

No Evidence of Export Attempt of Prohibited Shark Fins: CESTAT Quashes Confiscation and Penalty, Clarifies ‘Attempt to Export

Global Impex Trading vs The Additional Director General CITATION: 2025 TAXSCAN (CESTAT) 909

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has set aside the confiscation of shark fins worth Rs. 55.6 crores and the penalty of ₹7 crore imposed, holding that there was no evidence of an attempt to export. The appellant’s counsel argued that the case was built mainly on statements allegedly obtained under coercion, which were later retracted before a Magistrate. He contended that such retracted statements, without corroborative evidence, cannot establish an intent to export, especially since storage or domestic trading of shark fins is not prohibited.

License to Run Duty-Free Shops Constitutes Renting of Immovable Property, Not Liable to Service Tax under Airport Service Before 2010: CESTAT

M/s Airport Retail Private Limited vs Commissioner of Service Tax CITATION: 2025 TAXSCAN (CESTAT) 914

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that granting a license to operate duty-free shops at Delhi International Airport amounted to renting of immovable property and could not be taxed as airport services before July 01, 2010. The tribunal pointed out that the refund claim was filed within one year of the High Court’s judgment, which was the relevant date under Section 11B of the Central Excise Act. The tribunal also explained that DIAL’s confirmation showed that the burden of tax had not been passed on to any other party.

Extra Charges on Resold Cargo Space Are Principal-to-Principal Trading, Not Taxable as BAS: CESTAT

Shikhar Logistics Pvt. Ltd. vs Commissioner of Central Tax CITATION: 2025 TAXSCAN (CESTAT) 912

The Delhi Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) held that extra charges collected on resold cargo space by a freight forwarder were part of principal-to-principal trading and not taxable as Business Auxiliary Service ( BAS ). The tribunal heard the parties and noted that the assessee submitted that it purchased cargo space on its own behalf from shipping lines and airlines on a principal-to-principal basis and then sold it to customers at a profit, at cost, or at a loss. The assessee argued that it was trading in cargo space and not providing any service for customers or carriers.

CESTAT Abates Service Tax Appeal against Vasan Dental Hospitals since Company is Undergoing Liquidation

The Commissioner of GST and Central Excise vs M/s. Vasan Dental Hospitals Private Limited CITATION: 2025 TAXSCAN (CESTAT) 913

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has abated the Service Tax appeal filed by the Department, noting that the company is under liquidation and no application for continuance has been made by the official liquidator. The Tribunal noted that the National Company Law Tribunal (NCLT) had ordered liquidation of the respondent company. Referring to the Supreme Court’s ruling in Ghanshyam Mishra (2021), it reiterated that once a Resolution Plan is approved, all claims not part of the plan stand extinguished, and no further proceedings can be initiated.

Dept Audit Findings Alone Insufficient to Invoke Extended Period Without Intent to Evade or Wilful Suppression: CESTAT

National Engineering Industries Ltd vs Commissioner of CGST & Central Excise CITATION: 2025 TAXSCAN (CESTAT) 915

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that audit findings alone are not enough to invoke the extended limitation period without intent to evade or wilful suppression. The revenue counsel argued that the appellant wrongly availed credit meant for the Vadodara unit and failed to declare the correct facts under the self-assessment system. It was argued that but for the audit, the irregular availability would not have come to light, and thus extended limitation was rightly invoked.

Relief for MRF: CESTAT Rules Reimbursements of Salaries, Rent and Branch Expenses to Overseas Offices Not Taxable as Services under BAS

M/s. MRF Ltd. vs The Commissioner of Central Excise and Service Tax CITATION: 2025 TAXSCAN (CESTAT) 916

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that reimbursements made by MRF Ltd. to its overseas branch offices could not be treated as taxable services under Business Support Services (BAS), except for consultancy fees which the appellant admitted as taxable. The tribunal also observed that the reliance on Rule 5(1) of the Service Tax Valuation Rules was unsustainable, since the Supreme Court had already struck down the provision as ultra vires.

Misrepresented Two Challans used for Payment of previous period service tax: CESTAT Upholds Penalty u/s 78(1)

Suresh Singh vs Commissioner(Appeals) Central GST Central Excise and Customs CITATION: 2025 TAXSCAN (CESTAT) 917

The New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) upheld the penalty under Section 78(1) of the Finance Act, 1994 as it was evident that the appellant have misrepresented two challans used for payment of previous period service tax. On examining the documents submitted, the Commissioner (Appeals) re-determined the total service tax liability of the appellant for the period 2014–15 as Rs.18,07,429/- and not Rs.37,90,922/-. Further, on examining the challans, it was found that out of eight challans, two challans amounting to Rs.3,51,891/- and Rs.34,857/- bearing numbers 00001 and 00002 dated 3.09.2014 were actually utilised by them for payment of service tax of the year 2013–14 and since the appellant had already paid the tax in excess of the service tax liability for the year 2014–15, short paid service tax amounting to Rs.3,52,468/- was held liable to be recovered along with interest.

Relief for Bentley Motors: CESTAT Quashes ₹20 Lakh Penalty, Rules Exporter Not Liable for Importer’s Undervaluation

M/s Bentley Motors Ltd vs Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 919

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that an overseas exporter cannot be penalized under Section 112(a)(ii) of the Customs Act when the alleged undervaluation arises from the acts of the Indian importer. The tribunal also observed that Bentley had produced supplementary invoices, airway bills, and account adjustment records, showing that the transactions were disclosed and not concealed. The tribunal pointed out that Bentley, as an exporter, had no responsibility for declarations made before Indian Customs, and no evidence showed that the company abetted misdeclaration.

Relief for Godrej: CESTAT Rules Provisional Refunds Given Under Court Orders Cannot Be Treated as Wrong Refunds, No Interest Payable

M/s. Godrej Consumer Products Limited vs Commissioner of C.G.S.T. and Central Excise CITATION: 2025 TAXSCAN (CESTAT) 918

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that provisional refunds granted under binding court orders cannot be treated as erroneous refunds, and no interest can be demanded on them. The tribunal observed that after adjustments, only Rs. 50.96 lakh was excess, and this was already repaid. The tribunal pointed out that no show-cause notice had been issued before demanding interest, which was a violation of natural justice.

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