CESTAT Weekly Round-up

Amprolium HCL Classifiable Under Chapter 29 as Pure Chemical, Not under Animal Feed Premixes: CESTAT Upholds Demand

CITATION : 2025 TAXSCAN (CESTAT) 923 The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that Amprolium HCL is a pure chemical classifiable under Chapter 29 of the Customs Tariff and not under animal feed premixes. The tribunal upheld the demand raised by the department. The revenue counsel countered that the chemical imported was Amprolium HCL in its pure form and not a mixture or formulation intended as a premix. They argued that the test results and import documents clearly showed that the item was a pure chemical and thus appropriately classifiable under Chapter 29 of the Customs Tariff.

DGH Essentiality Certificate for Petroleum Operations Required Only for Importers, Not Domestic Manufacturers: CESTAT

CITATION : 2025 TAXSCAN (CESTAT) 924 The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the requirement of a Directorate General of Hydrocarbons (DGH) Essentiality Certificate applies only to importers and not to domestic manufacturers supplying goods under international competitive bidding. The appellant’s counsel argued that Condition No. 41 of Notification No. 12/2012-CE required only that goods, if imported, should be exempt from customs duty and additional customs duty. It did not impose any obligation on domestic manufacturers to obtain a DGH certificate.

Liquidated Damages Not Taxable as Declared Service: CESTAT sets aside Service Tax Demand, Extended Limitation Unsustainable

CITATION : 2025 TAXSCAN (CESTAT) 925 The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a service tax demand of ₹2,10,11,500, holding that liquidated damages recovered for delayed supply and short payments under power purchase agreements were not taxable as a “declared service” under section 66E(e) of the Finance Act, 1994, and that the invocation of the extended period of limitation was not sustainable. The Tribunal agreed with the assessee and observed that liquidated damages recovered under contractual clauses are compensatory in nature and do not amount to consideration for tolerating an act. The Bench further held that mere breach of contract and recovery of damages cannot be treated as taxable service.

CESTAT sets aside Service Tax Demand as Invocation of Extended Limitation under Section 73(1) Not Sustainable

CITATION : 2025 TAXSCAN (CESTAT) 926

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the appeal filed by Oswal Cargo Movers and set aside the demand of service tax, interest, and penalty, holding that the invocation of the extended period of limitation under section 73(1) of the Finance Act, 1994, was not sustainable as the necessary ingredients such as fraud, collusion, suppression of facts, or intent to evade payment of tax were absent. The bench comprising Justice Dilip Gupta (President) and Hemambika R Priya (Technical Member) noted that the mere failure to pay tax cannot justify the invocation of the extended limitation period. Since the normal period had already expired, the SCN issued by invoking the extended period under section 73(1) was held to be unsustainable.

CESTAT Rules Leasing of ISO Tank Containers from Overseas Suppliers as Deemed Sale, Not Taxable Service

CITATION : 2025 TAXSCAN (CESTAT) 927 The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the leasing of ISO tank containers from overseas suppliers amounted to a transfer of the right to use goods, which is treated as a deemed sale, and not a taxable service. The tribunal pointed out that since the appellant had effective possession and control, the leasing of ISO tanks could not be treated as a service. It ruled that the transaction was a deemed sale and thus not liable to service tax under “Supply of Tangible Goods Service.”

Service Tax Cannot Be Levied on TDS Paid to Govt on Behalf of Foreign Service Provider: CESTAT

CITATION : 2025 TAXSCAN (CESTAT) 928 The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that service tax is not payable on the TDS amount deposited with the Government on behalf of a foreign service provider. The tribunal pointed out that service tax is chargeable only on the amount billed by the service provider, and the TDS deposited with the Government does not form part of this value. The tribunal explained that this position had already been settled in earlier rulings in the appellant’s own cases as well as in similar matters involving other assessees.

Chlorine Supplied Free by Service Recipients not Part of Gross Amount Charged for Service Tax Calculation: CESTAT

CITATION : 2025 TAXSCAN (CESTAT) 929 The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that chlorine supplied free of cost by service recipients cannot be included in the gross amount charged under Section 67 of the Finance Act, 1994, for calculating service tax liability. The counsel explained that service tax is chargeable only on the gross amount actually billed or charged by the service provider. Since the appellant had not charged its clients for chlorine, the value of chlorine cannot be included in the gross amount charged.

Maintenance of Streetlights under Contracts Issued after 01.03.2015 Not Exempt from Service Tax: CESTAT Strictly Interprets Exemption Notifications

CITATION : 2025 TAXSCAN (CESTAT) 933 The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that maintenance of streetlights under contracts issued after 01.03.2015 is not exempt from service tax, holding that exemption notifications must be strictly interpreted. They further argued that the show cause notice failed to properly classify the services, that the demand was time-barred, and that penalties under sections 77 and 78 were unsustainable. The counsel also submitted that the appellant should be entitled to cum-tax benefit and the threshold exemption limit.

Arranging Cane-Harvesting Workers for Farmers Without Control is Mere Facilitation, Not Taxable as Manpower Supply Service: CESTAT

CITATION : 2025 TAXSCAN (CESTAT) 932 The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that arranging cane-harvesting workers for farmers without control or an employment relationship is only facilitation and not taxable as manpower supply service. They further argued that there was no master-servant relationship between the mill and the workers. The counsel relied on earlier CESTAT decisions such as Arignar Anna Sugar Mills v. CCE, Kallakuruchi Co-operative Sugar Mills v. CCE, and Nadippisai Pulavar K.R. Ramasamy Co-op Sugar Mill v. CCE, which held that similar arrangements did not amount to manpower supply.

Failure to Verify Importer’s Credentials and Mis-declaration of Goods: CESTAT Upholds Revocation of Customs Broker License

CITATION : 2025 TAXSCAN (CESTAT) 931 The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that a customs broker’s license can be revoked when the broker fails to verify the importer’s credentials and mis-declared goods are discovered. The revenue counsel argued that the appellant failed to conduct due diligence, relied entirely on documents from a freight forwarder, and never contacted the importer directly. They further argued that the broker filed the bill of entry without proper authorization and did not report discrepancies to Customs.

CESTAT Rules Assessable Value Must Be CIF with Air Freight Limited to 20% of FOB, Not Ex-Works

CITATION : 2025 TAXSCAN (CESTAT) 930 The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that assessable value must be based on CIF, with air freight limited to 20% of the FOB value, and not on ex-works prices. The tribunal observed that in this case ex-works prices were treated as FOB, which was incorrect and led to undervaluation. The tribunal also observed that all the Bills of Entry were assessed by officers of customs, who had access to the invoices and airway bills showing the true basis of the transaction. There was no evidence of collusion or concealment.

Charges Deducted by Foreign Banks on Export Remittances Not Liable to Service Tax: CESTAT

Annur Cotton Mills vs Commissioner of GST and Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 934 The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that charges deducted by foreign banks on export remittances are not liable to service tax as the exporter is not the recipient of the service. The revenue counsel argued that foreign banks provided taxable “Banking and Financial Services” and that the appellant was the recipient of those services in India. He contended that service tax was payable under Reverse Charge and supported the findings of the lower authorities.

No CBLR Violation Proven under Regulations 10(b),10(d) & 10(n): CESTAT Sets Aside Revocation of Customs Broker License

CITATION : 2025 TAXSCAN (CESTAT) 935 The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside the revocation of the Customs Broker (CB) license of Jaiswal Import Cargo Services Ltd., and held that no violation of Regulations 10(b), 10(d), and 10(n) of the Customs Brokers Licensing Regulations, 2018 (CBLR, 2018) was established, and that the revocation order was unsustainable. On Regulation 10(n), the tribunal held that all KYC documents submitted were valid, and there was no requirement for physical verification under CBLR, 2018. Relying on precedents, the Bench reiterated that a CB is not an inspector of the importer’s business and cannot be held liable for fraud committed after clearance.

CESTAT confirms Excise Exemption for Henna Paste Containing Oils

CITATION : 2025 TAXSCAN (CESTAT) 936 The New Delhi bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that henna paste mixed with oil continues to qualify for excise duty exemption, as the addition of oil is for better application and retention, does not alter its essential character or remove it from the scope of the exemption notification. The Tribunal, after considering the rival submissions, noted that the chemical examiner’s report had confirmed the goods to be henna paste, and that the addition of oil did not change its essential character.

Exporter’s Address Found Fake: CESTAT Quashes Penalty on Customs Broker Citing Due Diligence and Bona Fide Belie

CITATION : 2025 TAXSCAN (CESTAT) 937 The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that penalty cannot be imposed on a Customs Broker when they have verified all required documents, even if the exporter’s address later turns out to be fake. The adjudicating authority imposed a penalty of Rs. 3,00,000 on the Customs Broker under Sections 114 and 114AA of the Customs Act, 1962, holding that the broker had failed to properly verify the exporter’s identity and functioning as required under Regulation 10 of the Customs Brokers Licensing Regulations, 2018. The Commissioner (Appeals) upheld the penalty. Aggrieved, the appellant approached the CESTAT.

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Relief to Polycab Wires: CESTAT Quashes Demand of service tax on Ocean Freight

CITATION : 2025 TAXSCAN (CESTAT) 938 The Customs, Excise & Service Tax Appellate Tribunal(CESTAT) Ahmedabad bench in a ruling in favour of Polycab Wires Pvt Ltd, quashed the demand of service tax on ocean freight. During arguments, Advocate highlighted various case laws on the subject. He also pointed out that the High Court of Gujarat in their own case vide order dated 30.01.2020 had allowed their appeal on the identical matter. AR fairly agrees that the issue is no more res-integra and the levy of the service tax on ocean freight has been set aside by various decisions of the Tribunal and High Courts.

Customs Dept Cannot Question DGFT’s Export Obligation Discharge: CESTAT Sets aside Demand & Penalties on EPCG Licence

CITATION : 2025 TAXSCAN (CESTAT) 939 The New Delhi bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) ruled that Customs authorities cannot question the Directorate General of Foreign Trade (DGFT)'s discharge of export obligation, and the demands as well as penalties under the Export Promotion Capital Goods (EPCG) scheme were set aside for Super Cassettes Industries Ltd. The Tribunal noted that DGFT alone which can examine whether the appellant had discharged its export obligation, and so long as the time period for discharging the obligation under the EPCG licence was extended by DGFT and the appellant fulfilled its obligation under the Licence before expiry of the extended period, it cannot be urged by customs authorities that the appellant had not fulfilled its export obligation.

Refurbishing of Cranes Falls Under MMR Services, Not Motor Vehicles: CESTAT Quashes Demand on Limitation

CITATION : 2025 TAXSCAN (CESTAT) 940 The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that refurbishing of cranes falls within the scope of Management, Maintenance or Repair (MMR) services and not under motor vehicles but the demand for service tax was quashed as it was barred by limitation. On this basis, the tribunal held that the activity fell within MMR services and not under motor vehicles. It also observed that the show cause notice issued in 2013 covered the period 2007 to 2012 and there was no evidence of wilful suppression or intent to evade payment of service tax.

Absence of Contractual Obligation Shows Branch Transfer, Not Inter-State Sale: CESTAT Remands Matter

CITATION : 2025 TAXSCAN (CESTAT) 941 The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has remanded the matter involving M/s CMS Computers Ltd. for verification, after observing that the absence of a contractual obligation indicated that the movement of goods from the Noida unit to the Mumbai unit was a branch transfer and not an inter-State sale, thus entitling the assessee to exemption under Notification No. 6/2002-CE dated 1.3.2002. The Tribunal observed that the main issue was whether the movement of goods from Noida to Mumbai was occasioned by a contract of sale. It noted that no document had been brought on record by the Department to establish such a contractual obligation.

Maintenance Charges Collected from Tenants Not Liable to Service Tax under “Management, Maintenance or Repair Service”: CESTAT

CITATION : 2025 TAXSCAN (CESTAT) 942 The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that maintenance charges collected from tenants by the owner of a commercial mall are not liable to service tax under the category of “management, maintenance or repair service.” The tribunal explained that the lease deed clearly showed the tenants were required to bear only the actual proportionate cost of maintenance and that the appellant had not added any profit element. The tribunal pointed out that the amounts collected were like reimbursements and not consideration for taxable service.

Customs Duty on Imports Mistakenly Paid Twice on Same Bills of Entry: CESTAT Orders Refund of Second Payment

CITATION : 2025 TAXSCAN (CESTAT) 943 The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Mumbai has allowed a refund claim after holding that the company had paid customs duty twice on the same imports, which could not be legally retained by the authorities. The Tribunal examined the Bills of Entry, challans, ICEGATE references confirming that the burden of duty was borne entirely by Yazaki India and had not been passed on. It held that once customs duty was lawfully discharged on the first occasion, the second deposit had no legal basis. Accordingly the bench directed to grant the refund of the second deposit.

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Denial of Refund by Invoking Rule 9(1)(b) of Cenvat Credit Rules Without Fraud or Suppression is Invalid: CESTAT

CITATION : 2025 TAXSCAN (CESTAT) 944 The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the denial of a refund by invoking Rule 9(1)(b) of the Cenvat Credit Rules, 2004, without any allegation of fraud, misstatement, or suppression is invalid. The two-member bench comprising Dr. Ajaya Krishna Vishvesha (Judicial Member) and Ramesh Nair (Judicial Member) observed that there was no allegation or adjudication of fraud, suppression, or misstatement against the appellant, and the deficiency letter issued by DGFT was only an opportunity to regularize excess imports, not a penal action.

Relief for ITC Ltd: CESTAT Rules Quicklime with 92% Purity Classifiable under ‘Quicklime’, Not as ‘Other Inorganic Chemicals’

CITATION : 2025 TAXSCAN (CESTAT) 945 The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that quicklime with 92% purity is classifiable under “Quicklime” (Customs Tariff Item 2522 1000) and not as “Other Inorganic Chemicals” under 2825 9090. The tribunal pointed out that 2522 is a specific entry for quicklime, whereas 2825 9090 is only a residuary entry and classification rules require preferring the specific heading. The tribunal explained that the purity in this case was only 92%, so the imports could not be considered highly purified calcium oxide to fall under Chapter 28.

Syntel Wins Key Tax Refund Case as CESTAT Backs SEZ Unit on Input Service Classification

CITATION : 2025 TAXSCAN (CESTAT) 951 The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai Bench has allowed an appeal filed by Syntel Solutions (India) Pvt. Ltd., directing the tax authorities to refund an amount of ₹4,20,215 along with applicable interest. The order sets aside the earlier decision of the Commissioner (Appeals) that had denied the refund claim related to input services used by the company’s Special Economic Zone (SEZ) unit in Pune. The CESTAT bench, after hearing both sides, found merit in Syntel’s arguments. The Tribunal took note of a crucial Instruction No. 83 issued by the Department of Commerce, which provides a uniform default list of services eligible for SEZ units. This list includes ‘Business Support Service’ as an approved service.

Refund cannot be adjusted against Disputed Penalty when 25% Reduced Penalty Paid within Time: CESTAT Orders Refund with Interest

CITATION : 2025 TAXSCAN (CESTAT) 952 The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside the adjustment of refund against a disputed penalty, ruling that revenue cannot deny refund on the ground of penalty liability when the appellant had availed the statutory option of reduced penalty within the prescribed time. The single bench comprising Ashok Jindal (Judicial Member) held that the appellant was entitled to a refund of the adjusted amount and also directed that interest shall be payable from three months after the filing of the refund claim, i.e., 07.08.2018, till its realization.

CESTAT Dismisses Transport Finance Company's Plea, Confirms Taxability of Financial Collection Services

CITATION : 2025 TAXSCAN (CESTAT) 947 The Mumbai Bench of The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) dismissed an appeal filed by a non-banking financial company, upholding a substantial service tax demand on fees collected for financial services. The tribunal confirmed that the company’s activities of collecting loan instalments for banks constitute a taxable service under the category of "banking and other financial services." The bench found that the collection service was an independent activity for which Shriram Finance was entitled to retain a surplus from the collected amounts, which constituted consideration. It held that such services, when provided by a financial entity, correctly fall under "banking and other financial services." The tribunal distinguished the Edelweiss case, finding it inapplicable to the present facts.

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