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 30 August 2025 to September 2, 2025
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 30, 2025 to September 2, 2025.
CESTAT Remands Case, Slams Authority for Blindly Trusting Income Tax Return Over Evidence
MX Systems InternationalPrivate Limited vs Commissioner of GST& Central Excise CITATION : 2025 TAXSCAN (CESTAT) 948
The Mumbai Bench of The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has set aside a service tax demand that was based solely on a discrepancy in an Income Tax Return, criticizing the adjudicating authority for failing to examine concrete evidence.
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The CESTAT bench held that the adjudicating authority’s job was not to blindly trust one statutory filing over another but to actively examine the evidence presented. The tribunal slammed the authority for its failure to verify the details of the goods sold, which constituted ‘trading’ and were excluded from service tax. It noted that simply citing a discrepancy between two returns, without investigating the underlying facts, was insufficient to confirm a demand, especially for invoking the extended period.
Customs uses Australian Weapons Law to Seize Gun-Shaped Lighters in India: CESTAT exposes Blunder, Overturns Seizure
S.F. TradingCompany vs Commissioner of Customs Nhava Sheva-V Commissionerate 2025 TAXSCAN (CESTAT) 949
The Mumbai Bench of The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has set aside the confiscation of a consignment of gun-shaped cigarette lighters, strongly criticizing the customs department for basing its seizure on a law from the Australian state of Queensland.
The tribunal found the entire action legally untenable and ordered the goods to be released.
The bench found that the definition of a "replica" used in the seizure memo and upheld by lower authorities was directly copied from Section 6A of the Weapons Act, 1990 of Queensland, Australia. The tribunal noted that this foreign law has no jurisdiction in India and its application was a severe and reckless error by the customs officials.
CESTAT Rules Old Cenvat Rule 6(5) Still Applicable, Orders Recalculation on Decade-Old Service Tax Credit Dispute
M/s. SHV LPG India Pvt. Ltd vs Commissioner of GST & CentralExcise 2025 TAXSCAN (CESTAT) 950
The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the benefit of Rule 6(5) of the Cenvat CreditRules, 2004, though omitted in 2011, remains applicable for disputes pertaining to periods when it was in force.
The tribunal ordered a fresh adjudication to recalculate credit availed on input services used for both taxable and exempt activities, including trading, setting aside all penalties due to the interpretational nature of the dispute.
After considering both sides, the CESTAT bench acknowledged the settled legal position that credit on inputs used for trading activities must be reversed. However, the tribunal delved into the crucial issue of the applicability of the since-omitted Rule 6(5)
Syntel Wins Key Tax Refund Case as CESTAT Backs SEZ Unit on Input Service Classification
M/s Syntel Solutions (India)Pvt. Ltd vs Commissioner of Customs, Excise & Service Tax 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
Icon Industries vs Commissionerof CGST – Delhi West 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.
Confiscation and Double Duty Demands Quashed: CESTAT Orders Fresh Quantification of Differential Duty on Inflated MRP Sales
M/s.Sharaya Internationalvs Principal Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 953
The New Delhi Principal Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside double duty demands and confiscation of goods imposed, thereby directing the Adjudicating Authority to freshly quantify the differential duty strictly on instances already established of sales at inflated Maximum Retail Prices (MRPs).
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The Tribunal held that, as the appellant admitted that the goods were sold on much higher MRP after changing the MRP label and that the goods were sold through retailers in Kerala, the MRP was more than double in certain cases, there was a clear violation and therefore, the demand of differential duty as well as penal action was justified.
Curtain Wall Glazing Constructed on Site Becomes Part of Immovable Property Once Affixed and Cannot Be Treated as Excisable Goods: CESTAT
Commissioner of CentralExcise vs M/s AGV Alfag Ltd 2025 TAXSCAN (CESTAT) 954
The New Delhi Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal
(CESTAT) ruled that curtain wall glazing constructed on site and permanently affixed
becomes immovable property and is not liable to central excise duty.
The tribunal explained that curtain walls are constructed on site, are too large to be manufactured in a factory, and once affixed, become part of the immovable building, which means no excisable goods are manufactured. The tribunal pointed out that paying sales tax or service tax does not alter this position.
CESTAT Quashes 20-Year-Old Duty Demand, Rules in Favor of Importer in Landmark Textile Classification Case
IMFA Trading Company vsCommissioner of Customs (Import) CITATION : 2025 TAXSCAN (CESTAT) 955
The Mumbai Bench of The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed a customs duty demand, firmly siding with an importer against the revenue department’s attempt to reclassify goods based on a disputed retest conducted without due process.
The bench also referenced the Smart Designer (2019) case, which held that a retest by the Deputy Chief Chemist cannot overrule the original findings of the Textile Committee, especially when the proper procedure of a retest by the same specialized body was not followed.
The tribunal concluded that the entire demand was legally unsustainable. It found that the department failed to discharge its burden of proof for reclassification and that the belated retest, conducted without transparency or proper procedure, carried no weight. The 20-year-old demand was based on a process that lacked credibility and fairness.
Coal Loading and Transport Classified as Goods Transportation, Not Cargo Handling: CESTAT Upholds Commissioner’s Order
Commissioner of Central Goods and Service Tax vs Bhaiya Lal Infrastructure Pvt Ltd 2025 TAXSCAN (CESTAT) 956
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has dismissed the Department’s appeal and upheld the Commissioner (Appeals)’s order holding that coal loading and transport carried out by Bhaiya Lal Infrastructures Pvt. Ltd. for Northern Coalfield Ltd. (NCL) was classifiable as “transport of goods by road” and not “cargo handling services,” thereby affirming that service tax liability rested on the service recipient under reverse charge.
The Tribunal reiterated that mere loading incidental to transport cannot be classified as cargo handling and that the principal service was transportation of goods. Since the assessee was not a goods transport agency and no consignment notes were issued, no tax liability arose.
CESTAT Quashes Extended Service Tax & CENVAT Demand, says No Wilful Suppression Found, SCN Held Time-Barred
New Age Laminators PrivateLimited vs Commissioner of Central Goods And Service Tax & Central Excise&-Alwar CITATION : 2025 TAXSCAN (CESTAT) 957
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside demands of service tax and Central Value Added Tax (CENVAT) credit raised against New Age Laminators Pvt. Ltd, holding that the extended period of limitation could not be invoked in the absence of wilful suppression, and declared the Show Cause Notice (SCN) was time-barred.
The bench relied on the Supreme Court’s rulings, which held that suppression must be construed strictly, and omission without intent cannot justify extended limitation.
The Bench held that there was no deliberate act of suppression as the transactions were reflected in the appellant’s financial records and regularly filed returns, and the demand arose only upon audit scrutiny. Consequently, the SCN was declared barred by limitation.
CESTAT Confirms Penalty on Combine Trading for Under-Valuation and False Invoices in Glass Imports
M/s.Combine Trading Company vs Principal Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 959
The New Delhi Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has confirmed the penalty on Combine Trading Company and its associated individuals for under-valuation and the use of false invoices in the import of automotive glass.
The Tribunal noted that the documents recovered and self-certified under section 138C of the Act, as well as the admitted statements, provided credible evidence of undervaluation.
The Tribunal clarified that statements made to customs officers under section 108 are admissible and binding. The practice of maintaining two sets of invoices constituted clear evidence of fraudulent intent to undervalue imports to evade customs duty.
CESTAT Upholds Assessee’s Right to Cenvat Credit on Commission Paid for Flat Sales, Explanation to Rule 2(l) Held Declaratory
Commissioner of CGST &Central Excise Commissionerate vs M/s. Krish Infrastructure Pvt. Ltd. CITATION : 2025 TAXSCAN (CESTAT) 960
The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has affirmed the order of the Commissioner allowing Cenvat credit, ruling that the assessee was entitled to avail credit of service tax paid on commission agents for sale of flats, as the Explanation to Rule 2(l) of the Cenvat Credit Rules, 2004 is declaratory and retrospectively effective.
The Tribunal noted that the issue was no longer res integra and had been decided in a series of decisions. The tribunal relied on an earlier decision in the case of Essar Steel India Ltd. v. CCE (2016), which held that the Explanation to Rule 2(l), inserted by Notification No. 2/2016-CX (NT), was declaratory in nature and effective retrospectively. It was clarified that sales promotion includes services by way of the sale of dutiable goods on a commission basis.
Relief for SAIL: CESTAT Rules Forfeited Amount on Breach of Contract Not Liable to Service Tax
M/S.STEEL AUTHORITY OFINDIA LIMITED vs COMMISSIONER OF CENTRAL TAX & GST CITATION : 2025 TAXSCAN (CESTAT) 961
The Delhi Bench of Customs,Excise and Service Tax Appeal ( CESTAT ) granted relief to Steel Authority of India Limited (SAIL), ruling that the forfeited amount collected on breach of contract was not liable to service tax
The two member bench comprising Binu Tamta (Judicial Member) and P.V.Subba Rao (Technical Member) found no merit in the impugned order, set it aside, and allowed the appeal.
CENVAT Credit availed on input service which are used for output service cannot be denied: CESTAT
M/s. Enmas Andritz Pvt. Ltdvs Commissioner of GST & Central Excise CITATION : 2025 TAXSCAN (CESTAT) 962
The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that CENVAT Credit availed on input services that are used for output service cannot be denied. The bench allowed the appeal as there is nothing on record to establish that the input services credit availed by the appellant were used for proving the exempted service of ‘trading’.
Regarding the eligibility of CENVAT credit on the input services used by the appellant for rendering the Consulting Engineering Service,the tribunal found that the appellant has undertaken the following activities while rendering the output service.
A single bench of K. Anpazhakan, Member (Technical) found that there is no dispute that the input service on which the credit availed by the appellant were used in connection with the output service, namely, Consulting Engineering Service and held that the CENVAT Credit availed on the input service which are used for output service by the appellant cannot be denied.
Services provided for Imparting Education as per University Curriculum Exempted from Service Tax: CESTAT rules in favour of Sky Lark Educational Welfare Society
M/s Sky Lark EducationalWelfare Society vs Commissioner of Central Goods & Service Tax CITATION : 2025 TAXSCAN (CESTAT) 963
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad bench in a ruling in favour of Sky Lark Educational Welfare Society held that services provided for imparting education as per curriculum of a University are exempted from service tax.
The single member bench of P.K. Choudhary, Member (Judicial) observed that the Appellant had been imparting education to the students of Swami Vivekananda Subharti University, enrolled under the distant learning programme, as per the curriculum provided by the said University and the said University was duly recognized under the laws of the Uttar Pradesh Government/UGC.
The Appellant had been working as an educational institution during the relevant period. Services provided by the Appellant were therefore exempted from service tax.
CESTAT Sets aside Commissioner's order denying Cenvat Credit only because of absence of Nexus with Input services and Output services
Divyasree Holdings PrivateLimited vs The Commissioner of Service CITATION : 2025 TAXSCAN (CESTAT) 964
The Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal( CESTAT) sets aside the commissioner's order denying cenvat credit only on ground of absence of Nexus with Input services and output services.
Since the input services were availed for the construction of the commercial complex which was immovable property, it was held that these services are used in the manufacture of immovable property on which no duty or service tax is paid and hence, the question of availing cenvat credit did not arise.
Punjab Roadways Providing Transport Services to General Public Not a Manpower Recruitment or Supply Agency: CESTAT
Commissioner of Central Excise, Goods & Service Tax vsPunjab Roadways CITATION : 2025 TAXSCAN (CESTAT) 965
The Chandigarh bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Punjab Roadways providing transport services to the general public is not a manpower recruitment or supply agency and dismissed the Revenues’s Appeal.
The assessee-Punjab Roadways was performing statutory function and therefore, they do not fall in the definition of “Manpower Recruitment or Supply Agency’s Service” as defined under Section 65(68) of the Act.
A two member bench held that assessee-Punjab Roadways, being a transport department of the State of Punjab, is performing statutory function to provide transport services to the general public and is not a manpower recruitment or supply agency.
Rule 6 of Central Excise Valuation Rules not invocable when Discount Policy is Generally Offered for all Customers: CESTAT
Hyderabad IndustriesLimited vs Commissioner of Central Tax and Central Excise CITATION : 2025 TAXSCAN (CESTAT) 966
The Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal( CESTAT) has held that Rule 6 of the Central Excise Valuation Rules is not invocable when a discount policy is generally offered for all customers. The tribunal found that the appellant had given cash discounts to the buyers of the goods who had paid advances and the discounts are as per the already disclosed rates which are available for all the buyers who pay the amounts in advance or who pay the sale consideration within the stipulated periods after the delivery of the goods.
It was held that the actual amount paid is less to the extent of cash discount as part of the contract of sale and the same is in accordance with the valuation rules and is eligible for eligible reduction.
CENVAT Credit on Sub-Contractor’s Services Denied as Not Input for Cement Manufacture: CESTAT Upholds Service Tax Demand on Mining Services
M/S PRISM JOHNSON LIMITED vs COMMISSIONER OF CGST & CENTRALEXCISE CITATION : 2025 TAXSCAN (CESTAT) 967
The New Delhi bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in a batch of service tax and excise appeals filed by Prism Johnson Limited and its officers, upheld the demand of service tax for mining services rendered to the leaseholder while denying Central Value Added Tax (CENVAT) credit of service tax paid on sub-contractor’s services, restricting the recovery to the normal limitation period.
The tribunal held that the mining licence remained with Shrawan, and the assessee was only appointed as an operator to carry out mining on his behalf. Thus, the assessee had indeed rendered taxable mining services to Shrawan and suppressed facts by not obtaining service tax registration or filing returns.
The Tribunal sustained the service tax demand with interest and penalties against PJL and upheld penalties on responsible officials under Section 78A of the Finance Act, 1994.
Dry Dates Found of UAE Origin Not Pakistan, Valid Documents Present and No Fraud Proven: CESTAT Sets Aside Customs Demand
S. S. Overseas vs ThePrincipal Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 968
The New Delhi Principal Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside the order of the Principal Commissioner of Customs, which had reclassified dry dates imported by S.S. Overseas under tariff item 9806 00 00 as of Pakistani origin and confirmed a customs duty demand with penalties.
On appeal, the Tribunal noted that the documents submitted by the appellant, particularly the certificate of origin issued by a competent UAE authority, had not been cancelled or questioned by the issuing authority.
The Tribunal also observed that the Rule 6 of the Customs (Administration of Rules of Origin) Rules, 2020 provided a procedure for verifying the genuineness of such certificates, but no such verification was undertaken with the UAE authorities.The Tribunal held that the dry dates were of UAE origin, not Pakistan, and concluded that the customs demand and penalties could not be sustained.
Export Cannot be Penalised for Dept’s Delay in Litigation: CESTAT Orders Interest on Duty Drawback from 2003
M/s Siddhachalam Exports Pvt. Ltd vs The Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 969
The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has allowed the appeal of Siddhachalam Exports Pvt. Ltd., modifying the order of the Commissioner (Appeals) and directing payment of interest on sanctioned duty drawback from 2003 due to departmental delay in finalization.
The bench comprising Justice Dilip Gupta (President), and P.V. Subba Rao (Technical Member) held that the exporter cannot be penalized for the prolonged departmental litigation, noted that the Rule 13 of the Drawback Rules clearly provides that the shipping bills shall be treated as a claim for drawback filed on a date on which the proper officer of customs makes an order permitting clearance.
The Tribunal noted that Section 75A of the Customs Act mandates interest if the drawback is not paid within one month from the date of claim. The Tribunal thus directed that interest up to the date of payment of drawback shall be paid to the appellant within a period of one month from the order date.
Hotel Property Lease Exempt from ‘Renting of Immovable Property’: CESTAT Sets Aside Service Tax of ₹9.63L
M/s. Valvan Village Resorts vs Commissioner of Central Excise& Service Tax CITATION : 2025 TAXSCAN (CESTAT) 970
The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) allowed the appeal of Valvan Village Resorts, quashing the service tax demand of ₹9,63,562 along with interest and penalty, that had been confirmed under “Renting of Immovable Property Service.”
Referring to Section 65(105)(zzzz) of the Finance Act, 1994, the Bench observed that the definition of “Renting of Immovable Property Service” includes buildings rented for business or commerce but explicitly excludes “buildings used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities.”
The Tribunal also noted that while the service might have been considered under “hotel accommodation service” as defined in Section 65(105)(zzzzw) of the Finance Act, 1994, that provision only applied where accommodation was provided for a continuous period of less than three months. Since the conducting agreement contained no such stipulation and no demand was raised under that category, the classification was irrelevant to the case.
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