CESTAT Weekly Round-up

This weekly round-up summarizes the key stories related to the Customs Excise and Service Tax Appellate Tribunal (CESTAT) reported at Taxscan from September 2, 2025 to September 20, 2025.

No Confiscation Without Authority: CESTAT Rules DRI and Customs Cannot Invalidate BRCs or DEPB Scrips Without DGFT or RBI Action

PANKAJ CHORDIA vs THE COMMISSIONER OF CUSTOMS, AIR CARGO COMPLEX CITATION : 2025 TAXSCAN (CESTAT) 971

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), comprising Justice Dilip Gupta, President and P.V. Subba Rao, Technical Member, held that the Directorate of Revenue Intelligence (DRI) has no statutory authority under the Customs Act, 1962 or any other law to declare Duty Entitlement Passbook (DEPB) scrips issued by the Directorate General of Foreign Trade (DGFT) as null and void. The Tribunal emphasized that the power to cancel such scrips vests exclusively with the DGFT under the Foreign Trade (Development and Regulation) Act, 1992, and further ruled that demand of duty under Section 125(2) of the Customs Act was unsustainable in the absence of confiscation. Allowing a batch of 21 appeals filed by importers, bank officers, and a chartered accountant, the Bench set aside the Commissioner’s order confirming duty demands and penalties, granting the appellants full consequential relief.

Traffic Police Not a “Person” Under Service Tax Law Before 2012: CESTAT Rules No Service Tax on Crane Hire

SURINDER AGGARWAL vs COMMISSIONER (APPEALS-I) CITATION : 2025 TAXSCAN (CESTAT) 972

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), comprising Binu Tamta, Judicial Member and P.V. Subba Rao, Technical Member , held that service tax could not be levied on the hiring of cranes supplied to the Delhi Traffic Police during 2009-2012, since the Traffic Police was not a “person” under the Finance Act, 1994 for the relevant period. The Tribunal noted that the definition of “person,” which expressly included Government and local authorities, was introduced only from 1 July 2012 and could not apply retrospectively. Relying on precedents such as Deputy Commissioner of Police, Jodhpur v. CCE Jaipur-II and DIG of Police v. CCE Bhopal, as well as the Constitution Bench ruling in State of West Bengal v. Union of India, the Tribunal set aside the Commissioner (Appeals)’s order and allowed the appeal filed by the crane supplier, Surinder Aggarwal.

Rice Qualifies as “Agricultural Produce” under Notification, Service Tax on Commission Agents Not Payable: CESTAT

M/s Bharat Industrial Enterprises Ltd. vs Commissioner of Central Excise and Service Tax CITATION : 2025 TAXSCAN (CESTAT) 973

The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), comprising S.S. Garg, Judicial Member and P. Anjani Kumar, Technical Member, held that rice qualifies as “agricultural produce” under Notification No. 13/2003-ST, thereby exempting commission agent services for its sale or export from service tax. Bharat Industrial Enterprises Ltd., engaged in cultivation of paddy and sale/export of rice, had paid service tax under reverse charge on commission to agents during 2007–08 and later sought a refund. While the Commissioner of Central Excise, Panchkula, rejected the refund on the ground that rice was not agricultural produce, the Tribunal relied on CBIC Circular No. 143/12/2011-ST dated 26 May 2011 and precedents such as Kohinoor Foods Ltd. v. CCE and Bola Raghavendra Kamath & Sons v. CCE to conclude that rice, being a cereal, falls squarely within the exemption. Accordingly, the Tribunal set aside the Commissioner’s order and restored the refund claim with consequential relief.

Preloaded Software Must Be Included in Customs Valuation of Imported Navigation Devices: CESTAT

M/s. Lakshmi Access Communications Systems Pvt. Ltd. vs Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 974

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), comprising Dr. D.M. Misra, Judicial Member and Pullela Nageswara Rao, Technical Member, ruled that the value of preloaded software must be included in the customs valuation of imported GPS navigation devices. In the case of Lakshmi Access Communications Systems Pvt. Ltd., which had imported devices and paper licences separately to claim exemption under Notification No. 21/2002-Cus, the Tribunal found that the software was already etched and preloaded into the devices with licence keys imprinted on the hardware, making it an integral part of the goods. Relying on the Supreme Court’s ruling in Anjaleem Enterprises and the Larger Bench decision in Bhagyanagar Metals, the Tribunal upheld the Commissioner’s order enhancing the assessable value, confirming the demand of Rs. 62,89,752 with interest, confiscation, and penalties. While the company’s appeal was dismissed, the directors’ penalties were reduced from Rs. 6 lakh each to Rs. 1 lakh, considering the earlier penalty excessive.

Liability to Pay Service Tax under Reverse Charge for Foreign Services: CESTAT Rules No Liability Post 1st July 2012

M/s.Frisco Foods Pvt. Ltd vs Commissioner of Central Goods CITATION : 2025 TAXSCAN (CESTAT) 975

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), comprising Binu Tamta, Judicial Member and P.V. Subba Rao, Technical Member, held that service tax was not payable under the Reverse Charge Mechanism on foreign services received after 1 July 2012. In the case of Frisco Foods Pvt. Ltd., which had appointed overseas commission agents and made payments in foreign exchange, the Tribunal noted that the charging provisions Section 66A read with Section 65(105)(zzb) of the Finance Act, 1994 stood omitted from 1 July 2012 and could not be invoked thereafter. Reiterating its earlier ruling in the appellant’s own case for prior years, and applying the principle of strict interpretation of taxing statutes as laid down in Commissioner of Customs (Import) v. Dilip Kumar & Co., the Tribunal set aside the demand, interest, and penalties. It further held that the extended period of limitation could not be applied, citing Nizam Sugar Factory v. CCE, Andhra Pradesh. Accordingly, the impugned orders were quashed, and the appeals were allowed.

Service Tax Not applicable on Public Utility Works including Laying of Pipelines, Repairs of Sainik Schools: CESTAT quashes Demand

M/s Chaitanya Constructions vs Commissioner of Central Excise & Service Tax CITATION : 2025 TAXSCAN (CESTAT) 976

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), comprising A.K. Jyotishi, Technical Member and Angad Prasad, Judicial Member, set aside a demand of service tax on Chaitanya Constructions by holding that public utility works such as laying and maintenance of pipelines, construction of water distribution systems, repairs of Sainik Schools, and infrastructure works for SEZ developers are not taxable under Works Contract Service (WCS). The Tribunal observed that projects undertaken for municipal authorities, government departments, and SEZs are not works “primarily for commerce or industry,” and relied on precedents including CCE v. Indian Hume Pipes Co. Ltd. and Angraj Civil Projects Pvt. Ltd. v. CCE & ST. It further noted that works for SEZ developers are exempt under Section 26(1)(e) of the SEZ Act, 2005, and services to MES for Sainik Schools are non-taxable. Accordingly, the impugned demand, interest, and penalties under Sections 76 and 77 of the Finance Act, 1994, were quashed, and the appeal was allowed in entirety.

Clear Float Glass with Tin Absorbent Layer Classifiable as Non-Wired Glass with Absorbent/Reflecting Layer: CESTAT

M/s. Float Glass Centre vs Commissioner of customs CITATION : 2025 TAXSCAN (CESTAT) 977

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), comprising M. Ajit Kumar, Technical Member and Ajayan T.V., Judicial Member, held that clear float glass with a tin absorbent layer is classifiable under tariff heading 7005 1090 as non-wired glass with an absorbent or reflecting layer, making it eligible for exemption benefits under Notification No. 46/2011. In the case of Float Glass Centre, which imported glass from Malaysia, the Tribunal rejected Customs’ reliance on the tariff code mentioned in the country-of-origin certificate and emphasized that classification must be determined under Indian tariff law, supported by test reports confirming the presence of a tin absorbent layer. Citing Article 265 of the Constitution, the Bench ruled that excess duty cannot be retained merely because the importer filed bills of entry under protest and clarified that self-assessment is also appealable. Setting aside the Commissioner (Appeals)’s order, the Tribunal allowed the appeals and restored the exemption benefit to the importer.

Cenvat Credit Admissible on Service Tax Paid on "Manpower Supply Service”, Qualify as Input Service: CESTAT

Shri Vijay Kumar Sharma vs Commissioner of C.E.-Kutch CITATION : 2025 TAXSCAN (CESTAT) 978

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), comprising Dr. Ajaya Krishna Vishvesha, Judicial Member, held that Cenvat credit is admissible on service tax paid towards manpower supply, recruitment agency, and housekeeping services, as these qualify as “input services” under Rule 2(l) of the Cenvat Credit Rules, 2004. In the case of Solvay Specialities India Pvt. Ltd., where credit was disallowed for the period 2014-2017, the Tribunal relied on its earlier ruling in the appellant’s own case (2018) and precedents such as CCE v. Carboline (India) Pvt. Ltd., reiterating that manpower services, being integral to overall factory operations and cost of manufacture, are eligible for credit. Setting aside the orders of the lower authorities, the Tribunal allowed the appeals with consequential relief.

Cenvat Credit Admissible on Service Tax Paid on "Manpower Supply Service”, Qualify as Input Service: CESTAT

Solvay Specialities India Pvt Limited vs Commissioner of Central Excise & ST CITATION : 2025 TAXSCAN (CESTAT) 979

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), comprising Dr. Ajaya Krishna Vishvesha, Judicial Member, held that Cenvat credit is admissible on service tax paid towards manpower supply, recruitment agency, and housekeeping services, treating them as “input services” under Rule 2(l) of the Cenvat Credit Rules, 2004. The Tribunal set aside the orders of the adjudicating authority and the Commissioner (Appeals), which had denied credit to Solvay Specialities India Pvt. Ltd. for the period 2014-2017, and allowed the appeals with consequential relief.

Service Tax Refund Re-computation Request Treated as Fresh Claim without Complying Appellate Order: CESTAT sets aside New Order

M/s Deutsche CIB Centre Private Limited vs Commissioner of CGST & Central Excise, Mumbai East CITATION : 2025 TAXSCAN (CESTAT) 980

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), comprising Dr. Suvendu Kumar Pati, Judicial Member, held that refund proceedings initiated by the adjudicating authority without giving effect to binding directions of the Commissioner (Appeals) are invalid in law. In the case of Deutsche CIB Centre Pvt. Ltd., the Tribunal observed that treating a compliance letter as a fresh refund claim and rejecting it as time-barred violated the principles under the CENVAT Credit Rules, 2004. Declaring such proceedings non est, the Tribunal set aside the impugned order and directed the Assistant Commissioner of CGST & Central Tax, Mumbai, to implement the 2017 appellate order, recompute the admissible refund, and release the amount with applicable interest.

CHA allows Unauthorized Person to use License: CESTAT upholds Penalty, Declines to Cancel License and Forfeit Security

Commissioner of Customs vs M/s. Thirumala Logistics CITATION : 2025 TAXSCAN (CESTAT) 981

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), comprising Ajayan T.V., Judicial Member and Vasa Seshagiri Rao, Technical Member, upheld the imposition of a ₹50,000 penalty on Thirumala Logistics under the Customs Brokers Licensing Regulations, 2013 (CBLR) for allowing an unauthorized person to use its license, but declined to revoke the license or forfeit the security deposit. The case arose after the DRI intercepted a container concealing over 7.2 metric tonnes of red sanders, and the investigation revealed that K. Murugan had permitted his relative, who lacked a valid Customs Broker license, to transact business using the firm’s license. The Tribunal noted that while Regulations 10 and 11(b) were contravened, the circumstances did not justify stricter action, and there was no evidence linking the broker directly to the smuggling attempt. Citing Regulation 18 of CBLR and precedents like Skyline Shipping & Logistics v. Commissioner of Customs, the Bench sustained the fine and directed compliance with CBLR in the future.

Customs Authorities cannot Levy Redemption Fine Beyond Market Value of Seized Goods u/s 125 less Duty Payable: CESTAT

M/s. S. Kantilal & Company vs Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 982

The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising Dr. Suvendu Kumar Pati, Judicial Member, held that the redemption fine under Section 125 of the Customs Act, 1962, cannot exceed the market value of confiscated goods less the duty chargeable, and that simultaneous penalties on both a firm and one of its partners are impermissible. In the case of M/s S. Kantilal & Company, which imported “rough diamonds” later found to be low-value natural topaz, the Tribunal restricted the redemption fine and penalties to ₹8,291, corresponding to the actual market value, overruling the adjudicating authority’s imposition of ₹12.5 lakh fine and separate penalties on the partner under Section 112(a). The Bench emphasized statutory limits, proportionality in customs adjudication, and noted there was no justification to penalize an individual partner separately, thereby absolving Sanjay K. Shah of liability while confining the penalty to the firm.

Setback for Pondicherry Engineering College: CESTAT Upholds Service Tax on Technical Testing & Analysis Services, Penalty Waived

Pondicherry Engineering College vs Commissioner of GST & Central Excise CITATION : 2025 TAXSCAN (CESTAT) 983

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), comprising Ajayan T.V., Judicial Member and M. Ajit Kumar, Technical Member, held that Pondicherry Engineering College is liable to pay service tax on “Technical Testing and Analysis Services” along with interest, but set aside the penalty. The case arose after the college provided technical testing services to Numeric Power Systems, Puducherry, and a show cause notice demanded Rs. 3,42,367 along with equal penalty. The Tribunal, relying on its earlier decision dated 25.01.2017, observed that while tax liability was rightly upheld, the penalty was waived because the institution acted bona fide without deliberate intention to evade tax. Consequently, the service tax and interest were confirmed, but the penalty was quashed, and the appeal was partly allowed.

Exemption Notifications Override CBEC Circulars: CESTAT Rules Jewellery Exports Need Not Be Made Only from Imported Gold

PH Jewels vs Principal Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 984

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), comprising P.V. Subba Rao, Technical Member and Angad Prasad, Judicial Member, held that exemption notifications issued under Section 25 of the Customs Act, 1962, override departmental circulars, and exporters are not mandated to use only imported gold for fulfilling export obligations. In the case of PH Jewels, which was alleged by DRI to have diverted 25 kg of duty-free imported gold into the domestic market, the Tribunal observed that Notification No. 57/2000-Cus did not impose any such condition, and the reliance on CBEC Circular No. 27/2016-Cus was impermissible. The Bench set aside the duty, interest, and penalties imposed on the appellant and directed that any amounts pre-deposited or paid be refunded under Section 27 of the Customs Act, affirming that circulars cannot modify the scope of statutory notifications.

Claiming Customs Exemption or Classification on Bill of Entry Not Mis-Declaration: CESTAT rules No Suppression when Identical Consignments Cleared Earlier

M/s. Gravity Ventures Pvt. Ltd vs Commissioner of customs CITATION : 2025 TAXSCAN (CESTAT) 985

The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising Ajayan T.V., Judicial Member and M. Ajit Kumar, Technical Member, held that merely claiming a particular classification or exemption in a bill of entry does not amount to mis-declaration or suppression of facts under the Customs Act. In the case of Gravity Ventures Pvt. Ltd., which imported non-woven interlining materials and claimed exemption under Notification No. 46/2011-Cus, the Tribunal observed that identical past consignments had been cleared under the same classification and exemption. Relying on previous CESTAT decisions and Supreme Court precedent in Northern Plastic Ltd. vs. Collector of Customs & Central Excise, the Bench concluded that reassessment or reliance on a test report alone could not sustain a charge of willful mis-declaration. Accordingly, the Tribunal set aside the impugned order, quashing the demands of duty, redemption fine, and penalties, and allowed the appeal.

Consultancy Services Delivered Outside India Do Not Attract Service Tax Liability: CESTAT says Correlation of FIRCs and Invoices Procedural, Sets aside Order

Shri Shailesh Dayal vs Commissioner, Central GST, Agra CITATION : 2025 TAXSCAN (CESTAT) 986

The Allahabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising P.K. Choudhary, Judicial Member, held that consultancy and commission services provided to clients located outside India qualify as “export of services” and are not liable to service tax under the Finance Act, 1994. In the case of M/s Refractories & Engg., represented by Shailesh Dayal, the Tribunal set aside the impugned order of the Commissioner (Appeals) and allowed the appeal, noting that the appellant had provided services to a foreign client, and consideration was received in convertible foreign exchange, satisfying the conditions under Rule 6A of the Service Tax Rules, 1994. The Tribunal also clarified that minor procedural lapses, such as FIRCs not being strictly correlated with invoices, could not override the substantive right to treat the receipts as exports. Accordingly, the service tax demand, interest, and penalties imposed by the lower authorities were quashed.

Exporter’s Declaration in Shipping Bills Not False Merely Due to DRI’s Alternate Classification View: CESTAT sets aside Penalty u/s 114AA

COMMISSIONER, CUSTOMS vs M/S PELICAN QUARTZ STONE CITATION : 2025 TAXSCAN (CESTAT) 987

The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising Justice Dilip Gupta, Judicial Member and P.V. Subba Rao, Technical Member, held that an exporter’s declaration in Shipping Bills cannot be deemed false or incorrect merely because authorities like the Directorate of Revenue Intelligence (DRI) take a different view on classification. In the case of Pelican Quartz Stone, the Tribunal ruled that re-assessment post-export is without authority of law, and penalties under Sections 114 and 114AA and confiscation under Section 113(i) of the Customs Act, 1962 cannot be imposed when the exporter acted in good faith and there was no fraud or suppression of facts. The Tribunal further observed that MEIS benefits cannot be denied absent evidence of wrongdoing and allowed the assessee’s appeal while dismissing the Revenue’s appeal.

Service Tax Demand Raised Solely on Income Declared in Income Tax Survey is Not Sustainable: CESTAT

Agrawal Builders and Colonizers VS Commissioner of Central Goods, Service Tax CITATION : 2025 TAXSCAN (CESTAT) 988

The Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising Binu Tamta, Judicial Member and Hemmabika R. Priya, Technical Member , held that service tax demands cannot be sustained solely based on income declared by an assessee during an Income Tax survey without independent corroborating evidence linking such income to taxable services under the Finance Act, 1994. In the case of Agrawal Builders and Colonizers, the Tribunal observed that the Revenue relied only on the firm’s disclosure of ₹1.25 crore to the Income Tax Department, without identifying any specific service or service recipient. Referring to precedents including Shree Kankeshwari Enterprise v. CCE, Goyal & Co. Construction Pvt. Ltd. v. CCE, and K.T.M.S. Mohd. & Others v. Union of India (Supreme Court), the bench emphasized that tax liability under one statute cannot be mechanically imposed based on disclosures under another law. Consequently, the Tribunal set aside the impugned order and allowed the appeal.

Customs Dept. Cannot Deny Import Duty Exemption Made under Valid DFRC/DFIA Licences but Later Cancelled by DGFT: CESTAT

M/s. M.R. & Co. vs Commissioner of customs CITATION : 2025 TAXSCAN (CESTAT) 989

The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising M. Ajit Kumar, Technical Member and P. Dinesha, Judicial Member, held that Customs authorities cannot deny duty exemption on imports made under valid DFRC/DFIA licences that were later cancelled by the DGFT. In the case of a raw silk importer, the Tribunal observed that the licences were valid at the time of import (2006-07) and cancellation by DGFT in 2010 could not retrospectively affect the imports. Relying on Section 114A of the Customs Act, the Commissioner had demanded duty and imposed penalties, but the Tribunal clarified that duty exemption must be honoured for licences valid at the time of import, and subsequent cancellation for misrepresentation by the original holder does not vitiate the rights of the importer. Multiple precedents were cited to support that only forged or fake licences can nullify benefits, whereas lawfully issued licences remain valid until cancelled. Consequently, the Tribunal set aside the demand of duty, interest, and penalties.

Relief to JSW Steel: CESTAT Orders Cash Refund of ₹45.54 Lakh CVD & SAD Paid Post-GST Implementation

M/s JSW Steel Limited vs Commissioner of CGST & Central Excise CITATION : 2025 TAXSCAN (CESTAT) 990

The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising Dr. Suvendu Kumar Pati, Judicial Member, allowed JSW Steel a cash refund of ₹45,54,866 towards CVD and SAD paid post-GST, under Section 142(3) of the CGST Act, 2017. The Tribunal observed that since CENVAT Credit had been discontinued after 1st July 2017, the company was entitled to a cash refund, relying on judicial precedents including the Larger Bench ruling in Bosch Automotive Electronics India Pvt. Ltd. and the Bombay High Court’s decision in Combitic Global Caplet Pvt. Ltd.. The bench clarified that Section 142(3) covers “any other amount” paid under the erstwhile regime, and denial of refund in such transitional cases would lead to unjust enrichment. Consequently, the Tribunal set aside the Commissioner (Appeals) order and directed the Department to refund the amount with applicable interest within two months.

Remuneration Paid to Directors is in Nature of Salary, Excluded from Service Definition: CESTAT

M/s. Neelamber Catterers Private Limited vs Commissioner of C.G.S.T. and Central Excise CITATION : 2025 TAXSCAN (CESTAT) 991

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), comprising K. Anpazhakan, Technical Member, held that remuneration paid to directors in the nature of salary is not a service and thus not liable to service tax under section 65B(44)(b) of the Finance Act, 1994. The appellant, Neelamber Catterers Pvt. Ltd., had paid director remuneration with tax deducted at source under Section 192 of the Income Tax Act, which the department sought to tax under the reverse charge mechanism. The Tribunal observed that the directors were employees, the payments were in the nature of salary, and prior guidance from CBEC Circular No. 115/9/2009-ST confirms such remuneration falls outside taxable services. Consequently, the Tribunal set aside the service tax demand of Rs. 1,49,411/-.

Rule 3(5) of CCR Mandates Reversal Only on Inputs/Capital Goods Cleared ‘As Such’, Not on Input Service Credit Like Transportation: CESTAT

M/s. Gagan Ferrotech Limited vs Commissioner of C.G.S.T. and Central Excise CITATION : 2025 TAXSCAN (CESTAT) 992

The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), with K. Anpazhakan, Technical Member, held that Rule 3(5) of the CENVAT Credit Rules, 2004, requires reversal of credit only on inputs and capital goods cleared “as such” and does not extend to input service credit, such as transportation services. The appellant, Gagan Ferrotech Ltd., had reversed CENVAT credit on inputs and capital goods but not on service tax paid for transporting those goods. The Tribunal relied on prior rulings including Shyam Ferro Alloys Ltd. v. CCE and Chitrakoot Steel & Power Pvt. Ltd. v. CCE, noting that taxing provisions must be interpreted strictly. Consequently, the demand of Rs. 14,47,994 along with interest and penalty was set aside, and the appeal was allowed.

CENVAT Credit Admissible on Services Used for Setting up and Administering First Aid in Factory: CESTAT

M/s. Usha International Limited vs Commissioner of Central Excise CITATION : 2025 TAXSCAN (CESTAT) 993

The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), with K. Anpazhakan, Technical Member, held that CENVAT credit is admissible on services used for setting up and administering mandatory first aid facilities in a factory. Usha International Ltd. had claimed credit of Rs. 8,996 for 2011-12, which was denied by the lower authorities. The Tribunal observed that under Section 45 of the Factories Act, 1948, first aid facilities are a statutory requirement and such services are directly connected with the manufacturing process. Relying on Rule 2(l) of the CENVAT Credit Rules, 2004, the bench held that these services qualify as input services. The impugned order was set aside, and the appellant’s appeal was allowed, with no interest or penalties applicable.

CESTAT Holds CAs’ Executory Services Outside Scope of ‘Management Consultancy’, Export and Out-of-Pocket Expenses Not Taxable

M/s B S R and Co. vs Commissioner of Service Tax, Delhi CITATION : 2025 TAXSCAN (CESTAT) 994

The Chandigarh Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising S. S. Garg, Judicial Member and P. Anjani Kumar, Technical Member, allowed the appeals of B S R & Co. and B S R & Associates, setting aside service tax demands raised under Management Consultancy Services, on export of services, and on out-of-pocket expenses. The appellants, engaged as Chartered Accountancy firms, argued that their executionary work did not fall within “Management Consultancy,” that services provided to foreign clients qualified as export of services under the Finance Act, 1994, and that reimbursed out-of-pocket expenses are not taxable, relying on relevant CESTAT and Supreme Court precedents. The Tribunal upheld these contentions, observing that only advisory services are taxable under Management Consultancy, exports are determined by place of consumption, and reimbursed expenses are outside taxable value. The Tribunal accordingly set aside all demands of service tax, interest, and penalties in favor of the appellants.

Services to IIMs and XLRI Are Educational Support, Not ‘Commercial Training and Coaching’ : CESTAT

M/s Hughes Communication India Ltd vs Commissioner of Service Tax CITATION : 2025 TAXSCAN (CESTAT) 995

The Chandigarh Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising S. S. Garg, Judicial Member and P. Anjani Kumar, Technical Member, held that Hughes Communication India Ltd. did not render services as a “Commercial Training and Coaching Centre” merely by providing infrastructure, technology, and marketing support to premier institutions like IIM Kozhikode and XLRI Jamshedpur. The Tribunal noted that the institutions themselves designed curricula, conducted classes, and awarded certificates, while the appellant’s role was limited to connectivity, classrooms, and administrative support. Consequently, such auxiliary services were classified as educational support and not taxable under the Finance Act, 1994. The Tribunal allowed the appeals and set aside all demands of service tax, interest, and penalties.

Depreciation on Capital Goods under EOU Scheme Allowed Only up to Date of Debonding, Not Till Duty Payment: CESTAT

Commissioner of Customs (Preventive) Vijayawada vs Blue Gold Maritech (International) Ltd CITATION : 2025 TAXSCAN (CESTAT) 996

The Hyderabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising A.K. Jyotishi, Technical Member and Angad Prasad, Judicial Member, addressed the issue of allowability of depreciation on capital goods imported under the Export Oriented Unit (EOU) scheme. The Tribunal held that, as per Notification No. 188/1993-Cus and related notifications under the Customs Act, 1962, depreciation is admissible only up to the date of debonding of the unit and not until the date of payment of duty. In the matter of Blue Gold Maritech (International) Ltd, the Tribunal set aside the Commissioner’s order granting depreciation up to the date of duty payment and remanded the case for recalculation of duty allowing depreciation only till the date of debonding, emphasizing that extending depreciation beyond this date would contravene statutory provisions and lead to revenue loss.

Failure to Endorse ‘No CENVAT Credit Admissible’ on Commercial Invoices Is Only a Procedural Lapse: CESTAT Grants SAD Refund

M/s. Palfinger Cranes India Pvt. Ltd vs Commissioner of Customs (Exports) CITATION : 2025 TAXSCAN (CESTAT) 997

The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising M. Ajit Kumar, Technical Member and P. Dinesha, Judicial Member, dealt with the issue of refund of Special Additional Duty (SAD) under Notification No. 102/2007-Cus. In the case of Palfinger Cranes India Pvt. Ltd., the Tribunal held that failure to endorse “no CENVAT credit admissible” on commercial invoices is a procedural lapse and not a substantive bar to claiming refund. Relying on the Larger Bench ruling in Chowgule & Co. Pvt. Ltd. v. CCE, the Tribunal allowed the refund, emphasizing that commercial invoices without duty details do not preclude eligibility, provided other conditions under the Customs Act, 1962 and the notification are satisfied, and directed consequential relief.

Customs Duty on Bulk Liquid Imports to Be Based on Shore Tank Quantity: CESTAT Directs Apply Relevant Laws at Time of Import If Data is Missing

M/s Reliance Industries Limited vs Commissioner of Customs-(Prev)-Jamnagar CITATION : 2025 TAXSCAN (CESTAT) 998

The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising Somesh Arora, Judicial Member and Satendra Vikram Singh, Technical Member, addressed the issue of customs duty assessment on bulk liquid imports when shore tank data is unavailable in appeals filed by Reliance Industries Limited for imports during 2006-2007. The Tribunal held that duty must be assessed based on the laws and circulars in force at the time of import, noting that later circulars or Supreme Court judgments, including Mangalore Refinery & Petrochemicals Ltd. (2015), could not be applied retrospectively. Since shore tank data was not available, the matter was remanded to the adjudicating authority to re-examine the assessments using the applicable circulars, including CBEC Circular No. 06/2006-Cus, and legal provisions in force during the relevant period.

Customs Seizure 3 km Away from India-Bangladesh Border: CESTAT Cites Contradictions in SCN, Orders Release of ₹15 Lakh

Manir Hossain vs The Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 999

The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), with Ashok Jindal, Judicial Member, addressed the issue of confiscation of Indian currency under Section 114 of the Customs Act, 1962. The Tribunal ruled that the seizure of Rs. 15,00,000 from Ali Hossain, alleged to be destined for illegal export to Bangladesh, was unsustainable due to contradictions in the show cause notice regarding time and location, and because the seizure occurred 3 km away from the India-Bangladesh border. Observing that the department failed to establish smuggling with certainty, the CESTAT allowed the appeal and directed the release of the seized currency to the appellant, Manir Hossain.

Revenue Fails to Prove Bags Were Polyethylene Instead of Polypropylene: CESTAT Quashes ₹5,43,963 Excise Duty Demand

SIDHARTH POLYSACKS PVT LTD vs COMMISSIONER CITATION : 2025 TAXSCAN (CESTAT) 1000

The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising P. Dinesha, Judicial Member and P. Anjani Kumar, Technical Member, dealt with the issue of excise duty demand under CETH 39232100/39232900. The Tribunal held that the Revenue’s demand of Rs. 5,43,963 on Sidharth Polysacks Pvt. Ltd. could not be sustained, as there was no evidence proving that the bags cleared were polyethylene instead of polypropylene. Noting that the appellant purchased only polypropylene granules, supplied bags as per purchase orders, and filed ER-1 returns regularly, the Bench ruled that the department could not justify invoking the extended limitation period. The appeal was allowed, and the excise duty demand, interest, and penalties were set aside.

Accountant’s Clerical Error in ST-3 Returns: CESTAT Holds Only Two Instances of Delay Valid, Grants Partial Relief on Interest Demand

M/s AKC & SIG vs Commissioner of CGST And Central Excise CITATION : 2025 TAXSCAN (CESTAT) 1001

The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising Dr. Rachna Gupta, Judicial Member, addressed the issue of interest liability under Section 75 of the Finance Act, 1994 for delayed service tax payments by AKC & SIG. The Tribunal held that while the late fee of Rs. 32,400 was valid, most of the interest demand of Rs. 2,57,814 was unsustainable, as it arose from a clerical/typographical error in the ST-3 returns filed by the assessee’s accountant. Only two instances of actual delay of six days in January 2015 and two days in January 2016 justified interest. Consequently, the Tribunal partly allowed the appeal, confirming interest for the two delays and setting aside the remaining demand.

Group Insurance Covering Accidental Death and Injury During Working Hours Qualifies as Input Service, Not Personal Use: CESTAT

M/s Cabletech Services Private Limited vs Commissioner of Central Excise & Service Tax CITATION : 2025 TAXSCAN (CESTAT) 1002

The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising Dr. Suvendu Kumar Pati, Judicial Member and Prasad, Technical Member, addressed whether CENVAT credit on group insurance policies for employees constitutes an eligible input service. The Tribunal held that group mediclaim, life, and personal accident insurance covering employees against accidental death or injury during working hours qualifies as input service under Rule 2(l) of the CENVAT Credit Rules, since statutory compliance under Section 38 of the Employees’ State Insurance Act, 1948, and Section 4A of the Payment of Gratuity Act, 1972 is essential for providing manpower supply services. Observing that the policies did not confer extra personal benefits, the bench allowed the appeal, set aside the order of the Commissioner (Appeals), and confirmed that such statutory insurance is not personal use but an admissible input service.

Maintenance Deposits Collected by Builders for Sinking and Development Funds Are Not Taxable as Services: CESTAT

M/s. Parvati Resource Private Limited vs Commissioner of Service Tax CITATION : 2025 TAXSCAN (CESTAT) 1003

The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising Ashok Jindal, Judicial Member and K. Anpazhakan, Technical Member , addressed whether maintenance deposits collected by builders for sinking and development funds are taxable as service consideration. The Tribunal held that such deposits, collected by Parvati Resource Pvt. Ltd., were either refunded to flat owners or transferred to the welfare society and were not utilized by the builder. Observing that these amounts were trust funds meant to cover future contingencies and involved no quid pro quo for services rendered, the bench concluded they do not constitute consideration for management, maintenance, or repair services. Accordingly, the service tax demand on the maintenance deposits was set aside.

Absence of Foreign Markings and Purity Below Standard: CESTAT Quashes Penalties in Alleged Gold Smuggling Case

Shri Kailash Pareek @ Kailash Sharma Pareek vs Commissioner of Customs (Preventive) CITATION : 2025 TAXSCAN (CESTAT) 1004

The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising R. Muralidhar, Judicial Member and K. Anpazhakan, Technical Member, addressed the validity of penalties under Section 112(b)(i) of the Customs Act, 1962 for alleged smuggling of gold. The appellants—Shri Kailash Sharma Pareek, Shri Shankar Lal, and Shri Jyotish Pareek were penalized after 40 gold bars (6.6 kg) were seized, but the tribunal noted that the bars lacked foreign markings, and their purity (995-996 mille) did not indicate foreign origin. With no corroborative evidence apart from retracted statements, the bench held that the burden under Section 123 did not shift to the appellants, and suspicion alone could not sustain the penalties. Consequently, the CESTAT allowed the appeals and set aside the penalties.

Sole Reliance on Retracted and Untested Statements Impermissible: CESTAT Sets Aside Penalty on Diamond Broker in Overvaluation Case

Shri Dulraj Uttamchand Jain vs Commissioner of Customs (Airport) CITATION : 2025 TAXSCAN (CESTAT) 1005

The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), comprising R. Muralidhar, Judicial Member and K. Anpazhakan, Technical Member , addressed the validity of a penalty under Section 112(a) of the Customs Act, 1962 imposed on Shri Dulraj Uttamchand Jain, a diamond broker, in an alleged overvaluation case. The tribunal held that the penalty could not be sustained as it relied solely on retracted and untested statements, with no corroborative evidence establishing the appellant’s involvement in prohibited acts or duty evasion. Observing that penalties cannot rest on assumptions or conjecture, the CESTAT set aside the penalty and allowed the appeal.

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