CESTAT Weekly Round-up

The single-member bench of Ashok Jindal (Judicial Member) observed that it was a matter of record that no consignment notes were issued by the truck owners. The tribunal explained that the definition of GTA service necessarily requires issuance of consignment notes, and in their absence, the services fall outside the ambit of GTA.

The tribunal further pointed out that as the demand itself was unsustainable, the penalty and extended limitation also could not survive. The tribunal set aside the demand and penalty, and the appeal was allowed with consequential relief.

The Bench, comprising Judicial Member P. Dinesha and Technical Member M. Ajit Kumar observed that the matter was settled by judicial precedents which clarified that the sale of vehicles is governed by the Sale of Goods Act, 1930, and not dependent on registration from the Regional Transport Office.

Accordingly, the Tribunal held that refurbishment carried out while the vehicle is owned by the assessee amounts to self-service, is not a service to another person and thus falls outside the ambit of Service Tax. Accordingly, CESTAT set aside the orders of the lower authorities and allowed the appeal with consequential relief.

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad has ruled that CENVAT credit wrongly availed on traded goods is inadmissible and the demand, along with interest, is sustainable.

However, the Bench set aside the penalty imposed under the Central Excise Act, 1944, holding that once the credit and interest had been deposited before the show cause notice, statutory provisions barred continuation of penalty proceedings.

Management Consultancy and Ship Management Form Part of SEZ Unit Approval Committee’s Approved List, Refund Admissible: CESTAT

Swan Defence and Heavy Industries Ltd vs C.G.S.T. & CentralExicse-Bhavnagar

CITATION : 2025 TAXSCAN (CESTAT) 1011

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that management consultancy and ship management services are part of the SEZ Unit Approval Committee’s approved list of services, and refund of service tax paid on them is admissible.

Swan Defence and Heavy Industries Ltd., the appellant, operates from Pipavav Port in an SEZ. Refund claims they filed were partly rejected by the Commissioner (Appeals), Rajkot, on the ground that management consultancy and ship management services were not in the list of services approved by the SEZ Unit Approval Committee.

The tribunal explained that ship management service is a species of the genus “Management, Maintenance or Repair Services” which was in the approved list, and thus refunds could not be denied. The tribunal held that rejection of refunds on this ground was unsustainable and directed that the refund be sanctioned with consequential relief. The appeals were allowed.

Laminating Plastic Films Qualifies as Manufacture: CESTAT Allows CENVAT Credit, Quashes ₹1.37 Crore Excise Demand

M/s Kapoor Print Pack India P Ltd vs Commissioner of Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 1014

The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that laminating plastic films amounts to manufacture and that CENVAT credit is admissible. The Tribunal set aside an excise duty demand of Rs. 1.37 crore along with interest and penalty.

The two-member bench comprising Justice Dilip Gupta, President, and Member (Technical) observed that the department had accepted the appellant’s duty payments through ER-1 returns and never objected during the relevant period.

The tribunal observed that the dispute was interpretational, and the extended period could not be applied. The tribunal held that laminating plastic films amounts to manufacture, that CENVAT credit was admissible, and that the demand of Rs. 1.37 crore with interest and penalty was unsustainable. The appeal was allowed with consequential relief.

Commissions Paid by Indian Railways Before 1 October 2012 Not Subject to Service Tax: CESTAT Quashes Order

The Delhi Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that commissions paid by Indian Railways to overseas agents for selling Indrail passes before 1 October 2012 were not subject to service tax.

Indian Northern Railways, appellant-assessee, disputed the service tax on commissions paid to overseas agents for selling Indrail passes to foreign tourists.

The two member bench comprising P.Dinesha (Judicial Member) and P.Anjani Kumar (Technical Member) reviewed the case records and found that the Commissioner (Appeals) had wrongly tried to differentiate between services provided by the Railways and services received under the RCM.

It noted that Section 99 of the Finance Act, 2013, exempted service tax on services provided by Indian Railways before 1 October 2012, without making any distinction between services rendered or received.

Setback for HDFC: CESTAT Rules Imported Rectangular Gold Pieces are Not Coins, Concessional Duty Benefit Denied

M/s HDFC Bank Ltd vs Commissioner of Customs Hyderabad – Customs

CITATION : 2025 TAXSCAN (CESTAT) 1016

The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that rectangular gold pieces imported by HDFC Bank without engraved serial numbers do not qualify as “gold coins” and are to be treated as gold bars, making them ineligible for concessional duty under Notification No. 62/2004-Cus

HDFC Bank regularly imports gold, including coins, through various ports. Under the notification, gold bars with engraved serial numbers and gold coins attract concessional duty.

The two-member bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) observed that the goods matched the description of small bars or ingots and could not be treated as coins.

The tribunal explained that the requirement of engraved serial numbers was mandatory for bars and the imported pieces did not meet this condition, so they fell under the higher duty category.

Setback for FedEx: CESTAT upholds ₹1 Lakh Penalty for Lack of Due Diligence after Red Sandalwood Misdeclared as Copper Wire

FedEx Express Transportation and Supply Chain Services India Pvt Ltd vsCommissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 1017

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) upheld a penalty of Rs. 1 lakh against FedEx Express Transportation and Supply Chain Services India Pvt. Ltd. for failure to exercise due diligence when consignments declared as copper wire were found to contain prohibited red sandalwood.

The single-member bench comprising Dr. Rachna Gupta (Judicial Member) observed that the consignments were collected from an address different from the exporter’s declared address, and the exporter was not found at the KYC location.

The tribunal upheld the Rs. 1 lakh penalty under Section 117 but remanded the matter to the Commissioner (Appeals) to reconsider the proposals for penalty under Section 114 and action under Regulation 13 of CIER, 2010. The appeal was disposed of with these directions.

CESTAT Rules Matrimonial Services Before July 2012 Not Classifiable as OIDAR but as Composite Services Exempt from Service Tax

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that matrimonial services provided before July 2012 could not be classified as Online Information and Database Access or Retrieval (OIDAR) services but had to be treated as composite services, exempt from service tax.

The two-member bench comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that matrimonial services were composite, combining print, OIDAR, and consultancy.

They observed that vivisection of composite services was not permissible, and the essential character of the service was matrimonial. The tribunal further observed that the investigation itself was triggered by the appellant’s letters and the demand was based on their own records, showing no suppression.

Relief for Videocon D2H: CESTAT Rules Viewing Cards Are Smart Cards, Not Set-Top Box Parts, Quashes Customs Demand

M/s Videocon D2H Limited vs Additional Director General

CITATION : 2025 TAXSCAN (CESTAT) 1019

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) set aside a customs duty demand of Rs. 56 crore and held that viewing cards imported by the company are smart cards and not parts of set-top boxes.

The two-member bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) observed that classification is part of assessment and that acceptance by customs officers at the time of clearance could not later be treated as misdeclaration.

The tribunal observed that the evidence did not prove the presence of additional circuits beyond the chip and that the expert opinion in favour of the assessee could not be ignored. It pointed out that goods like ATM or debit cards, though linked to machines, are not treated as machine parts.

Interest Mandatory on Amounts Payable under Provisional Assessment but Not Paid on Due Date: CESTAT in BHEL Case

M/s. Bharat Heavy Electricals Ltd vs Principal Commissioner of CGST

CITATION : 2025 TAXSCAN (CESTAT) 1020

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that interest is mandatory on amounts payable under provisional assessment but not paid on the due date, even if the differential duty was deposited before finalisation.

The two-member bench comprising Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that the later Supreme Court ruling in SAIL was binding. They observed that because the contracts included a price variation clause, the liability for differential duty related back to the date of removal, and interest was chargeable under the law.

The tribunal explained that the argument that advance payment of duty shields the assessee from interest was not sustainable in light of the binding Supreme Court ruling. It upheld the Commissioner (Appeals)’ order and dismissed BHEL’s appeals.

Free Accommodation and Reimbursements to CISF Personnel Not Taxable as Consideration for Security Services: CESTAT

The Commandant CISF vs Commissioner of Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 1021

The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that free accommodation and other reimbursements provided by Rashtriya Ispat Nigam Ltd. (RINL) to CISF personnel cannot be treated as taxable consideration for security services.

The two-member bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) observed that the demand arose from a periodical show cause notice following an earlier one, which had already been decided in favour of CISF in May 2024. The tribunal observed that the matter was no longer open to dispute, as the issue had already been settled.

Sugar Syrup Used in Biscuit Production Not Marketable, Hence Not Excisable: CESTAT

Modern Bakers (Madras) Pvt. Ltd vs Commissioner of GST & CentralExcise

CITATION : 2025 TAXSCAN (CESTAT) 1022

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that sugar syrup produced and consumed captively in the manufacture of biscuits is not marketable and hence not excisable.

The two-member bench comprising Ajayan T.V. (Judicial Member) and M. Ajit Kumar (Technical Member) observed that merely because sugar syrup is listed in the tariff does not establish its marketability.

The tribunal observed that excise duty applies only when goods are marketable, and the department had not discharged its burden of proof. They pointed out that earlier payment of duty by the assessee did not mean continued liability, since there can be no estoppel against statute.

The tribunal explained that as no evidence of marketability was produced, sugar syrup could not be treated as excisable goods. The demand, interest, and penalty were set aside, and the appeal was allowed with consequential relief.

Foreign Currency Different From Baggage, Tribunal Can Entertain Appeal: CESTAT Orders Release of Seized Currency, Directs to Reduce Penalties on Family Members

BHAVIKA PALA vs C.C. AHMEDABAD

CITATION : 2025 TAXSCAN (CESTAT) 1024

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Ahmedabad Bench, related to the seizure of foreign currency carried by family members, directed that the confiscated currency be released on payment of redemption fine and that penalties imposed on accompanying relatives be suitably reduced.

The bench of Somesh Arora, disposed of the appeal stating that while confiscation may be justified for regulatory violations, absolute confiscation of currency is disproportionate since it is not contraband. It directed that the seized currency be released on payment of redemption fine, with the fine amount linked to the potential profit margin, generally limited to commissions charged by authorized dealers, rather than speculative gains.

Penalties under Sections 76 and 78 of Finance Act cannot be Imposed Simultaneously: CESTAT sets aside Penalty u/s 76

Khs Machinery Pvt Ltd VS Principal Commissioner, CGST & CentralExcise

CITATION : 2025 TAXSCAN (CESTAT) 1025

In a recent ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench, has ruled that penalties under Sections 76 and 78 of the Finance Act, 1994 cannot be imposed simultaneously. The Tribunal accordingly set aside the penalty levied under Section 76 while upholding other statutory liabilities.

The Tribunal referred to the Gujarat High Court ruling in Raval Trading Company v. CST, 2016, which clarified that Section 76 covers cases of non-payment not involving fraud, suppression, or misstatement, while Section 78 specifically addresses cases of deliberate evasion.

Noting that the appellant had already discharged service tax and interest, the bench of Ajaya Krishna Vishvesha (Judicial member) and Satendra Vikram Singh (Technical member) held that their case fell squarely within the settled jurisprudence and ordered deletion of the penalty under Section 76.

Cum-Duty Benefit Dispute Rendered Infructuous: CESTAT Dismisses Departmental Appeal in Excise Duty Case

The bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, , dismissed an appeal filed by the Department in a central excise duty matter, holding that the very basis of the demand was unsustainable.

The Bench comprising of Dr. Suvendu Kumar Pati, Judicial Member and Anil G. Shakkarwar, Technical Member observed that the legality of the show cause notice itself had been decided in the assessee’s earlier appeal, where it was held that the purification of mixed solvents did not amount to manufacture under Section 2(f) of the Central Excise Act, 1944.

The Tribunal noted the demand itself was held to be unsustainable, the issue of extending or denying cum-duty benefit became infructuous.

Profit Margin on Land Sales Not Commission as Landowners Paid No Agency Fee: CESTAT Sets Aside Service Tax Demand

M/s. Tiwari Sons Construction Private Limited vs Commissioner of CentralExcise and Service Tax

CITATION : 2025 TAXSCAN (CESTAT) 1027

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that profit retained by a developer on land sales cannot be treated as commission when landowners did not pay any agency fee.

The two-member bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) observed that landowners were entitled only to fixed amounts under the agreements and did not share in profits. The bench observed that there was no agreement for agency commission and no consideration was paid by landowners. It explained that the appellant functioned as an independent developer taking full risk of profit or loss and not as an agent.

The tribunal set aside the service tax demand of Rs. 82,61,976 under “Real Estate Agent Services,” holding that the profit margin on land sales was not commission.

Export Duty Cannot be Levied When SEZ Unit Lawfully Exports Goods from Approved Warehouse: CESTAT

Parry Sugars Refinery India Pvt Ltd vs Commissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 1028

The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that export duty cannot be levied when an SEZ unit lawfully exports goods from an approved warehouse with proper authorization.

The tribunal explained that the 14,000 MT of sugar was legitimately exported and the demand of export duty could not be sustained. With respect to the 1073.3 MT of sugar moved without documents, the tribunal observed that the lapse was procedural and not fraudulent but upheld confiscation with a reduced redemption fine.

The tribunal set aside the demand of Rs. 8.74 crores of export duty and Rs. 1.43 crores of import duty, quashed most penalties, and sustained only a reduced penalty for procedural breaches. The appeal was partly allowed.