Premium Earned from Transfer of Sugar Export Quota Not Taxable as Service: CESTAT Holds Transaction is Sale of Goods, Not BAS

M/s Shahabad Co-op Sugar Mills Ltd vs Commissioner of CentralExcise & Service Tax

CITATION : 2025 TAXSCAN (CESTAT) 1333

The Chandigarh Bench of the CESTAT set aside a service tax demand of ₹17.21 lakh raised against Shahabad Co-operative Sugar Mills Ltd., holding that the premium received on transfer of sugar export quota is not taxable under Business Auxiliary Service (BAS). The Tribunal observed that the transfer of export quota allotted by the Directorate of Sugar is a commercial sale of rights having intrinsic value and does not involve any element of service. Reliance was placed on settled judicial precedents recognizing transferable licenses and quotas as “goods” capable of being bought and sold.

Rejecting the department’s contention that the transaction facilitated business of other sugar units, the Bench held that the premium was consideration for sale of a government-granted privilege and not commission for any service. Following Supreme Court rulings and its earlier decision in UNN Sugar Complex, the Tribunal concluded that no taxable service was rendered and accordingly quashed the demand, allowing the appeal in full.

Concrete Mix Manufactured at BMRCL Site Not Classifiable as Ready-Mix Concrete: CESTAT Sets aside Excise Demand and Penalties

Ahluwalia Contracts India Limited vs Commissioner of CentralExcise, Bangalore-II

CITATION : 2025 TAXSCAN (CESTAT) 1340

The Bangalore Bench of the CESTAT set aside the excise duty demand against Ahluwalia Contracts India Limited, holding that the concrete mix manufactured at the construction site for the Bengaluru Metro Rail Corporation Ltd. did not qualify as excisable “Ready Mix Concrete” (RMC). The Tribunal noted that the appellant produced site-mixed concrete for captive consumption in construction, conforming to Indian Standard IS 456, whereas RMC is governed by IS 4926 and is typically manufactured in a factory and supplied to sites, as clarified by CBIC Circular No. 368/1/98-CX.

The Bench found that the Department failed to establish that the product was RMC, as no samples were drawn, no technical examination was conducted, and the findings relied merely on the statement of a non-technical officer. It further observed that site-manufactured concrete mix was exempt from duty under applicable notifications during the relevant period. Accordingly, the Tribunal set aside the duty demand, interest, and penalties, and allowed the appeals filed by the company and its General Manager.

Statutory Dues Not in Approved Resolution Plan Stand Extinguished: CESTAT Dismisses Appeal, Ruling Dept. Participated in NCLT Proceedings

M/s. PSL Limited vs Commissioner of GST and Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 1346

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that statutory dues not included in an approved resolution plan under the Insolvency and Bankruptcy Code (IBC), 2016 stand extinguished. PSL Limited challenged the revenue’s attempt to recover excise dues despite the NCLT-sanctioned resolution plan, which the department had participated in and for which its claim had been considered.

The two-member bench, comprising Vasa Seshagiri Rao and P. Dinesha, relying on the Supreme Court ruling in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., held that claims not incorporated in the resolution plan, including statutory dues, cannot be enforced once the plan is approved under Section 31(1) of the IBC. Since the department had participated in the CIRP and the dues were not part of the plan, the demand was non-recoverable, and the appeal was dismissed.

Supplementary Drawback Claim Within 3 Months Limitation of AEPC Valuation: CESTAT Sets Aside Customs Rejection Order

M/s.Promising Exports Limited vs Development Commissioner,FaltaSpecial Economic Zone

CITATION : 2025 TAXSCAN (CESTAT) 1347

The Kolkata Bench of CESTAT held that a supplementary drawback claim filed by M/s Promising Exports Limited after receipt of the revised valuation report from the Apparel Export Promotion Council (AEPC) was well within the prescribed limitation under Rule 15 of the Customs, Central Excise Duties & Service Tax Drawback Rules, 1995. The Tribunal observed that the cause of action for claiming the differential drawback arose only when the updated valuation was formally communicated to the appellant. Consequently, the earlier rejection of the claim on the ground of limitation was unsustainable, as the appellant could not have filed for the differential amount before the AEPC’s revised valuation was available.

The Bench further noted that the appellant had consistently followed up with the authorities regarding the revaluation of exported goods and filed the supplementary claim promptly on 3 January 2008, shortly after receiving the updated report dated 5 October 2007. Considering this timely action, the Tribunal concluded that no delay could be attributed to the appellant. Accordingly, the impugned orders dated 12 and 13 December 2017 were set aside, and the matter was remitted to the Development Commissioner, Falta SEZ, with directions to review the supplemental claims in light of the AEPC valuation and sanction the eligible amount of drawback. The appeals were allowed with consequential relief as per law.

Extended Limitation cannot Be Invoked for Audit-Based Demand: CESTAT Quashes Excise Duty Demand against Delphi Automotive

Delphi Automotive Systems Pvt Ltd vs Commissioner of CentralExcise, Goods

CITATION : 2025 TAXSCAN (CESTAT) 1351

The Chandigarh Bench of the CESTAT set aside the entire excise duty demand, interest, and penalties against Delphi Automotive Systems Pvt. Ltd., holding that a show cause notice issued solely on the basis of audit findings cannot justify invocation of the extended period of limitation. The Tribunal noted that the SCN dated 31.12.2007 covered a period ending 31.03.2005 and was issued beyond the normal limitation period. Since all relevant facts, including retention of sales tax under the Haryana VAT deferment scheme, were duly recorded in statutory accounts and disclosed during audit, there was no suppression or intent to evade duty to attract the extended period under Section 11A of the Central Excise Act, 1944.

While observing that the issue on merits stood against the appellant in view of binding Supreme Court precedents, the Bench held that the demand could not survive as it was wholly time-barred. It reiterated that demands arising from audit objections cannot invoke extended limitation in the absence of evidence of wilful misstatement or suppression. The Tribunal also noted that penalties had been wrongly imposed twice arising from the same SCN, and accordingly quashed the duty demand, interest, and all penalties.

Entity Not Recognized as Manufacturer or Buyer Cannot Claim Excise Duty Refund Regardless of Who Paid: CESTAT

"M/s GVK Emergency Management and Research Institute vsCommissioner of Central Excise "

CITATION : 2025 TAXSCAN (CESTAT) 1354

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dismissed the refund claim of GVK Emergency Management and Research Institute, holding that an entity that is neither the manufacturer nor the buyer of excisable goods cannot claim a duty refund, even if it physically paid the duty on behalf of the government. The appellant had paid Central Excise duty on ambulances fabricated by M/s Bafna Healthcare Pvt. Ltd. under an MOU with the Government of Karnataka and sought a refund, arguing that the duty incidence was borne on behalf of the government and the vehicles qualified for a concessional rate under Notification No. 6/2006-CE.

The Tribunal noted that the appellant was merely an operational and management partner, while the District Health & Family Welfare Officers were the registered buyers, making the government the true owner. The appellant failed to produce any legally recognised invoice or document to prove eligibility or unjust enrichment under the Central Excise Act. Citing Supreme Court precedents, the Tribunal emphasized that statutory procedures must be strictly followed, and since the appellant did not satisfy the essential conditions of being the manufacturer or buyer, the refund claim was legally untenable, and the appeal was dismissed.

Misuse of Signed Blank Annexure-A by Third Party cannot attract Liability without Evidence: CESTAT Quashes Penalty against CHA Manager

Mr. M.K. Raja Mohammed vs Commissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 1355

The Chennai Bench of CESTAT quashed penalties imposed on M.K. Raja Mohammed, CHA Manager of M/s Anisha Overseas, holding that liability cannot be imposed merely because signed blank Annexure-A forms were misused by a third party. The Tribunal observed that there was no evidence of his knowledge, intent, or active involvement in the mis-declaration of goods, nor any monetary benefit received, and emphasized that penalties under Sections 114(iii) and 114AA of the Customs Act require proof of wrongful intent or participation in the offence.

The Tribunal noted that the forms were provided for legitimate operational purposes to a regular exporter and were subsequently misused by another individual without the appellant’s knowledge. Relying on judicial precedents, the Bench held that abetment requires prior knowledge of the offence, which was absent, and therefore, neither penalty could be sustained. Consequently, the Order-in-Appeal No. 28/2015 was set aside, and the appeal was allowed with consequential relief.

DGFT issues EODC against Imported Cars: CESTAT rules Customs cannot Demand duty Once obligation Discharged and Certified

Interglobe Enterprises Limited vs Commissioner of Customs, NewDelhi

CITATION : 2025 TAXSCAN (CESTAT) 1360

The New Delhi Bench of the CESTAT allowed the appeal filed by Interglobe Enterprises Pvt. Ltd., holding that once the DGFT has issued an Export Obligation Discharge Certificate (EODC) under the EPCG Scheme, Customs authorities have no jurisdiction to question or reassess the fulfilment of export obligation. The Tribunal observed that monitoring and certification of export obligations under the Foreign Trade Policy squarely fall within the domain of the DGFT, and Customs cannot sit in appeal over DGFT’s satisfaction after issuance of the EODC.

Relying on settled precedents, including Titan Industries Ltd., the Bench held that the duty, interest, and penalties demanded by Customs were unsustainable once the export obligation had been duly certified by the DGFT. Since the appellant’s export performance had been verified and accepted by the competent authority, the Tribunal set aside the impugned order and allowed the appeal in full.

Peanut Butter Classified as Similar to Margarine: CESTAT Sets Aside ₹1.35Cr Cenvat Credit Demand While Upholding Credit Reversal on Written-Off Inputs

M/s Agro Tech Foods Ltd vs Commissioner of Central TaxRangareddy - GST

CITATION : 2025 TAXSCAN (CESTAT) 1363

The Hyderabad Bench of the CESTAT partly allowed the appeal filed by Agro Tech Foods Ltd., holding that peanut butter qualifies as an “edible preparation similar to margarine” and is therefore covered by the exemption under Sl. No. 30 of Notification No. 3/2006-CE. The Tribunal noted that both margarine and peanut butter fall under edible preparations in Chapter 21 and share essential commercial and functional characteristics as fat-based spreads, making the exemption applicable.

However, the Tribunal set aside the demand of ₹1.35 crore towards reversal of Cenvat credit on the ground of complete revenue neutrality, observing that duty had been paid on the final product and corresponding credit was available to downstream units, rendering the demand unsustainable. The Bench, nevertheless, upheld the limited demand for reversal of credit on inputs written off under Rule 3(5B) of the Cenvat Credit Rules, 2004, and allowed the appeal accordingly.

‘Input’ vs ‘Input Service’ Mismatch in ST-3 Return a Harmless Error: CESTAT Allows Cenvat Credit Refund u/s. 142(9)(b)

Punjab National Bank vs Commissioner of CGST

CITATION : 2025 TAXSCAN (CESTAT) 1364

The Delhi Bench of the CESTAT allowed Punjab National Bank’s appeal, holding that a mismatch between “input” and “input service” entries in the ST-3 Return was a mere clerical error and could not defeat a valid refund claim under Section 142(9)(b) of the CGST Act, 2017. The Tribunal noted that PNB’s revised ST-3 Return for April–June 2017 had enhanced the closing Cenvat credit balance, thereby entitling it to a cash refund, and that non-carry-forward of the credit in TRAN-1 could not be used to deny such refund.

The Bench observed that the credit amount was clearly supported by invoices relating to audit fees, an input service, and the incorrect description as “inputs” in the ST-3 Return did not affect the substantive entitlement. Relying on settled precedents and noting the absence of any mala fide intent, particularly given the appellant’s status as a nationalised bank, the Tribunal set aside the impugned orders and allowed the appeal with consequential relief.

Duty Demand on DFIA Imports Set Aside: CESTAT Rules Extended Limitation Cannot Apply to Bona Fide Transferee

Indras Agencies Pvt. Ltd vs Commissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 1368

The Chennai Bench of the CESTAT set aside a customs duty demand raised against Indras Agencies Pvt. Ltd. by invoking the extended limitation period under Section 28(4) of the Customs Act, 1962. The Tribunal held that the appellant, a bona fide transferee of DFIA licences originally issued to Pan Parag India Ltd., could not be held liable for alleged misrepresentations attributed solely to the original exporter. Since the licences were validly issued, duly transferred, and verified by Customs at the time of import, and there was no allegation or evidence of wilful misstatement, suppression, or collusion on the part of the appellant, invocation of the extended limitation period was legally unsustainable.

The Bench further observed that licences validly issued but later alleged to have been obtained through misrepresentation are merely voidable and remain effective until cancelled, unlike forged licences which are void ab initio. As there was no evidence that the DFIA licences had been cancelled ab initio or that the appellant had knowledge of any defects, the Tribunal held that the appellant had acquired good title to the licences. Consequently, the duty demand of ₹25.12 lakh, along with interest, was set aside and the appeal was allowed with consequential relief.

Commercial Chartering Services by Shipping Ministry liable to service tax on 1% commission, Extended Limitation Period Not Applicable: CESTAT

PR. COMMISSIONER OF CGST & SERVICE TAX-DELHI SOUTH VSCHARTERING WING

CITATION : 2025 TAXSCAN (CESTAT) 1371

The Principal Bench of the CESTAT, New Delhi, held that the Chartering Wing (Tranchart) of the Ministry of Shipping was providing taxable Business Support Services by arranging shipping space for PSUs and government departments and charging a 1% commission on freight-related amounts. The Tribunal rejected the plea of sovereign or non-commercial exemption, observing that taxability depends on the nature of the service and not on the status of the service provider or whether the activity was profit-oriented. It held that the chartering activity was akin to services rendered by commercial brokers and was taxable both prior to and after 01.07.2012, as it was not covered by the negative list.

However, on limitation and penalties, the Tribunal found no evidence of fraud, suppression, or intent to evade tax, noting that the respondent acted under a bona fide belief that service tax was not payable. Accordingly, invocation of the extended period was held to be unsustainable and penalties under Sections 76, 77, and 78 were waived under Section 80 of the Finance Act, 1994. The appeal was partly allowed by confirming the demand of service tax and interest only for the normal period of limitation.

Penalty Not Sustainable when Customs Ignores Assessee’s Valuation: CESTAT Quashes Penalties of Rs 1.57 Crore

Amit Bhutoria VS Commissioner of Customs (Airport & ACC)

CITATION : 2025 TAXSCAN (CESTAT) 1372

The Kolkata Bench of the CESTAT set aside penalties totaling ₹1.80 crore imposed on Shri Amit Bhutoria, a Government-approved valuer, under Sections 112(a)(iii) and 114AA of the Customs Act, 1962, in a case arising from a DRI investigation into alleged trade-based money laundering through over-invoiced imports of rough precious stones. The department alleged that the appellant had connived with importers by certifying inflated values and misdescribing inferior stones as precious or semi-precious to facilitate illegal remittances.

Allowing the appeals, the Tribunal held that the allegations were unsupported by evidence. It noted that Customs had independently assessed and cleared the goods without relying on the appellant’s valuation, negating liability under Section 114AA, and that there was no proof of any benefit derived or intended by the appellant to sustain penalty for abetment under Section 112(a)(iii). The Bench also highlighted the absence of corroborative evidence, including re-valuation by a government valuer or examination by GSI, and failure to establish that the goods examined by the appellant were the same as those investigated, rendering the penalties unsustainable.

Gold Seizure by Customs: CESTAT says Dept failed to prove Seized Gold is Foreign and Smuggled, Orders Release

Birendra Nath Ghosh vs Commissioner of Customs(Preventive)

CITATION : 2025 TAXSCAN (CESTAT) 1373

The Kolkata Bench of the CESTAT set aside penalties imposed under Section 112(b) of the Customs Act, 1962, in a case involving seizure of two kilograms of gold and ₹2 lakh in cash from a city location in Kolkata. The Tribunal held that the Department failed to establish the foreign origin or smuggled nature of the gold, noting that the seizure was not made at any airport, seaport, or notified customs area, the gold bore no foreign markings, and its purity was below 99.5%. In the absence of such evidence, the presumption under Section 123 of the Act could not be invoked merely due to non-production of purchase documents.

The Tribunal further held that penalties cannot be sustained solely on uncorroborated statements, especially where no gold was recovered from some appellants. It also found no nexus between the seized Indian currency and any alleged smuggling activity, particularly when lawful ownership was supported by income tax records. Consequently, the CESTAT directed the return of the seized ₹2 lakh with applicable interest and allowed all appeals by setting aside the penalties.

Rough Estimates in Private Diaries Not Sufficient to Prove Clandestine Clearance: CESTAT Sets Aside Central Excise Duty Demand and Penalties

M/s. Dhara Polytubes Private Limited vs Commissioner of CentralExcise

CITATION : 2025 TAXSCAN (CESTAT) 1374

The Kolkata Bench of CESTAT set aside a Central Excise Duty demand of over Rs. 19.6 Lakhs, along with all associated penalties, against M/s Dhara Polytubes Pvt. Ltd., its Director Shri Prem Kumar, and Supervisor Shri Kumar Rajoo. The Tribunal observed that the duty demand, based on alleged clandestine clearance of PVC pipes to evade SSI exemption, was unsustainable both legally and procedurally. The appellants highlighted that the Order-in-Original was passed ex-parte without providing copies of the relied-upon documents cited in the Show Cause Notice, constituting a gross violation of natural justice.

On the merits, the Tribunal found that the Revenue relied solely on rough diary entries to calculate unaccounted clearances and failed to produce corroborative evidence such as proof of excess raw material consumption, transportation, or sale proceeds. The Bench emphasized that allegations of clandestine removal require cogent, positive, and tangible evidence, not assumptions or private records. Accordingly, the Tribunal set aside the entire impugned order, allowing the appeals in full.

CESTAT allows CENVAT Credit to Adhunik Industries, Holds Denial based on Technical Objections Unsustainable

Adhunik Industries Limited vs Commissioner of Customs, CentralExcise and Service Tax, Durgapur

CITATION : 2025 TAXSCAN (CESTAT) 1375

The Kolkata Bench of the CESTAT allowed the appeal filed by Adhunik Industries Ltd., holding that CENVAT credit cannot be denied in the absence of clear evidence of ineligibility or misuse. The Tribunal observed that the Department did not dispute the receipt of inputs and input services, their duty-paid nature, or their use in or in relation to the manufacture of dutiable final products. In such circumstances, denial of credit solely on procedural or technical grounds was held to be unsustainable.

The Bench reiterated that substantive benefits under the CENVAT Credit Rules, 2004 cannot be denied without proof of wrongful availment, diversion, or intent to evade duty. Since there was no allegation of fraud or suppression and the nexus with manufacturing activity stood established, the Tribunal set aside the denial of credit along with the consequential demand and penalties, allowing the appeal in full.

Plain Packaging Not Ground to Deny Concession Duty Under India-Singapore Trade Agreement: CESTAT Quashes Denial of Benefit for HDPE Granules

M/s. Blow Plast Industries vs Commissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 1376

The Chennai Bench of the CESTAT held that concessional duty under Notification No. 10/2008-Cus (India–Singapore CECA) cannot be denied merely because imported HDPE granules were packed in plain bags without markings. The Tribunal observed that the product-description and origin requirements apply to the Certificate of Origin (COO) and not to physical packaging. Since the COO expressly stated “packing in plain bags,” was validly issued by the competent Singapore authority, and matched the commercial documents, Customs was not justified in treating it as deficient.

The Bench further noted that if Customs had any doubt regarding the COO, it was required to seek verification under the prescribed Rules of Origin, which it failed to do. Unilateral rejection of a valid certificate without invoking the verification mechanism was held to be unlawful. Accordingly, the Tribunal set aside the denial of concessional duty, allowed the appeal, and granted consequential relief.

Customs Commissioner Fails to issue Notice within 90 days: CESTAT Quashes Penalty over Custom Brokers License Proceedings

M/s. La Freight Lift Pvt Ltd vs Commissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 1377

The Chennai Bench of the CESTAT set aside the suspension of licence and forfeiture of security deposit imposed on M/s La Freight Lift Pvt. Ltd., holding that the Customs Commissioner failed to comply with the mandatory time limits prescribed under the Customs Brokers Licensing Regulations, 2013 (CBLR). The Tribunal noted that Regulation 20 mandates issuance of a show cause notice within 90 days from the date of receipt of the offence report, and non-compliance with this statutory timeline vitiates the entire proceedings, rendering the penalty unsustainable.

While the Department had alleged violations of due diligence obligations under Regulations 11(a), 11(b), 11(e) and 11(n) in connection with an attempted export of Red Sanders concealed as steel pipes, the Tribunal held that procedural safeguards under CBLR are mandatory and not directory. Since the show cause notice was issued beyond the prescribed period and the Commissioner failed to establish compliance with the 90-day requirement, the CESTAT quashed the penalty, revoked the licence suspension, and set aside the forfeiture of the security deposit.

Insufficient Proof of Clandestine Removal: CESTAT Sets Aside Excise Duty Demand as Department Fails to Supply Seized Documents

M/s. Dhara Polytubes Private Limited vs Commissioner of CentralExcise

CITATION : 2025 TAXSCAN (CESTAT) 1379

The Kolkata Bench of the CESTAT set aside the excise duty demand against M/s Dhara Polytubes Pvt. Ltd., holding that the adjudicating authority had passed an ex-parte order without supplying the seized and relied-upon documents, in clear violation of principles of natural justice. The Tribunal noted that despite repeated requests, the Department failed to furnish private notebooks and diaries relied upon to allege suppression and clandestine clearance. Such non-supply deprived the appellant of an effective opportunity to defend and rendered the proceedings void and unsustainable in law.

On merits, the Tribunal held that allegations of clandestine removal cannot rest merely on rough notebook entries without corroborative evidence. It found that the appellant’s actual clearances during FY 2005-06 were within the SSI exemption limit and that the Department wrongly added unverified estimates from seized notebooks without establishing manufacture, transport, buyers, or receipt of sale proceeds. As the duty demand failed, the Tribunal also set aside interest and penalties imposed on the company, its Director, and Supervisor, allowing all appeals with consequential relief.

Form 26AS Alone Cannot Sustain Service Tax Demand Without Precedent Review: CESTAT Orders Fresh Decision in One Month

Rama Overseas Company vs CGST & Central Excise-Vadodara-I

CITATION : 2025 TAXSCAN (CESTAT) 1380

The Ahmedabad Bench of the CESTAT remanded a service tax demand raised solely on the basis of Form 26AS discrepancies, holding that tax liability cannot be sustained without examining whether the receipts reflected therein actually represent taxable services. The Tribunal observed that neither the adjudicating authority nor the Commissioner (Appeals) had addressed the core issue of taxability, including identification of service recipients, proof of rendering of services, or linkage of Form 26AS entries with consideration for taxable services.

Relying on the Allahabad Bench decision in Yards and Yields Infratech Pvt. Ltd. (2025), the Tribunal held that Form 26AS by itself cannot form the sole basis for service tax demand without independent verification. As the Commissioner (Appeals) had failed to examine the applicability of this binding precedent, the matter was remanded with a direction to decide the issue afresh within one month, and the appeal was allowed by way of remand.

Steel Manufacturer's Appeal Allowed: CESTAT Quashes Excise Duty Demand for Lack of Evidence on Clandestine Clearance

Adhunik Industries Limited vs Commissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 1381

The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) allowed the appeal of M/s Adhunik Industries Ltd. and set aside an excise duty demand of Rs. 71,14,525/- alleging clandestine clearance of MS products. The Tribunal observed that the appellant had effected genuine ex-factory sales, paid excise duty, and received payments through account-payee cheques, and therefore could not be held liable for the buyer’s alleged non-receipt of goods. It further held that Section 11D was wrongly invoked, as the duty collected had already been deposited with the Government, and that allegations of clandestine removal were unsupported by independent, cogent, or corroborative evidence such as raw material usage, power consumption, transportation, or flow of sale proceeds.

The Tribunal also ruled that the statement of the buyer’s Director, on which the demand was primarily based, lacked evidentiary value since it was not tested under Section 9D of the Central Excise Act, 1944. In the absence of any independent proof, the Tribunal set aside the duty demand, interest, and penalties, and quashed the penalty imposed on the Director for lack of personal involvement. Consequently, the impugned order was fully set aside, and the appeals filed by the appellant were allowed with consequential relief.

Small-Scale Exemption Cannot be Denied without Evidence: CESTAT Rules Expert Opinion Inadmissible, Sets Aside Excise Duty Demand

M/s A. K. Industries vsCommissioner of Central Excise andService Tax, Ludhiana

CITATION : 2025 TAXSCAN (CESTAT) 1382

The Chandigarh Bench of CESTAT set aside a demand of ₹15,45,499 against A.K. Industries, ruling that the department failed to establish that the product manufactured was ‘Brass Ingots’ rather than ‘Brass Billets.’ The Tribunal observed that the department’s case was primarily based on an expert opinion from 2001 and a statement by the partner of the appellant firm from the same period, whereas the dispute related to the period from April to June 2005. No samples were drawn or tested during the relevant period to determine the exact nature or weight of the product, which was a crucial procedural requirement. The Tribunal also referred to prior decisions, including the appellant’s own earlier cases, where similar products were recognized as eligible for small-scale exemption under Notification No. 8/2003-CE.

The Bench noted that the Commissioner (Appeals) had set aside the Original Authority’s order without proper examination of the goods, declaring the product as ‘Brass Ingots’ without any contemporaneous evidence. The Tribunal emphasized that reliance on outdated opinions and untested statements could not sustain a duty demand, especially when prior identical cases had already been decided in favor of the appellant. Considering the absence of concrete evidence, the Tribunal held that the impugned order was legally unsustainable, set aside the demand, and allowed the appeal of A.K. Industries, confirming their entitlement to the small-scale exemption.

Reimbursable Expenses Excluded from Service Tax Valuation: CESTAT sets aside Demand in CHA Services Case

Balram Shipping Services vs Commissioner of GST

CITATION : 2025 TAXSCAN (CESTAT) 1383

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside service tax demands on reimbursable expenses collected by Balram Shipping Services while providing Customs House Agent (CHA) services. The Tribunal held that service tax is leviable only on consideration for services actually rendered, and expenses recovered as a pure agent on actuals—such as harbour/CFS dues, freight charges, surveyor fees, and insurance—cannot form part of taxable value. The appellant had claimed these expenses were not leviable to service tax, and the Tribunal relied on the Supreme Court ruling in UOI v Intercontinental Consultants and Technocrats Pvt Ltd (2018), which struck down Rule 5(1) of the Service Tax Valuation Rules, 2006, as ultra vires Sections 66 and 67 of the Finance Act, 1994.

The Tribunal observed that the appellant had discharged service tax correctly on consideration for CHA services only, excluding reimbursable charges, which were supported by chartered accountant certificates showing they were collected on actuals without markup. Citing both the Supreme Court precedent and the Tribunal’s earlier decision in Sindhu Cargo Services Pvt Ltd (2025), the bench concluded that the impugned order remanding the matter for verification of certificates could not be sustained. Accordingly, the Tribunal allowed the appeal, set aside Order in Appeal No. 450/2016 dated 29.07.2016, and granted consequential relief.

Service Tax Exemption under Notification cannot be denied due to delay in filing EXP-2 Return: CESTAT

The Merchants vsCommissioner of Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 1385

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chandigarh Bench, allowed the appeal filed by the Merchants, exporters who had paid commissions in foreign currency to overseas agents for services related to their export activities in India. The department had alleged that these payments attracted Service Tax under Section 66A of the Finance Act on a reverse charge basis, claiming they fell under ‘Business Auxiliary Services’ and ‘Banking and Other Financial Services.’ The Adjudicating Authority and Commissioner (Appeals) had confirmed a demand of ₹1,55,125, denying the benefit of Notification No. 18/2009-ST dated 07.07.2009.

The Tribunal observed that the denial of the notification’s benefit was based merely on a procedural lapse—the purported delay in filing EXP-2 returns—whereas the actual filing deadlines fell on holidays and a 'Punjab Bandh,' extending the due dates to the next working day. Relying on settled decisions, including HEG Limited, Maruti Suzuki India Ltd., and Sunshine Steel Industries, the Tribunal held that substantive benefits under the notification cannot be denied due to procedural lapses and that the extended period of limitation cannot be invoked solely based on audit objections. Since the appellants had consistently filed returns and paid service tax without suppression of facts, the Tribunal set aside the demand, confirming the entitlement of the appellants to the benefit of Notification No. 18/2009-ST.

Swachh Bharat Cess Refund Clarified: CESTAT Favors Genpact, Cites No Time-Bar on Export Proceeds

M/s Genpact India Pvt. Ltd vs Commissioner of Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 1386

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside the rejection of a refund claim by M/s Genpact India Pvt. Ltd., holding that the adjudicating authority must reassess the matter in accordance with the correct legal principles governing export of services and refund of accumulated CENVAT credit. The appellant had claimed ₹3.60 crore for the period April–September 2016, which was rejected on grounds including alleged lack of nexus between input and output services, Swachh Bharat Cess credit on pre-03.02.2016 invoices, and delayed foreign exchange realization. The Tribunal noted that export of services is deemed complete only upon receipt of foreign exchange, and exclusion of turnover on delayed realization was erroneous.

The Bench, comprising S. S. Garg and P. Anjani Kumar, held that the authority had failed to examine whether disputed services were used primarily for business or personal purposes, as required under the amended definition of “input service.” The Tribunal also emphasised that CENVAT credit wrongly taken but not utilised cannot be denied at the refund stage without issuing proceedings under Rule 14 of the CENVAT Credit Rules, 2004. The appeal was allowed by way of remand, directing the authorities to re-adjudicate the refund claim in accordance with law, including Swachh Bharat Cess and input services, and to follow the correct statutory procedure before denial.

IPR Licensing Cannot be Treated as Franchise Service: CESTAT Grants Relief to Reckitt Benckiser

Reckitt Benckiser Pvt Ltd vs Commissioner of Central Goods &Service Tax

CITATION : 2025 TAXSCAN (CESTAT) 1387

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that licensing arrangements for use of intellectual property rights cannot be reclassified as Franchise Services for service tax purposes, and that denial of exemption on such reclassification is unsustainable. Reckitt Benckiser Pvt. Ltd., engaged in manufacturing and sale of FMCG products, had entered into licensing agreements with overseas group entities, paying royalties under the reverse charge mechanism as Intellectual Property Services and availing exemption to the extent of research and development cess paid. The department contended that the services were franchise-related, issuing a show cause notice demanding service tax of ₹8.49 crore.

The Tribunal, comprising S. S. Garg and P. Anjani Kumar, observed that classification as Franchise Service requires granting a representational right where the franchisee loses independent identity, which was absent in the appellant’s case. Reckitt Benckiser retained control over manufacturing, marketing, pricing, and sub-licensing, clearly operating independently while using intellectual property rights. Relying on its earlier decision for the same appellant on identical facts, the Tribunal held the services were correctly classified as Intellectual Property Services and that the appellant was entitled to the exemption. The service tax demand, interest, and penalties were therefore set aside, and the appeal allowed.

Time Spent Before Refund Authority to Be Excluded for Limitation: CESTAT Remands Custom Appeal on Post-Clearance FTA Exemption Claim

Kalmar India Private Limited vs Commissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 1388

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal of Kalmar India Pvt. Ltd. and held that administrative delays and time spent pursuing a refund before the wrong authority must be excluded when computing the period of limitation under Section 128 of the Customs Act. The Tribunal observed that the two-year delay by the department in responding to the appellant’s refund request amounted to “unexplained administrative inaction” and should not prejudice the appellant, applying Section 14(1) of the Limitation Act, 1963.

The Tribunal set aside the Commissioner of Customs (Appeals) order rejecting the appeal as time-barred and remanded the matter for fresh adjudication. It directed the lower authority to treat the appeal as filed within time, verify the Certificates of Origin, and reconsider the refund claim on merits, allowing the appellant to claim the benefit of the Free Trade Agreement after proper verification.

Leasing of Containers from Overseas Lessor Not ‘Supply of Tangible Goods’: CESTAT Sets Aside Service Tax Demand

Caravel Logistics Pvt. Ltd. vs Commissioner of GST

CITATION : 2025 TAXSCAN (CESTAT) 1389

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal of Caravel Logistics and set aside the Service Tax demand, holding that leasing of containers from foreign companies did not constitute 'Supply of Tangible Goods' when both possession and effective control were transferred to the lessee. The Tribunal noted that the appellant had legal rights to use the containers, obtained necessary customs licenses in its own name, and enjoyed exclusive possession, fulfilling the “five-fold test” established by the Supreme Court in the BSNL case.

The Tribunal further clarified that conditions imposed by the lessor for safety or maintenance purposes did not interfere with the lessee’s control and could not convert the lease into a taxable service. Consequently, the transaction was treated as a “deemed sale,” not a service, and the Service Tax demand, along with interest and penalties, was unsustainable. The impugned order was set aside, and the appeal was allowed with consequential relief.

Service Tax Demand Time-Barred for Sub Contractor where Principal Contractor Paid Service Tax: CESTAT Sets Aside Demand, Interest & Penalty

Sree Nandhees Technologies Pvt. Ltd vs Commissioner of GST & Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 1391

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside a Service Tax demand of ₹13,18,116 against Sree Nandhees Technologies Pvt. Ltd., a sub-contractor providing maintenance services for UPS systems, ruling that the demand was time-barred. The appellant had paid service tax on commissions but relied on the principal contractor, M/s Emerson Network Power India Pvt. Ltd., to discharge the main service tax liability. The Tribunal noted that prior to the 2007 Master Circular, legal interpretations on sub-contractor liability were divergent, and the appellant consistently filed ST-3 returns without intent to evade tax.

Relying on Supreme Court precedents, the Tribunal held that once a demand is barred by limitation, there is no need to examine the merits of the case. Observing the absence of evidence of willful suppression or intent to evade, the bench concluded that the demand, interest, and penalties were legally unsustainable. Accordingly, the Tribunal allowed the appeal and set aside the impugned orders of the Adjudicating Authority and Commissioner (Appeals).

DTA-SEZ Supplies not “deemed exports”: CESTAT Sets Aside Excise Refund Rejection, Remands for Fresh Consideration

M/s. Sundaram Brake Linings Ltd vs Commissioner of GST &Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 1393

The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) set aside the rejection of excise duty refund claims totaling ₹88.61 lakh on supplies made from Domestic Tariff Area (DTA) units to Special Economic Zone (SEZ) units by M/s. Sundaram Brake Linings Ltd. The Tribunal held that such clearances cannot be treated as “deemed exports” under Chapter 8 of the Foreign Trade Policy (FTP) 2009–14 and observed that the lower authorities erred in directing the appellant to claim benefits from the Development Commissioner or Regional Authority. Relying on CBEC Circular No. 1001/8/2015-CX dated 28.04.2015, the Tribunal noted that DTA-to-SEZ supplies are to be treated as exports for excise purposes.

Following the Bombay High Court’s decision in Tiger Steel Engineer (India) Pvt. Ltd. v. Union of India, the Tribunal held that the binding circular and judicial precedents were wrongly ignored by the lower authorities. Accordingly, the impugned orders were set aside and the matters were remanded to the original authority for fresh consideration in light of the 2015 circular and relevant case law. The appeals were allowed for statistical purposes, with all contentions kept open.