PIMS Registration Timeline Directory, Not Mandatory: CESTAT Quashes Confiscation for Delayed PIMS Compliance

M/s Greenlam Industries Ltd vs Commissioner Customs Preventive

CITATION : 2025 TAXSCAN (CESTAT) 1384

The Principal Bench of the CESTAT, New Delhi, held that the timeline prescribed under the Paper Import Monitoring System (PIMS) is directory and not mandatory, and that obtaining PIMS registration after arrival of goods but before their clearance amounts to a mere procedural lapse. In the case of Greenlam Industries Ltd., the tribunal noted that although the PIMS registration was obtained after the consignments arrived, the certificates were submitted before clearance of goods, thereby fulfilling the core objective of monitoring paper imports. The bench observed that the word “can” used in Notification No. 11/2015-2020 should be read as “may,” indicating a procedural requirement rather than a substantive condition.

The tribunal further held that non-compliance with such procedural timelines, in the absence of mala fide intent and where substantive compliance is achieved, does not attract confiscation under Section 111(d) or penalty under Section 112(a)(i) of the Customs Act, 1962. Relying on settled judicial precedents, the CESTAT quashed the confiscation order, redemption fine, and penalty, and allowed the appeal with consequential relief.

Reimbursement of Electricity Charges Not Taxable as Service: CESTAT Sets Aside Service Tax Demand on Ubico Network

Ubico Network Private Limited vs Commissioner of Service Tax,Delhi-IV

CITATION : 2025 TAXSCAN (CESTAT) 1390

The Chandigarh Bench of the CESTAT held that service tax is not leviable on reimbursement of electricity charges, as electricity is classified as “goods” and its supply amounts to sale, not a taxable service. Ubico Network Pvt. Ltd., engaged in providing in-building coverage solutions, was alleged to have failed to pay service tax on electricity charges recovered from customers. The tribunal relied on the Delhi High Court’s decision in Intercontinental Consultants& Technocrats Pvt. Ltd., affirmed by the Supreme Court, which held that reimbursable expenses cannot be included in the taxable value for service tax.

The bench further noted that electricity is specifically covered under the Central Excise Tariff and therefore cannot form part of the assessable value of services. It also held that one of the show cause notices was barred by limitation and that the extended period was wrongly invoked solely on the basis of an audit, without any evidence of intent to evade tax. Accordingly, the tribunal set aside the service tax demand of over ₹1.07 crore and allowed the appeal.

Transport of Minerals Inside Mines Is Not ‘Mining Service’: CESTAT Rejects Service Tax Demand

M/s. Mahavir Logistics Pvt. Ltd. vs Commissioner of ServiceTax-II

CITATION : 2025 TAXSCAN (CESTAT) 1392

The Kolkata Bench of the CESTAT held that transportation of excavated minerals within or outside a mining area does not fall under “Mining Service” under Section 65(105)(zzzy) of the Finance Act, 1994, as it is a post-mining activity. In the case of Mahavir Logistics Pvt. Ltd., the tribunal examined a service tax demand of ₹1.34 crore raised on the allegation that movement of iron ore and overburden constituted mining services. The appellant contended that its role was limited to transportation of already excavated minerals and did not involve any mining, extraction, drilling, or processing activity.

Relying on CBEC Circular No. 232/2/2006-CX-4 dated 12.11.2007 and the Supreme Court decision in CCE & ST, Raipur v. Singh Transporters (2017), the tribunal held that transportation of minerals from the pithead or within the mine is a logistical, post-mining activity and, if taxable at all, falls under Goods Transport by Road Service, not Mining Service. As the classification itself was untenable, the CESTAT set aside the service tax demand along with interest and penalty and allowed the appeal with consequential relief.

Cigarette Packs Lacking Mandatory Declarations Had to be Destroyed, Not Auctioned: CESTAT sets aside Forfeiture

M/s Muchipara Consumers CoOperative Stores Ltd vs Commissionerof Customs

CITATION : 2025 TAXSCAN (CESTAT) 1394

The New Delhi Principal Bench of the CESTAT held that seized cigarette packets lacking mandatory statutory declarations under the Cigarettes and Other Tobacco Products (Packaging and Labelling) Rules, 2008 could not have been auctioned at all and were required to be destroyed. Muchipara Consumers Co-operative Stores Ltd., the successful bidder in a 2017 e-auction, sought a refund after discovering that the cigarette packets did not contain essential details such as the date of manufacture, making them legally unsaleable in the domestic market, in line with a CBEC Circular dated 29 March 2017.

Rejecting the department’s stand that the bid amount was validly forfeited for non-payment of the balance, the tribunal noted that the goods themselves were unfit for auction and that in a similar case (Ahad Traders), the department had refunded the amount. Holding the forfeiture unjustified, the bench set aside the impugned orders and directed the department to refund the entire deposited amount with interest at 6% per annum from the date of deposit until payment.

Reversal of CENVAT Credit Equivalent to Non-Availment: CESTAT Sets Aside Rs. 1.11 Crore Service Tax Demand

Skipper Ltd vs Commissioner of CGST

CITATION : 2025 TAXSCAN (CESTAT) 1395

The Kolkata Bench of the CESTAT held that proportionate reversal of CENVAT credit amounts to non-availment, making the demand of 6%/5% of the value of exempted services under Rule 6 of the CENVAT Credit Rules, 2004 legally unsustainable. In the case of M/s Skipper Ltd., the tribunal noted that the assessee had already reversed proportionate common input service credit prior to issuance of the show cause notice, duly disclosed in returns and certified by a Chartered Accountant. Relying on consistent judicial precedents, the bench ruled that authorities cannot compel assessees to adopt the Rule 6(3) option, and if credit is wrongly availed, recovery can only be made under Rule 14.

On limitation, the tribunal found that the extended period was wrongly invoked as the demand was based entirely on scrutiny of books, balance sheets, and statutory returns, with no evidence of suppression or intent to evade tax. Accordingly, the demand of ₹1.11 crore under Rule 6 was set aside. However, the RCM demand of ₹4.90 lakh was upheld as revenue-neutral, with penalty waived and only interest payable under Section 75 of the Finance Act, 1994. The appeal was allowed with consequential relief.

CVD on Castings Imported for Wind Electricity Generators: CESTAT Directs Fresh Valuation, Appeals Against Provisional Assessment Valid

Commissioner of Customs vs M/s.Siemens Gamesa Renewable PowerPvt. Ltd.

CITATION : 2025 TAXSCAN (CESTAT) 1396

The Chennai Bench of the CESTAT held that Countervailing Duty (CVD) is leviable on castings imported as part of sub-assemblies, components, or equipment of wind-operated electricity generators under Notification No. 1/2016-Customs, and rejected the plea that the levy applies only to castings simpliciter. The Tribunal also upheld the maintainability of appeals against provisionalassessment orders under Section 18 of the Customs Act. It ruled that excluding castings embedded in components would defeat the object of the notification, which expressly covers castings even when forming part of sub-assemblies or components of WOEGs.

However, the Tribunal found that the Revenue had failed to properly determine the value attributable to the casting portion within the imported items. Accordingly, while upholding the legal liability to CVD, it remanded the matter to the adjudicating authority for fresh valuation after considering the importer’s submissions. The Tribunal clarified that if the casting value cannot be determined, no CVD can be levied, applying the principle that a levy fails where the computation mechanism breaks down. The Revenue’s appeal was thus allowed for statistical purposes.

Inadvertent Wrong Citation of Notification Not Fatal When Eligibility Conditions are same: CESTAT Sets Aside ₹82.84 Crore Demand of Erroneous Refund

Sun Pharma Laboratories Limited vs Commissioner, C.G.S.T. andCentral Excise

CITATION : 2025 TAXSCAN (CESTAT) 1397

The Kolkata Bench of the CESTAT set aside a demand of ₹82.84 crore raised under Section 11A of the Central Excise Act, 1944 for recovery of alleged erroneous refunds, holding that inadvertent mention of an incorrect exemption notification does not disentitle an assessee from refund when the substantive eligibility conditions are identical. In the case of Sun Pharma Laboratories Ltd., the tribunal noted that although the refund claims cited Notification No. 56/2003-CE instead of Notification No. 20/2007-CE, the jurisdictional officers had examined and sanctioned the refunds through appealable Orders-in-Original, applying the correct exemption rates based on eligibility.

The tribunal further held that since the Revenue failed to challenge the refund sanctioning orders under Section 35E, those orders had attained finality and could not be reopened through a subsequent show cause notice under Section 11A. Relying on judicial precedents including Share Medical Care and the Madras High Court ruling in Eveready Industries, the CESTAT ruled that Section 11A cannot be used as a collateral mechanism to undo final adjudication orders. Accordingly, the demand was quashed, the appeal was allowed with consequential relief, and the department’s cross-objection was dismissed.

CESTAT Quashes Customs duty on Silk Fabric Imports, Rules Non-Return of Seized Laptop Violates Natural Justice and Remits Matter

Francis Goel vs Commissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 1398

The Chennai Bench of the CESTAT set aside a demand of differential customs duty and penalties on alleged under- and over-valuation of imported silk fabrics, holding that the department’s failure to return a seized laptop used as evidence amounted to a serious violation of principles of natural justice. The demand of ₹1.88 crore was based on partial data extracted from the seized laptop and statements of the appellant, Francis Goel of M/s Tek Chand International. Despite repeated requests, the laptop and non-relied-upon documents were never returned, and the adjudicating authority proceeded to pass an ex-parte order.

The tribunal held that authorities cannot decide the relevance of documents sought by an assessee for defence and noted that CBEC Circulars mandate return of non-relied-upon documents within 15 days of issuing the SCN. It also observed that electronic evidence was relied upon without complying with Section 138C of the Customs Act, 1962. Terming the retention of the laptop as unexplained and prejudicial, the CESTAT set aside the order and remanded the matter, directing return of the laptop within 30 days and granting the appellant 60 days thereafter to file a revised reply and evidence.

Revenue Sharing with Diagnostic Labs Not Taxable as BSS: CESTAT Sets aside Service Tax Demand on Hospital

NC Jindal Institute of Medical Care & Research vsCommissioner of Central Excise, Goods &Service Tax, Rohtak

CITATION : 2025 TAXSCAN (CESTAT) 1399

The Chandigarh Bench of the CESTAT held that service tax cannot be levied under “Business Support Services” on the portion of revenue retained by a hospital from diagnostic service providers (DSPs), as the arrangement constitutes a joint venture in providing healthcare rather than a service rendered to the DSPs. In the case of NC Jindal Institute of Medical Care & Research, the tribunal noted that the hospital provided infrastructure while DSPs installed and operated their own diagnostic equipment, with patients being billed by the hospital and revenues shared on a pre-agreed basis.

The tribunal found that the relationship between the hospital and DSPs was on a principal-to-principal basis, with healthcare services being provided by the hospital to patients, and not business support services to DSPs. Observing that healthcare services have been exempt from service tax since 2011 and were outside the tax net even under the negative list regime, and noting that similar demands for other periods had already been set aside, the CESTAT quashed the demand of ₹42.6 lakh and allowed the appeal with consequential relief.

Drawback on Exports Delivered to Dubai Instead of Russia: CESTAT Quashes Rs. 31.66 Lakh Disallowance, sets aside Confiscation Order

Texcomash Export & Sh. N.K. Rajgarhia vs Commissioner ofCustoms, New Delhi

CITATION : 2025 TAXSCAN (CESTAT) 1400

The Principal Bench of the CESTAT, New Delhi, held that export is complete once goods are taken out of India to any place outside India, and drawback cannot be denied merely because the goods were delivered in Dubai instead of the originally intended destination of Russia. In the case of M/s Texcomash Export, the tribunal noted that the Drawback Rules do not mandate delivery to a specific final destination and that delivery at Dubai against surrender of original bills of lading is a normal commercial practice. It also observed that RBI had permitted the remittances, indicating no violation of its circulars governing export proceeds.

The tribunal further held that retrospective application of Rule 16A of the Drawback Rules, 1995 to exports made in 1993–94 was impermissible and that alleged irregularities in landing certificates abroad could not negate drawback once goods had crossed Indian territory. Holding the disallowance of ₹31.66 lakh drawback and the confiscation of goods to be legally unsustainable, the CESTAT set aside the impugned order and allowed the appeals with consequential relief.

Customs Cannot Withhold Provisional Release of Used Highly Specialised Equipment in Absence of Centralised Monitoring: CESTAT

M/s. Atul Automation Private Limited vs Principal Commissionerof Customs

CITATION : 2025 TAXSCAN (CESTAT) 1401

The Kolkata Bench of the CESTAT held that Customs authorities cannot deny or partially withhold provisional release of used highly specialised equipment merely due to the absence of a centralised mechanism to monitor model-wise import limits. In the case involving Atul Automation Pvt. Ltd. and others, the tribunal noted that although the imported used digital multifunction print and copying machines were examined and found to be correctly declared, Customs withheld release of 63 machines by applying a model-wise import cap without any uniform or centralised monitoring system, leading to arbitrary and inconsistent enforcement.

Relying on Ministry clarifications and earlier Calcutta High Court orders affirmed by the Supreme Court, the tribunal observed that selective enforcement at one port was unjustified, especially when the importers had already furnished bonds and bank guarantees covering the full value of the consignments. Holding that there was no valid basis to withhold provisional release, the CESTAT directed release of the detained machines against bond and bank guarantee and disposed of the appeals accordingly.

Limitation Act Does Not Apply to Conversion of Shipping Bills u/s 149 of the Customs Act: CESTAT

Commissioner of Customs vs ADF Foods Ltd.

CITATION : 2025 TAXSCAN (CESTAT) 1402

The Mumbai Bench of the CESTAT held that the Limitation Act, 1963 does not apply to applications for conversion of Shipping Bills made under Section 149 of the Customs Act, 1962, as the provision prescribes no time limit. In the case of ADF Foods Ltd., the tribunal reiterated that Article 137 of the Limitation Act applies only to applications before civil courts and not to quasi-judicial proceedings under the Customs Act. It further held that conditions introduced through Circular No. 36/2010-Cus cannot override the statute, and conversion of Shipping Bills can be allowed based on documentary evidence even after a long period.

The tribunal also noted that in an earlier order dated 17.07.2025, it had already allowed conversion of all Shipping Bills covering more than ten years. Applying the doctrine of merger and principles of res judicata, the bench held that the Customs Department was barred from reopening the issue or challenging even the partial relief earlier granted by the Commissioner. Accordingly, the department’s appeal was dismissed and the conversion of Shipping Bills in favour of the exporter was upheld.

Laying of Telecom and Optical Fibre Cables Under or Alongside Roads Not Taxable to Service Tax: CESTAT

M/s. Precision TrenchlessLaying Private Limited vs Commissioner of Service Tax-II

CITATION : 2025 TAXSCAN (CESTAT) 1403

The Kolkata Bench of the CESTAT held that laying telecom and optical fibre cables under or alongside roads is not liable to service tax, relying on CBEC Circular No. 123/5/2010-TRU. Precision Trenchless Laying Pvt. Ltd., engaged in underground cable laying for major telecom operators during 2008-09 to 2012-13, executed pure service, composite works, and supply contracts. The department had raised a demand of ₹93.69 lakh with interest and penalty on various grounds including undervaluation, denial of abatement, taxation of right-of-way reimbursements, and invocation of extended limitation.

The Tribunal ruled that the circular was clarificatory and applicable retrospectively, and that all receipts related to a non-taxable activity. Consequently, the service tax demand, interest, and penalty were unsustainable, and the extended period of limitation was wrongly invoked. The appeal was allowed in full, setting aside the entire demand, with the clarification that no refund would be available for any tax already collected from clients and deposited with the government.

Penalty on CHA Not Sustainable When Classification Dispute is Settled in Favour of Importer and No Misdeclaration is Established: CESTAT

Narendra Forwarders Pvt.Ltd. vs Commissioner of Customs (Import), Nhava Sheva

CITATION : 2025 TAXSCAN (CESTAT) 1404

The Mumbai Bench of the CESTAT held that penalty on a Customs House Agent (CHA) is not sustainable when the classification dispute is ultimately decided in favour of the importer and no misdeclaration is established against the CHA. Narendra Forwarders Pvt. Ltd., acting as CHA for clearance of fabricated aluminium products, had classified the goods based on documents and instructions provided by the importer and claimed exemption accordingly. Although the DRI initially disputed the classification and the importer paid differential duty with interest, the Tribunal later upheld the importer’s classification and entitlement to exemption.

The Tribunal observed that merely following the importer’s instructions on classification or exemption does not amount to misdeclaration by the CHA, particularly when the classification itself was held to be correct. It further held that the CHA’s statement under Section 108 did not constitute an admission of misclassification, and once penalty on the importer was set aside, penalty on the CHA could not survive. Accordingly, the penalty imposed under Section 112 of the Customs Act was quashed and the appeal was allowed with consequential relief.

Extended Limitation Not Invocable when CENVAT Credit Availed was Disclosed in Returns: CESTAT Grants Relief to HCL Technologies

HCL Technologies Ltd vs Commissioner of Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 1405

The Allahabad Bench of the CESTAT held that the extended period of limitation cannot be invoked for recovery of CENVAT credit when the availment of credit is duly disclosed in statutory ST-3 returns and refund claims, and that penalty is not sustainable in the absence of suppression or misstatement. In the case of HCL Technologies Ltd., the Tribunal noted that the appellant had regularly filed returns, disclosed the credit availed, and submitted all invoices and documents along with refund claims, and that detailed scrutiny by the department at a later stage does not justify invocation of the extended period.

On merits, the Tribunal observed that credit on several disputed input services had already been allowed in the appellant’s own earlier cases, while credit on outdoor catering services (post-amendment), services meant for personal consumption of employees, and invoices lacking proper particulars was not admissible. It held that once the extended period was not invocable, the penalty under Section 78 of the Finance Act, 1994 could not survive. Except for a limited remand to verify an alleged double addition of credit, the appeal was partly allowed in favour of the appellant.

Relief for Reliance Industries: CESTAT allows Proportionate CENVAT Credit on Insurance Services Spanning Pre-And Post-Taxable Period

COMMISSIONER OF CENTRAL GST AND CENTRAL EXCISE-RAJKOT vsRELIANCE INDUSTRIES LTD

CITATION : 2025 TAXSCAN (CESTAT) 1406

The Ahmedabad Bench of the CESTAT held that proportionate CENVAT credit on insurance services covering both pre-taxable and taxable periods is admissible, provided there is a nexus with taxable output services. Reliance Industries Ltd. had taken long-term insurance policies in 2003, prior to Business Auxiliary Service becoming taxable on 1 July 2003, and availed CENVAT credit only on a proportionate basis for the post-taxable period. The Tribunal rejected the Revenue’s contention that credit must be denied solely because the premium was paid before the levy, holding that the decisive factor is the use of the input service in relation to taxable output services.

The Tribunal noted that insurance was an integral requirement under the service agreement and that the policies continued to cover the period during which the output services were taxable. While accepting the legal principle that proportionate credit is permissible when services span taxable and non-taxable periods, the Tribunal observed that the insurance policies were not placed on record to conclusively establish nexus. Accordingly, the matter was remanded to the adjudicating authority for limited factual verification, and the appeal was disposed of by way of remand.

Excise Refund Claim cannot be Reopened Once Earlier Appellate Findings Attains Finality: CESTAT Dismisses BHEL Appeal

Bharat Heavy Electricals Ltd. vs Commissioner, CGST &Central Excise, Kanpur

CITATION : 2025 TAXSCAN (CESTAT) 1407

The Allahabad Bench of the CESTAT dismissed the appeal filed by Bharat Heavy Electricals Ltd., holding that issues conclusively decided by the Commissioner (Appeals) in an earlier round of litigation cannot be re-agitated in subsequent proceedings. BHEL had paid excise duty on exempted clearances made between January and March 2014 and later filed a refund claim under Section 11B. In the first round, the Commissioner (Appeals) remanded the matter with specific directions, which were not challenged by either party and therefore attained finality.

The Tribunal observed that in remand proceedings, the authorities correctly applied the earlier appellate findings by allowing refund for March 2014 and rejecting the claims for January and February 2014 as time-barred. It held that the relevant date for limitation under Section 11B had already been settled in the earlier order and reopening the issue would violate principles of res judicata and judicial discipline. Finding no merit in the appeal, the Tribunal dismissed it in entirety.

Relief to Indiamart: CESTAT Rules Refund of Excess Service Tax Paid on Unused Subscription Amounts Not Time-Barred Post-GST

Indiamart Intermesh Ltd vsCommissioner, CGST

CITATION : 2025 TAXSCAN (CESTAT) 1408

The New Delhi Bench of the CESTAT held that refund of excess service tax paid on amounts later refunded to customers is not time-barred where the right to credit had already accrued under the service tax law, even though cash refund was sought after the introduction of GST. Indiamart Intermesh Ltd. had paid service tax on advance subscription amounts and later refunded proportionate consideration to customers on plan changes. Under Rule 6(3) of the Service Tax Rules, 1994, the appellant was entitled to take credit for the excess tax paid when services were not provided.

The Tribunal observed that there was no limitation prescribed under the service tax regime for availing such credit and that the right to credit had accrued prior to GST. Since service tax law ceased to exist, the appellant could not take credit and was entitled to cash refund under Section 142(3) of the CGST Act. Accordingly, the Tribunal held that the refund claim was not barred by limitation, set aside the impugned orders, and allowed the appeal with consequential relief.

Customs Cannot Reject Declared Value of LED TVs Based on Third-Party Documents Without Independent Evidence: CESTAT

ABC Overseas vs Principal Commissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 1409

The New Delhi Bench of the CESTAT held that Customs authorities cannot reject the declared transaction value of imported LED TVs merely on the basis of third-party documents, assumptions, or electronic records without independent and legally admissible evidence. In the case of ABC Overseas, the Tribunal noted that the consignment of unbranded LED TVs was subjected to 100% examination and was found fully consistent with the declared description, quantity, and value. The presence of brand stickers on internal LED panels, discovered only after dismantling the TVs, did not render the finished products “branded,” nor did it justify rejection of the declared value.

The Tribunal further held that reliance on third-party invoices and computer printouts was impermissible in the absence of compliance with Section 138C of the Customs Act, and that certificates of origin could not be discarded without proof of collusion or falsification. It observed that valuation cannot be redetermined based on unrelated third-party data lacking contemporaneous import evidence or corroboration. Accordingly, the Tribunal set aside the rejection of transaction value, confiscation of goods, and the demands of duty, interest, and penalties, and allowed the appeal in favour of the importer.

Sale of Food And Beverages at Cinema Counters Not a Taxable Service: CESTAT in Cinepolis India Case

M/s Cinepolis India Private Limited vs Additional DirectorGeneral

CITATION : 2025 TAXSCAN (CESTAT) 1410

The New Delhi Bench of the CESTAT held that sale of food and beverages at cinema counters does not amount to a taxable service under the Finance Act, 1994. In the case of Cinepolis India Pvt. Ltd., the Tribunal noted that food items such as popcorn and beverages are sold across the counter to movie ticket holders, without any element of table service, serving staff, or dining facilities. Relying on its earlier decision in PVR Limited, the Tribunal held that such transactions constitute a pure sale of goods and not the provision of any service.

The Tribunal rejected the department’s contention that the activity was a declared service under Section 66E, observing that the sale of food inside cinema halls is merely incidental to the primary activity of film exhibition and does not alter the nature of the transaction. It further noted that the Supreme Court had upheld the decision in PVR Limited, thereby settling the issue. Accordingly, the demand of service tax, interest, and penalty was set aside, and the appeal was allowed with consequential relief.

Change in Ownership Does Not Restore Excise SSI Exemption If Turnover Limit Was Crossed Earlier: CESTAT

Pankil Textiles vs Commissioner of Central Excise &ST,Surat-1

CITATION : 2025 TAXSCAN (CESTAT) 1411

The Ahmedabad Bench of the CESTAT held that a change in ownership of a factory does not revive eligibility for Small Scale Industry (SSI) excise exemption if the turnover limit had already been crossed in the preceding financial year. In the case of Pankil Textiles, the Tribunal noted that the aggregate clearances of the factory under the previous owner had exceeded the SSI threshold in 1995–96, and concessional duty had been paid during part of that year. It held that SSI eligibility is linked to the factory and its past clearances, not the identity of the manufacturer, and later payment of differential duty did not nullify the earlier availment of concessional benefit.

The Tribunal rejected the challenge to jurisdiction and upheld the demand of excise duty and interest, observing that the Superintendent was competent to issue the show cause notices and that a mere incorrect rule reference did not vitiate the penalty proceedings. However, considering the facts and circumstances, the Tribunal reduced the penalty from ₹6 lakh to ₹4 lakh. The appeal was thus partly allowed only to the extent of reduction in penalty.

DGFT Export Restrictions on Garnet Not Limited To Beach Sand Minerals, Apply Regardless of Source: CESTAT

Payal Synthetics vs Commissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 1412

The Ahmedabad Bench of the CESTAT held that export restrictions imposed by the DGFT on garnet apply irrespective of its source and are not limited to garnet derived from beach sand minerals. In the case of Payal Synthetics Pvt. Ltd., the Tribunal noted that DGFT Notification No. 26/2015–20 canalised the export of garnet under the relevant tariff heading through Indian Rare Earths Limited without making any distinction based on the place of origin. Since the test report conclusively identified the exported goods as natural garnet, reclassification under the canalised tariff heading was justified.

The Tribunal rejected the contention that inland-origin garnet was outside the scope of the notification, observing that the Customs Tariff does not differentiate between inland and beach-origin garnet. It further held that declaring the goods as “Natural Abrasive” amounted to misdeclaration intended to circumvent export restrictions. Accordingly, the Tribunal upheld confiscation of the goods along with the redemption fine and penalties, and dismissed the appeal.

No Abetment without Knowledge or Intent to evade: CESTAT Sets Aside ₹15 Lakh Customs Penalty On CFO

Asheesh Chatterjee vs Commissioner of Customs (Airport &Cargo)

CITATION : 2025 TAXSCAN (CESTAT) 1413

The Chennai Bench of the CESTAT set aside the ₹15 lakh penalty imposed on the Chief Finance Officer of Moser Baer India Ltd., holding that mere negligence or failure to exercise due care does not constitute abetment under Section 112(a) of the Customs Act. The appellant, Asheesh Chatterjee, had been penalised on the allegation that he abetted undervaluation of imported recorded media by not ensuring that licence or royalty fees paid to foreign suppliers were included in the assessable value. Although the company paid the differential customs duty during the investigation, the adjudicating authority imposed a personal penalty on the CFO on the ground that his lack of diligence facilitated duty evasion.

The Tribunal observed that while mens rea may not always be required for imposing penalty on a person directly involved in acts rendering goods liable to confiscation, the concept of abetment necessarily requires knowledge, intent, and conscious participation. It noted that neither the show cause notice nor the adjudication order clearly spelt out how the appellant had knowingly instigated, aided, or encouraged the alleged undervaluation. The appellant’s statement also did not indicate any awareness that licence fees were required to be added to the assessable value or any intention to evade customs duty. The Tribunal held that even if the appellant failed to exercise due care in his role as CFO, such conduct would amount at best to negligence, which cannot be equated with abetment in law. In the absence of evidence establishing knowledge or intentional involvement, the penalty was held to be unsustainable and was accordingly quashed.

Recovery Notice Falls for Want of Non-Obstante Clause: CESTAT Rules Pre-Liquidation Dues Cannot be Fastened on Purchasers

Fmn Enterprise vsCommissioner of Customs.-Ahmedabad

CITATION : 2025 TAXSCAN (CESTAT) 1414

The Ahmedabad Bench of the CESTAT held that recovery notices issued against auction purchasers for pre-liquidation excise and customs dues are without jurisdiction when the relevant fiscal statutes do not contain a non-obstante clause overriding the liquidation scheme under the Companies Act, 1956. The appellants, including FMN Enterprise, had purchased assets of Varun Seacon Ltd., a 100% Export Oriented Unit, through a court-supervised liquidation process in which the Gujarat High Court had expressly directed that purchasers would be liable only for statutory dues arising after the winding-up order, with all pre-liquidation dues to be dealt with through the official liquidator.

The Tribunal held that pre-liquidation excise and customs liabilities must be claimed only before the official liquidator in accordance with the Companies Act and cannot be fastened on asset purchasers in the absence of express statutory authority. It observed that none of the fiscal statutes relied upon by the department contained a provision enabling revenue authorities to bypass the liquidation framework or recover past dues from auction purchasers. Since only assets and not the business as a going concern were sold, the appellants could not be treated as successors liable for bonded obligations. Accordingly, the recovery notices, duty demands, interest, and penalties were quashed and the appeals were allowed.

Textile Job Work on Per-Kg / Output Basis Is Not Manpower Supply: CESTAT Quashes Service Tax Demands

N D Enterprises vs COMMISSIONER OF CGST & CENTRAL EXCISE

CITATION : 2025 TAXSCAN (CESTAT) 1415

The Ahmedabad Bench of the CESTAT held that textile processing carried out on a job-work basis does not constitute manpower supply service, and accordingly set aside the service tax demands raised against the appellants. N D Enterprises and Singh Labour Contractor were engaged in dyeing and hydro-processing of yarn for principal manufacturers, with payment linked to the quantity of work completed rather than the number of workers deployed. The raw materials, machinery, and consumables were supplied by the principals, but control over labour, quality, losses, and timely completion of work remained with the appellants.

The Tribunal observed that manpower supply service requires workers to be under the control of the service recipient and payment to depend on the number of workers deployed. In contrast, the appellants’ contracts were output-based, and they maintained control over the workforce, meeting the characteristics of job work rather than manpower supply. Relying on earlier Tribunal decisions and CBEC clarifications, the Bench concluded that the service tax demands were unsustainable and allowed the appeals, setting aside the orders of the Commissioner (Appeals).

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