Adjournment Not a Matter of Right: CESTAT Refuses to Entertain Late E-mail Request after Pronouncing Order in Open Court

M/s Purple Products Pvt. Ltd. vs Commissioner, Customs, Noida

CITATION : 2025 TAXSCAN (CESTAT) 1419

The Allahabad Bench of CESTAT dismissed the appeal filed by Purple Products Pvt. Ltd., upholding the Commissioner (Appeals)’ order rejecting the appeal as time-barred under Section 128 of the Customs Act, 1962. The Tribunal noted that the appellant became aware of the demand through a recovery notice dated August 16, 2021, yet filed the appeal more than three years later, far beyond the statutory condonable period of 90 days (60 + 30). Relying on Singh Enterprises v. CCE, the Bench held that the limitation period is absolute and cannot be extended by invoking Section 5 of the Limitation Act, and that merits of the case are irrelevant while considering condonation of delay.

The Tribunal also rejected a belated adjournment request sent by e-mail at 9:03 AM on the day of hearing, after the matter had already been decided in open court. It observed that the request was not made in advance, lacked details or proof regarding the alleged demise, and did not bind the Bench to grant an adjournment. Citing Shri Ram Steel Industries, the Tribunal reiterated that last-minute adjournment requests are objectionable and that discretion to adjourn rests solely with the Bench. Consequently, both the appeal and the adjournment application were dismissed.

Higher Sale Value of ‘Inputs Cleared as Such’ Attracts Liability u/s 11D: CESTAT upholds Excise Duty Demand

SATYENDRA PACKAGING PVT LTD vs COMMISSIONER OF CENTRAL EXCISE

CITATION : 2025 TAXSCAN (CESTAT) 1420

The Ahmedabad Bench of CESTAT upheld the demand against Satyendra Packaging Pvt. Ltd., holding that any amount collected from buyers as representing excise duty in excess of the duty actually paid or CENVAT credit reversed must be deposited with the government under Section 11D of the Central Excise Act, 1944. The appellant had cleared inputs “as such” at a higher sale value than the purchase price, reversing only the credit originally availed under Rule 3(5) of the CENVAT Credit Rules, 2004. The Tribunal noted that while the purchase value was about ₹6.46 crore, the sale value was ₹6.70 crore, resulting in a differential of ₹23.78 lakh, on which duty had not been correctly discharged.

The Bench observed that inclusion of freight and profit margins indicated trading activity under a manufacturing registration and that Section 11D squarely applied to the excess amount collected as duty. Relying on the Gujarat High Court’s ruling in CCE Ahmedabad-II v. Inducto Therm (I) Pvt. Ltd., it held that any amount collected beyond the exact credit taken must be paid in cash through PLA. Finding no infirmity in the adjudication, the Tribunal upheld the demand of ₹2.97 lakh along with interest and penalties, and dismissed the appeal.

Settlement Amount Paid Towards Outstanding Rent Not Taxable as ‘Declared Service’: CESTAT Set asides Service Tax Demand Under RCM

CHAROTAR GAS SAHKARI MANDALI LIMITED vs Commissioner of CGST

CITATION : 2025 TAXSCAN (CESTAT) 1421

The Ahmedabad Bench of CESTAT held that the lump-sum settlement amount of ₹60 lakh paid by Charotar Gas Sahkari Mandli Ltd. to the Vallabh Vidhyanagar Nagarpalika towards long-pending rent for laying underground pipelines did not constitute a “Declared Service” under Section 66E(e) of the Finance Act, 1994. The Tribunal noted that the settlement merely resolved a rent dispute, that the municipality had already discharged service tax on the amount under “Renting of Immovable Property Service,” and that the same transaction could not be subjected to tax again under a different head.

The Bench observed that for Section 66E(e) to apply, there must be a clear agreement to tolerate or refrain from an act for consideration, which was absent in the present case. The payment was found to be purely towards use of land and not for tolerating any act or situation. It further held that there was no suppression or intent to evade tax, making the extended limitation period and penalties under Sections 78 and 77(2) unsustainable. Accordingly, the service tax demand on a reverse charge basis and the penalties were set aside.

Director cannot Be Penalised Without Personal Involvement in Service Tax Evasion: CESTAT

Ali Akbar Ratansi vs Commissioner of CGST

CITATION : 2025 TAXSCAN (CESTAT) 1422

The Mumbai Bench of CESTAT set aside the personal penalty of ₹1 lakh imposed on Ali Akbar Ratansi under Section 78A of the Finance Act, 1994, holding that a director cannot be penalised without proof of active control over the company’s affairs and knowing involvement in service tax evasion. The Tribunal noted that the service tax demand of about ₹1.93 crore against the company was not under challenge and that the appellant had ceased to be a director in October 2017, much before the show cause notice was issued in September 2020.

The Bench observed that both the show cause notice and the adjudication order contained only general allegations against directors, without identifying any specific role or evidence showing the appellant’s conscious participation in the evasion. It reiterated that mere designation as a director is insufficient to attract liability under Section 78A, which requires proof that the person was in charge of the business and knowingly involved in the offence. In the absence of such findings or evidence, the Tribunal held the penalty unsustainable and accordingly quashed it.

Accident Surcharge Not Insurance Service: CESTAT Sets aside Rs 2.2 Crore Service Tax Demand on Rajasthan SRTC

Rajasthan State Road Transportation Corporation vs The PrincipalCommissioner of Central Goods and Service Tax and Central ExciseCommissionerate, Jaipur

CITATION : 2025 TAXSCAN (CESTAT) 1423

The Principal Bench of CESTAT, New Delhi, set aside a service tax demand of ₹2.20 crore against Rajasthan State Road Transport Corporation (RSRTC) for April–June 2017, holding that the accident compensation surcharge collected along with passenger tickets was not taxable as a general insurance service. The Tribunal observed that RSRTC’s core activity was passenger transportation, which fell under the negative list during the relevant period, and the compensation surcharge was merely incidental and bundled with the principal exempt service.

Relying on its earlier decision in RSRTC’s own case, the Bench held that even if accident compensation were treated as an additional service, it did not alter the essential character of passenger transportation. Since the activity did not amount to providing general insurance service, the demand, along with interest and penalties, was held unsustainable. Accordingly, the impugned order was set aside and the appeal was allowed with consequential relief.

CESTAT Sets Aside ₹1,398 Crore CENVAT Credit Demand on Indian Oil Petronas on Limitation Grounds

Indian Oil Petronas vs The Commissioner of GST & CentralExcise

CITATION : 2025 TAXSCAN (CESTAT) 1424

The Chennai Bench of CESTAT allowed the appeal filed by Indian Oil Petronas and set aside a demand of nearly ₹1,398 crore raised on alleged wrongful availment of CENVAT credit on capital goods and input services used for setting up its LPG plant. The Tribunal noted that the appellant had entered into a lump-sum EPCC contract, regularly availed credit, and disclosed the same in ER-1 returns, all of which were verified by the Department well before issuance of the show cause notice. Consequently, allegations of suppression or wilful misstatement were held to be unsustainable.

Relying on Supreme Court rulings in Pepsi Foods Ltd., Hindustan Steel Ltd. and Canon India Pvt. Ltd., the Bench held that the extended period of limitation cannot be invoked merely due to a change in interpretation when full disclosure has been made. It observed that regular filing of returns and payment of duty ruled out any intent to evade tax. Since the demand itself was time-barred, the Tribunal also set aside the consequential interest and penalties, allowing the appeal with consequential relief.

Rule 3(a) Interpretation: CESTAT Rejects Revenue’s Attempt to Reclassify Specific Goods Under Residuary Headings

Arun Industries vsCommissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 1425

The Chennai Bench of CESTAT allowed the appeal filed by Arun Industries, holding that the department had wrongly reclassified imported PVC Suspension Resin SP 660 and erroneously denied the benefit of concessional duty under Notification No. 46/2011-Customs. The appellant had correctly classified the goods under CTH 39042110 as non-plasticised PVC resin, whereas the department sought reclassification under the residuary heading 39041090. The Tribunal noted that identical goods had consistently been classified under CTH 39042110 in earlier decisions and that the department’s reliance on test reports of other importers was contrary to settled law.

The Bench reiterated that tariff classification must follow the most specific entry and that a residuary heading cannot override a specific tariff description. Observing that CTH 39042110 was a specific and applicable entry during the relevant period, the Tribunal held that the Commissioner (Appeals) erred in deviating from binding precedents. Accordingly, the impugned order was set aside, the appeal was allowed, and the appellant was held entitled to concessional customs duty with consequential relief.

No CENVAT Reversal Required on Sale of Empty Packaging Material: CESTAT Holds Rule 6 Inapplicable to Non-Manufactured Goods

Mahindra Agri Solutions Limited vs Commissioner CGST &Central Excise, Vadodara

CITATION : 2025 TAXSCAN (CESTAT) 1426

The Ahmedabad Bench of CESTAT allowed the appeal filed by Mahindra Agri Solutions Limited, holding that Rule 6(3) of the CENVAT Credit Rules, 2004 is applicable only when a manufacturer produces two classes of goods, namely exempted and dutiable goods. The Tribunal observed that in the present case, the appellant was engaged in manufacturing only one category of final products such as fertilizers, insecticides and fungicides. The used packing materials in the form of empty drums were not manufactured by the appellant but merely arose after receipt and consumption of inputs. Since these empty drums did not emerge from any manufacturing process, they could not be treated as “exempted goods” or “final products” for the purpose of Rule 6(3), and therefore no 6% CENVAT credit reversal was required on their clearance.

The Bench relied on judicial precedents including Sundaram Packaging India Pvt. Ltd. and Cadila Healthcare Ltd., which consistently held that empty packaging material is not liable to excise duty and does not attract reversal of credit under Rule 6(3), even after the 2015 amendment. The Tribunal found that the lower authorities had misinterpreted Notification No. 6/2015-CE (NT) by extending Rule 6 to non-manufactured, non-excisable goods. Holding the demand of ₹94,135, along with interest and penalty, to be legally unsustainable, the Tribunal set aside the impugned order and allowed the appeal with consequential relief.

Rule 8(3A) of Central Excise Rules already Declared Unconstitutional by Gujarat HC: CESTAT sets aside ₹14.14cr Demand

Rathi TMT Saria Pvt. Ltd. vs Commissioner of Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 1427

The Principal Bench of CESTAT, New Delhi, set aside a central excise duty demand of ₹14.14 crore raised against M/s Rathi TMT Saria Pvt. Ltd. under Rule 8(3A) of the Central Excise Rules, 2002, holding that the provision had already been declared unconstitutional. The demand arose from alleged default in payment of excise duty for September 2012 and the department’s insistence that duty be paid in cash without utilisation of CENVAT credit. The Tribunal noted that despite the assessee’s reply, the adjudicating authority had confirmed the demand solely by invoking Rule 8(3A).

The Bench, comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member), observed that Rule 8(3A), insofar as it prohibited utilisation of CENVAT credit, had been struck down by the Gujarat High Court in Indsur Global Ltd. v. Union of India, a view consistently followed by several High Courts, with the department’s civil appeal also having been dismissed. Since the legal position was settled and even conceded by the Revenue, the Tribunal held that the impugned demand could not survive. Accordingly, the order dated September 1, 2014 was set aside and the appeal was allowed.

Unconstitutional Restriction on CENVAT Credit: CESTAT Sets Aside Penalty and Demand Based on Invalid Rule 8(3A) of Central Excise Rules

Finproject India Pvt. Ltd. vs Commissioner of CGST & CentralExcise

CITATION : 2025 TAXSCAN (CESTAT) 1428

The Principal Bench of CESTAT, New Delhi, set aside the central excise duty demand raised against M/s Finproject India Pvt. Ltd. under Rule 8(3A) of the Central Excise Rules, 2002, holding that the provision had already been declared unconstitutional and the issue was no longer res integra. The demand arose from a short payment of education cess of ₹1,392 for March 2014, which was paid belatedly in December 2014, following which proceedings were initiated alleging default and seeking recovery of duty and penalty under Rule 8(3A).

The Tribunal relied on the Gujarat High Court’s decision in Indsur Global Ltd. v. Union of India, which struck down the restriction on utilisation of CENVAT credit under Rule 8(3A) as arbitrary and violative of Articles 14 and 19(1)(g), a view consistently followed by several other High Courts. Noting the departmental concession that the issue was covered, the Bench held that the demand could not survive. Accordingly, the impugned order dated July 10, 2018 was set aside and the appeal was allowed.

Relief for Bridgestone India: CESTAT Sets Aside ₹96 Lakh Excise Demand for Alleged Excess CENVAT Credit

M/s Bridgestone India Pvt. Ltd. vs Commissioner of CentralExcise & CGST

CITATION : 2025 TAXSCAN (CESTAT) 1429

The Principal Bench of CESTAT, New Delhi, set aside a central excise duty demand exceeding ₹96 lakh against Bridgestone India Private Limited, holding that the extended period of limitation was wrongly invoked. The demand pertained to April–June 2017 and arose from an audit objection alleging excess availment of CENVAT credit distributed by the Input Service Distributor in violation of Rule 7 of the CENVAT Credit Rules, 2004. A show cause notice issued in January 2022 invoked Section 11A(4) of the Central ExciseAct, 1944 on the ground that the irregularity surfaced only during audit, a view accepted by the lower authorities.

The Tribunal, comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member), held that invocation of the extended period requires proof of wilful suppression or misstatement with intent to evade duty. Relying on Pushpam Pharmaceutical Co. and other settled precedents, it observed that detection during audit or alleged non-disclosure by itself does not constitute suppression. Since the show cause notice failed to establish deliberate intent to evade duty and the relevant details were available in statutory returns, the demand was held time-barred. Accordingly, the impugned order was set aside and the appeal was allowed.

CESTAT Sets Aside Section 114AA Penalty Due to Failure in Establishing Proof of Intentional Use of Manipulated Scrip

M/S GFC WELD HOUSE vsPRINCIPAL COMMISSIONER

CITATION : 2025 TAXSCAN (CESTAT) 1430

The Principal Bench of CESTAT, New Delhi, held that a penalty under Section 114AA of the Customs Act, 1962 cannot be sustained unless there is evidence that the importer knowingly or intentionally used false or incorrect documents. The appeal arose from misuse of a Focus Market Scheme scrip that had been fraudulently enhanced in the Customs EDI system and used by GFC Weld House to discharge customs duty. While the duty demand and penalty under Section 114A were not disputed in view of the Supreme Court’s ruling in Munjal Showa Ltd. that forged scrips are void ab initio, the appellant challenged the separate penalty of ₹10 lakh imposed under Section 114AA.

The Tribunal, comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member), found that there was no evidence on record to show that the importer had knowledge of or was involved in the fraudulent enhancement of the scrip. It emphasized that Section 114AA mandates proof of conscious or intentional use of false documents, which was absent in the present case. Accordingly, the Tribunal set aside the penalty imposed under Section 114AA while upholding the remainder of the impugned order, thereby partly allowing the appeal.

CESTAT Quashes Service Tax Demand on Cross-Border Cost-Sharing, Holds Downward Price Adjustments are Not Consideration

Intellect Design ArenaLimited vs Commissioner of GST and Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 1431

The Chennai Bench of CESTAT set aside a service tax demand exceeding ₹36.77 crore against Intellect Design Arena Limited, holding that inter-company cost sharing and downward price adjustments under software implementation arrangements do not amount to “import of services” taxable under the Reverse Charge Mechanism. The Tribunal observed that the appellant was the primary service provider licensing software to overseas group entities, and the debit notes merely reflected adjustment of costs for implementation work not performed by the appellant, rather than consideration for any service rendered by foreign subsidiaries.

Relying on precedents such as Tech Mahindra Ltd., Man Trucks India Pvt. Ltd. and KPIT Technologies Ltd., the Bench held that internal cost-sharing and revenue adjustments within a group do not satisfy the ingredients of a taxable service under Section 65B(44) of the Finance Act, 1994, and in any event, services performed outside India were not taxable under the Place of Provision of Services Rules, 2012. It further ruled that the extended limitation period and penalties were not invocable. However, a separate demand of ₹1.16 crore for December 2016 arising from an alleged clerical error in ST-3 returns was remanded for verification, and the appeal was accordingly partly allowed and partly remanded.

Works Contract Cannot Be Taxed as Residential Complex Construction Service: CESTAT Sets Aside Rs 80 Lakh Service Tax Demand, upholds Penalty for Non-Registration

Indermohan Singh vs Commissioner of Central Excise and ServiceTax, Ludhiana

CITATION : 2026 TAXSCAN (CESTAT) 101

The Chandigarh Bench of CESTAT held that composite works contracts involving both supply of materials and construction services cannot be taxed under “Construction of Residential Complex Services,” as works contract service became a separate taxable category only from 1 June 2007. Relying on the Supreme Court’s decision in Larsen & Toubro Ltd., the Tribunal observed that such composite contracts were not covered under pre-existing service categories either before or after the introduction of works contract service. Since the department itself had admitted the contracts were composite and had granted 67% abatement, the service tax demand of ₹80.23 lakh for the period 2004–2010 was held unsustainable.

Accordingly, the Tribunal set aside the demand along with interest and penalties imposed under Sections 76 and 78 of the Finance Act, 1994. However, it upheld the penalty under Section 77, noting that the appellant, though providing works contract services, had failed to obtain registration and file ST-3 returns as required. The appeal was thus partly allowed by the Tribunal.

Knowledge Centre Services Qualify as Management Consultancy, Not Legal Services: CESTAT Holds Classification Cannot Be Challenged at Refund Stage

OSC Export Services Pvt. Ltd vs Commissioner of Central Goods

CITATION : 2026 TAXSCAN (CESTAT) 103

The Chandigarh Bench of CESTAT held that the Knowledge Centre Services provided by OSC Export Services Pvt. Ltd. were correctly classifiable as Management or Business Consultant Services and not as Legal Consultancy Services, as alleged by the Revenue. The Tribunal observed that this classification had already been settled in the appellant’s own case and that the Revenue had never challenged the assessment or self-assessment adopting such classification. Relying on ITC Ltd. and B.T. India Pvt. Ltd., held that refund proceedings under Rule 5 of the CENVAT Credit Rules, 2004 are executionary in nature and the classification or admissibility of input services cannot be reopened at the refund stage without invoking Rule 14.

The Tribunal further held that CENVAT credit could not be denied merely because payment for services was made after the service period, since the payment was made before filing the refund claim and duly reflected in ST-3 returns. It also found credit on Theme Party and Real Estate Services admissible and noted that, in any event, the issue was revenue neutral in the absence of proceedings under Rule 14. The Revenue’s appeal was dismissed as being below the monetary threshold under the National Litigation Policy, while the appellant’s appeal was allowed and the cross-objection disposed of.

Voluntary Service Tax Payment u/s 73(3) Constitutes Final Settlement, Not Mere Deposit: CESTAT Dismisses Refund Appeal

Amplus Capital Advisors Pvt. Limited vs Commissioner, CGSTCommissionerate

CITATION : 2026 TAXSCAN (CESTAT) 104

The Ahmedabad Bench of CESTAT held that voluntary payment of service tax under Section 73(3) of the Finance Act, 1994 constitutes a final settlement of proceedings and cannot later be treated as a deposit or challenged through a refund claim. In this case, Amplus Capital Advisors Pvt. Ltd. had voluntarily paid Rs. 3,46,342/- (including service tax, interest, and penalty) during an inquiry relating to services received from foreign providers in FY 2014-15 and 2015-16, seeking closure of proceedings. Subsequently, the appellant claimed a refund of Rs. 2,45,786/- after realizing the services were not taxable under the Reverse Charge Mechanism, but the Assistant Commissioner rejected it on grounds of limitation and voluntary payment, which was upheld by the Commissioner (Appeals).

The Tribunal, led by Dr. Ajaya Krishna Vishvesha, affirmed that the payment made under Section 73(3) was voluntary and intended to conclude the inquiry, relying on the precedent in Amar Engineering Company vs. Commissioner of CE & ST, Vadodara-1. It held that once a voluntary payment is made and intimated to the department, the matter cannot be reopened for refund, and seeking such a refund contradicts the statutory provisions of Section 73(3). Accordingly, the Tribunal dismissed the appeal, upholding the impugned order.

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