CESTAT Weekly Round-up

OP Jindal Institute’s Revenue-Sharing with Labs Not Taxable as Business Support Service: CESTAT Sets Aside Order

M/s OP Jindal Instituteof Cancer & Research vs Commissioner of Central Excise, Goods & ServiceTax, Rohta  CITATION: 2026 TAXSCAN (CESTAT) 210

In a recent ruling The Customs,Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh, has ruled that the OP Jindal Institute’s revenue-sharing agreements with diagnostic labs were principal-to-principal arrangements and formed part of exempt healthcare services, not taxable Business Support Services, and set aside the impugned order that had confirmed a service tax demand of nearly ₹34.7 lakh.

The bench of S.S Garg ( judicial member ), P Anjani Kumar (Technical Member), concluded that the order by the Commissioner (Appeals) confirming the demand of about ₹34.7 lakh was unsustainable in law, and therefore set aside.

CENVAT Credit On Escort And Security Services For Goods In Transit Requires Determination Of Place Of Removal: CESTAT

M/s. GE T&D India Ltd vs Commissioner of GST andCentral Excise

CITATION: 2026 TAXSCAN (CESTAT) 211

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (“CESTAT”) has held that the eligibility of CENVAT credit for escort and security services used for the transportation of goods of high value depends on the determination of the place of removal and therefore their eligibility cannot be determined mechanically.

The Tribunal comprising Justice P. Dinesha[Judicial Member] and Vasa Seshagiri Rao[Technical Member] explained that credit could not be denied mechanically and must be decided based on facts specific to each transaction.

CSIR-IICT Providing Data to Private Entity as per Govt. Order Not Taxable under Scientific and Technical Consultancy Service: CESTAT

M/s Indian Institute ofChemical Technology vs Commissioner of Central Tax Secunderabad - GST

CITATION: 2026 TAXSCAN (CESTAT) 213

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad Bench, held that the Indian Institute of Chemical Technology’s (IICT) provision of data to private entities in accordance with a Government order, without rendering any consultation or advice, is not taxable under Scientific and Technical Consultancy Service.

The tribunal observed that in the case of Halliburton Offshore Services Inc., Vs CST, it has been held that merely providing data for consideration cannot be treated as provision of service under STCS. Accordingly, the tribunal set aside the commissioner’s order.

IICT Not Liable for Service Tax for Availing Consultation and Opinion from Designated Individuals: CESTAT

Indian Institute ofChemical Technology vs Commissioner of Central Tax Secunderabad - GST

CITATION: 2026 TAXSCAN (CESTAT) 213

Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad bench, held that Indian Institute of Chemical Technology is not liable to pay service tax on consultation and opinion received from designated individuals. Any demand on service tax would be made from those designated individuals providing consultation and technical opinion.

The Tribunal held that there was no dispute that the designated individuals had provided Scientific and Technical Consultancy Services. However, any service tax demand, if applicable, should be raised against those designated individuals, who may or may not be liable to pay service tax depending on the threshold exemption available to individuals.

Unauthenticated Electronic Data And Private Records Cannot Prove Clandestine Removal: CESTAT

Commissioner of GST and Central Excise vs Umashankar Alloys Pvt. Ltd

CITATION: 2026 TAXSCAN (CESTAT) 215

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that unauthenticated electronic data and private records in the absence of independent verification cannot by themselves prove the allegations of clandestine removal or justify coercive measures against an assessee.

The Tribunal held that “the charge of clandestine removal is a serious one and cannot be sustained on assumptions and presumptions. Unauthenticated electronic records and private papers without supportive evidence are not sufficient to sustain the charge of clandestine removals.” Thus, it made it clear that the burden of proof is on the department to sustain the allegations through cogent and reliable evidence.”

Final Assessment Pending on Provisionally Assessed Bills of Entry: CESTAT Sets Aside Customs Duty Demand

M/s.Ankit Impex vs ThePrincipal Commissioner of Customs

CITATION: 2026 TAXSCAN (CESTAT) 216

The Chennai Bench of the Customs, Excise andService Tax Appellate Tribunal (CESTAT) has set aside the customs demand with consequent penalty and confiscation, observing that no demand can be sustained where the Bills of Entry are provisionally assessed and the final assessment is pending.

The Tribunal comprising Sulekha Beevi C.S[Judicial Member] and Vasa Seshagiri Rao[Technical Member] set aside the impugned orders in their entirety and allowed the appeals with consequential relief.

Warehouse construction classified as commercial service since facilities permitted rental and non-agricultural use: CESTAT

M/s V R ConstructionCo. vs Commissioner of Central Excise And Service Tax, Panchkula

CITATION: 2026 TAXSCAN (CESTAT) 217

In a recent ruling The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh Bench, has dismissed the appeal, ruling that the construction of warehouses for the Haryana State Warehousing Corporation (HSWC) amounted to taxable commercial construction services.

The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar(Technical Member) held that construction services provided by the appellant were taxable up to 30 June 2012, with no exemption available before that date. The Commissioner had already allowed abatement under Notification No. 01/2006.

Service Tax Penalty u/s 78 Remains Unsustainable Where Liability Was Unclear During Relevant Period: CESTAT

M/s. Devi Tyres vsCommissioner of GST and Central Excise

CITATION: 2026 TAXSCAN (CESTAT) 218

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the penalty under Section78 of the Finance Act, 1994 cannot be levied if the service tax liability itself was not clear and an issue of interpretation arose during the relevant time period. The Tribunal, therefore, set aside the penalty imposed on the assessee.

The Tribunal further held that where the dispute is with regard to the interpretation of taxability and the assessee has paid the tax and interest promptly, the penalty cannot be sustained.Therefore, it allowed the appeal and set aside the penalty imposed under Section 78.

Non Adoption Of MRP Based Valuation Not Form any Wilful Suppression: CESTAT Sets Aside ₹1.18 Cr Excise Demand On Universal Colours India

Commissioner of GST andCentral Excise vs Universal Colours India Pvt. Ltd

CITATION: 2026 TAXSCAN (CESTAT) 219

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal(CESTAT) held that non adoption of MRP valuation under Section 4A of the Central Excise Act, 1944 does not constitute wilful suppression and therefore cannot be a reason for applying the extended period of limitation. The Tribunal therefore, set aside an excise duty demand of ₹1.18 crores against Universal Colours India Pvt. Ltd.

The bench of two members, consisting of P.Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member), agreed with the assessee and stated that "wilful suppression necessarily involves a positive act of intention to evade payment of duty, which is not made out in the present case."

Electricity Consumption alone Cannot Establish Suppressed Manufacture: CESTAT Rejects Excise Demand on Scented Supari

M/s Marie Products Pvt.Ltd. vs Commissioner, Central Excise & Central Goods & Service Tax,

CITATION: 2026 TAXSCAN (CESTAT) 220

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the consumption of electricity cannot form the sole basis for making an allegation of suppressed manufacture and clandestine removal of excisable goods.

The tribunal comprising, JUSTICE DILIP GUPTA [President] and P.V. SUBBA RAO[Technical Member]noted that clandestine manufacture and removal is a grave offense that needs robust and corroborative evidence. It was held that any inference drawn on the basis of electricity consumption alone is mere speculation and cannot form the basis of a demand. In the absence of any supporting evidence the demand was held to be unsustainable.

Extended Limitation & Penalty Unsustainable in Software Valuation Disputes: CESTAT set aside Differential Duty Demand on Wipro

M/s. Wipro (InfotechGroup) vs Commissioner of Customs

CITATION: 2026 TAXSCAN (CESTAT) 221

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench held that extended limitation and penalties cannot be sustained in software valuation disputes arising out of bona fide differences of interpretation and partly allowed the appeal filed by Wipro Infotech Group.

The Tribunal set aside the invocation of extended limitation and penalties, restricted the demand to the normal limitation period and remitted the case for requantification.

SSI Exemption For Cashew Shell Liquid Remains Eligible Despite Notification Amendment: CESTAT Sets Aside ₹3.2 Lakh Duty Demand

Mr. N. Sundar vsCommissioner of GST and Central Excise

CITATION: 2026 TAXSCAN (CESTAT) 222

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench has ruled that Cashew Shell Liquid (CNSL) continues to be eligible for Small-Scale Industry (SSI) exemption even after the amendment of the notification. Thus set aside an excise duty demand of around ₹3.2 lakh imposed on NS Oil Mills under Section 11AA of the Central Excise Act.

The bench comprising Justice P.Dinesha (Judicial Member) Vasa Seshagiri Rao (Technical Member) held that CNSL continued to fall within the SSI exemption and that the excise duty demand interest and penalty were therefore unsustainable and the appeal was allowed with consequential relief.

Area Based Excise Refunds Cannot be Recovered Once Eligibility Settled: CESTAT Quashes ₹8.78 Crore Demand on GAIL

M/s. Gail (India)Limited vs The Commissioner, CGST

CITATION: 2026 TAXSCAN (CESTAT) 223

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench has set aside an excise demand of ₹8.78 crore holding that refunds paid under a statutory area-based exemption cannot be recovered once the eligibility of the assessee has been conclusively judicially determined.

The Tribunal held that recovery was not permissible once the basic entitlement was finally adjudged to be established and therefore set aside the impugned demand.

Customs Duty Cannot Be Demanded on Leftover Offshore Materials on which Duty Paid: CESTAT Sets Aside Demand Against L&T

Larsen & TourboLimited vs Commissioner of Customs-Ahmedabad

CITATION: 2026 TAXSCAN (CESTAT) 224

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside the customs duty demand on Larsen & Toubro Limited and its officials and held that duty cannot be demanded on materials which were already duty paid and later brought back from offshore work at Bombay High.

The tribunal set aside the duty demand, redemption fine, and penalties, and allowed all the appeals with consequential relief.

Buyer's Premises Constitute 'Place of Removal', Not Factory Gate: CESTAT Allows Cenvat Credit on Service Tax

CIE Automotive Ltd. vsCommissioner of Central Excise & Service Tax, Pune I

CITATION: 2026 TAXSCAN (CESTAT) 225

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Mumbai Bench, allowed Cenvat credit on transportation services of finished goods to customer’s premises as it constitutes a ‘place of removal’.

The present appeals since were not disputed on the consideration of the consignment being on Freight on Road destination basis, and thus the sale included freight. The single member bench of Ajay Sharma held that GTA service availed for outward transportation of finished goods up to the customer’s premises qualify as ‘input service’ under Rule 2(1) and the credit availed by appellant was held admissible. The tribunal allowed consequential relief, if any.

Uniform Penalties on Scrap Dealers Unsustainable without Role Assessment: CESTAT Scales Down Penalties After Examining Gravity Of Violations

M/s. J.M. TradingCorporation vs Commissioner of GST and Central Excise

CITATION: 2026 TAXSCAN (CESTAT) 226

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai Bench, in a recent decision held that penalties under Rule 26(2) of the Central Excise Rules, 2002 cannot be imposed mechanically or uniformly on multiple notices without assessing their individual role extent of involvement and gravity of violations.

Noticing that the penal provisions are designed to punish according to the level of violation, the Tribunal confirmed the violations but substantially reduced the penalties imposed on each of the appellants.

Penalty Remains Unsustainable In Absence Of Proof of Knowledge of Fraudulent CENVAT Credit: CESTAT

M/s. Calwien MarketingPvt. Ltd. vs Commissioner of Central Tax

CITATION: 2026 TAXSCAN (CESTAT) 227

The CESTAT has reserved penalties imposed under Rule 26(2) of the Central ExciseRules, 2002, holding that penal liability cannot be attributed to a supplier in the absence of concrete evidence to establish knowledge or conscious participation in fraudulent availment or distribution of CENVAT credit.

The Bench comprising Justice Ashok Jindal[Judicial Member] and K.Anpazhakan[Technial Member] held that the penalty under Rule 26(2) is required to be proved by clear proof of knowledge, intent or active participation in the alleged fraud. The mere supply of goods to a registered buyer on payment of duty, without any corroborative evidence of collusion, cannot form the basis of penal action. The Tribunal also observed that once the proceedings against the main notice were set at rest under SVLDRS the penalties against co-noticees were not warranted.

Service Tax Not Applicable as per Work Order, Within Scope of Receiver: CESTAT Allows Appeal by Worker Undertaking Fabrication

Shri Raj Kishore Bhagatvs Commissioner of CGST, CX, Patna

CITATION: 2026 TAXSCAN (CESTAT) 228

The Customs, Excise and Service Tax Appellate Tribunal, Kolkata Bench, allowed an appeal by a worker who undertook fabrication work. The rationale behind the decision was that the work order did not hold the work liable for service tax.

The single bench of R. Muralidhar (Judicial Member) highlighted the conditions of the Work Order and referred to Tabassum Enterprises v. C, CGST & CX (2025). The rationale given in the mentioned case applies to the present case, according to the tribunal. CESTAT finally allowed the appeal and held the appellant eligible for consequential relief, if any, as per law.

Levy Includes Imposition, Assessment & Recovery: Madras HC Upholds Application of Excise Act to Recover Clean Environment Cess

M/S C L INTERNATIONAL& ANR. vs ADDITIONAL COMMISSIONER, CENTRAL TAX

CITATION: 2026 TAXSCAN (CESTAT) 229

In a recent ruling, the Madurai Bench of the Madras High Court held that the word “levy” under Section 83(7) of the Finance Act, 2010 includes imposition, assessment and recovery of Clean Environment Cess, and the Centre can apply Section 11A of the Central Excise Act, 1944 for recovery of unpaid or short-paid cess through a notification.

The Government chose to borrow the excise recovery mechanism. Since “levy” includes assessment and collection, the notification applying Section 11A was held valid. The writ petition was dismissed with no costs.

Service Recipient vide Letter Intimidated Service Tax Not Required: CESTAT Held No Mala Fide Intention, Allowed Appeal

M/s. Impelco ElectricCompany vs M/s. Impelco Electric Company

CITATION: 2026 TAXSCAN (CESTAT) 230

The Customs, Excise & Service TaxAppellate Tribunal (CESTAT), Kolkata Bench, allowed an appeal since there is no mala fide intention of avoiding service tax. The letter sent to the appellant by the service recipient intimates that service tax would not be required.

The tribunal considered the letter by the service recipient and pointed out that the appellant had paid the appropriate service tax with interest when the demand was raised against him. CESTAT ruled that no mala fide intention can be inferred from the set of facts and dropped the various penalties imposed on the appellant for not paying Service Tax.

Circulars benefiting Assessee have Retrospective Application: CESTAT Affirms 12% IGST on Poultry Machinery Imports

QUALITY SYSTEMS ANDEQUIPMENTS P.LTD vs COMMISSIONER OF CUSTOMS-NHAVA SHEVA – V

CITATION: 2026 TAXSCAN (CESTAT) 231

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, affirmed a 12% Integrated Goods and Services Tax (IGST) on poultry machinery imports, while noting that circulars benefitting assessee have retrospective application.

The Tribunal held that the lower rate of IGST, i.e., 12% should be imposed and the order by the Commissioner is sustainable both in law and facts.

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