CESTAT Weekly Round-up

Manual Proceeding due to System Technical Problem: CESTAT Accepts Range Superintendent's Verification Report M/s. Exide Industries Ltd. vsCommissioner of CGST, CX Kolkata CITATION: 2026 TAXSCAN (CESTAT) 232
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, accepted the Range Superintendent’s Verification Report which stated that due to technical problems in the system, manual proceeding was determined in the present case.

R. Muralidhar (Judicial Member), adjudicating on the matter presented before the CESTAT, allowed the appeal and noted the eligibility of the appellant for consequential relief, if any, as per law.

Due to Improper Investigation, Details of Service not Rendered: CESTAT Allows Appeal as 50% Service Tax Liability with RecipientM/s.Indian Automobile vsCommissioner, CGST & CX, Bolpur CITATION: 2026 TAXSCAN (CESTAT) 233

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, allowed an appeal on the rationale that half of the service tax liability was with the recipient as details of service have not been rendered when the investigations were conducted.

The single bench of R. Muralidhar relied on Tabassum Enterprises v. C , CGST & CX (2025) and held that the demand is set aside and the appeal is allowed. The appellant would be eligible for any consequential relief as per law.

Penalty u/s 108 Cannot Rely On Unverified Statements Recorded: CESTAT sets aside ₹10 Crore Penalty Kamal Sehgal vs Commissioner of Customs CITATION: 2026 TAXSCAN (CESTAT) 234

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Principal Bench has set aside a penalty of ₹10 crore imposed on Kamal Sehgal holding that penal liability under the Customs Act cannot be sustained solely on the basis of unverified statements recorded under Section 108 without following the mandatory evidentiary procedure prescribed under the law.

Allowing the appeal, the set aside the entire penalty, reiterating the well-established legal position that customs penalties cannot be levied on the basis of untested and unverified statements. This judgment is a significant reminder of the need for evidentiary discipline and due process in customs adjudication.

Excise Duty on Royalty Confirmed Only For Normal Period: CESTAT sets aside Extended Limitation, Penalty and Interest Demand M/s. South Eastern Coalfields Limited vs Commissioner of Central Excise CITATION: 2026 TAXSCAN (CESTAT) 235

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the amount received on account of royalty is to be included in the transaction value for the purpose of central excise duty payment only within the normal period of limitation while setting aside the demand made for the extended period of limitation along with penalty and interest.

Partially allowing the appeal, the tribunal limited the excise duty liability on royalty to the normal period alone and set aside the extended demand, penalty, and interest reiterating that penal provisions and extended limitation should be applied only on strict proof of Intent.

No Excise Duty On Stowing Charges, Forest Transit Fees, Entry Tax And Other Statutory Levies: CESTAT M/s. South Eastern Coalfields Limited vs Commissioner of Central Excise CITATION: 2026 TAXSCAN (CESTAT) 236

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that stowing charges, forest transit fees, entry tax, terminal tax, rural infrastructure cess, environment cess, and other similar statutory dues cannot be levied central excise duty.

The Bench comprising Justice Dilip Gupta and P.V. Subba Rao [Technical Member],held that excise valuation cannot be widened to include all amounts remotely related to sale, particularly when such amounts are mandatorily paid under statutory compulsion and are subsequently remitted to the Government.

SCN Barred by Limitation, MLM Trading Amounts to Sales: CESTAT Deems Such Activities Not Taxable M/s Emam Hossain Dewan vs Commissioner of CGST & Central Excise,Bolpur CITATION: 2026 TAXSCAN (CESTAT) 237

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, judged that multi-level marketing (MLM) trading of goods amounts to sale and are not taxable. The show causenotice (SCN) issued against the assessee was also barred by limitation.

Further, the single member bench of CESTAT noted that the extended period of limitation is not invocable in the present case as the SCN is issued solely on the basis of third-party data without proper verification and without establishing suppression or wilful mis-statement. R. Muralidhar (Judicial Member), on behalf of the tribunal, held that the demand is also hit by limitation and allowed the appeal.

Construction Of Public Parking And Government School Not Commercial Activity: CESTAT Allows Service Tax Refund To RIDCOR Under Section 102 M/s. Road Infrastructure Development Company of Rajasthan Limited (RIDCOR) vs Commissioner of Central Excise and Customs CITATION: 2026 TAXSCAN (CESTAT) 238

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the construction of public parking spaces and a government residential school does not amount to a commercial activity.

Allowing the appeal, CESTAT set aside the impugned orders and directed grant of the service tax refund to RIDCOR with consequential relief reaffirming that the non-commercial character of public infrastructure projects executed for governmental bodies.

Buyers cannot be Treated as Related Persons Merely Due To Common Promoters or Minority Shareholding: CESTAT M/s Thapar Ispat ltd. vsCommissioner of Central Excise, Ludhiana CITATION: 2026 TAXSCAN (CESTAT) 239

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the buyers cannot be said to be related persons or inter-connected undertakings under Section 4 of the Central Excise Act, 1944 on the basis of common promoters or minority shareholding.

The two-member bench of Justice S.S Garg[Judicial Member] and P.Anjani Kumar[Technical Member] set aside the excise duty liability reiterating that the transaction value is sacrosanct unless the Department meets the heavy burden of establishing related party influence and non-arm’s length price.

ATF Supplied To Foreign-Going Aircraft Through Warehouses Eligible For Excise Exemption: CESTAT Bharat Petroleum Corporation Limited vs Principal Commissioner, CGST& Central Excise CITATION: 2026 TAXSCAN (CESTAT) 240

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that Aviation Turbine Fuel (ATF) supplied to foreign going aircraft continues to be eligible for excise duty exemption even if such supplies are made through customs bonded warehouses setting aside the excise demand made by the Department.

The Bench also held that beneficial exemptions cannot be denied on hyper-technical considerations, particularly when the material requirement of using ATF in foreign-going aircraft was fully met.

CESTAT Quashes Extended Service Tax Demand Based Solely on Form 26AS, Grants ₹19.66 Lakh Negative Liability Relief M/s. Mahakali Motors Pvt.Ltd. vs Commr., CGST & CX, Patna CITATION: 2026 TAXSCAN (CESTAT) 241

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, has set aside the extended period demand of service tax raised solely based on Form 26AS data and granted the benefit of Rs. 19.66 lakh reflected as negative service tax liability for the relevant period.

CESTAT observed that the demand is sustainable. On the order, the single member bench of R. Muralidhar (Judicial Member) relied on Tabassum Enterprises v. C, CGST & CX (2025) where it was held that demand without evidence cannot be sustained. Consequently, the appeal was partly allowed and the liability for service tax was held in the negative figures, this was to be verified when actual quantification for the normal period is arrived at.

Customs Penalty Remains Unsustainable u/s 112 without Examination and Cross-Examination Of Statements: CESTAT Nawal Kishore Singh vs Commissioner of Customs CITATION: 2026 TAXSCAN (CESTAT) 242

The CESTAT set aside the customs penalty imposed under Section 112(a)(i) of the Customs Act, 1962 on the grounds that the reliance placed solely on the statements recorded under Section 108 which is without examination and cross-examination as required under Section 138B and makes the penalty not legally sustainable.

The appeal was allowed by the CESTAT and the impugned order of penalty was set aside reiterating that customs penalties cannot be based on assumptions or unverified statements.

Absence of Knowledge of Smuggling: CESTAT Quashes Vehicle Confiscation and Penalty u/s 117 Shri Piyush Mahendra Jain vs The Commissioner of Customs CITATION: 2026 TAXSCAN (CESTAT) 243

The Customs, Excise, and ServiceTax Appellate Tribunal (CESTAT), New Delhi Principal Bench has set aside the confiscation of a vehicle under Section 115 and the penalty imposed under Section 117 of the Customs Act, 1962 because penal proceedings cannot be initiated in the absence of evidence that will prove the knowledge of the owner of the vehicle regarding any smuggling activities.

The Bench comprising Justice Dilip Gupta [Judicial Member] and Hemambika R Priya [Technical Member] held that the Department did not produce any corroborative evidence to establish that the appellant was aware of the use of the vehicle for smuggling activities.It further held that the penalty under Section 117 is consequential in nature and the confiscation itself is also held unsustainable.

CESTAT Scales Down Penalties Up To ₹14 Lakh After Rejecting Uniform Penalty Approach On Invoice Transactions M/s. J.M. Trading Corporation vs Commissioner of GST and Central Excise CITATION: 2026 TAXSCAN (CESTAT) 244

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai Bench, declared that uniform penalties imposed on multiple co-notices involved in invoice-only transactions are not legally sustainable.

The Bench noted that the adjudicating authority did not consider the facts such as the nature of transactions, the amount of credit availed, and the level of participation. The Tribunal held that imposing equal penalties is against the principle of proportionality and reduced the penalties imposed on each of the appellants substantially from approximately ₹1.76 lakhs to ₹55,000 for Saravana Metal Corporation, and so on.

Unverified Statements u/s 108 Cannot Sustain Customs Penalty: CESTAT Quashes ₹50 Lakh Penalty M/s Committed Logistics Pvt. Ltd. vs Commissioner of Customs CITATION: 2026 TAXSCAN (CESTAT) 245

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Bench, has set aside a penalty of ₹50 lakh under the Customs Act 1962, holding that penalties cannot be sustained on the basis of unverified statements recorded under Section 108 without compliance with verified evidence.

The two-member bench of Justice Dilip Gupta and P.V. Subba Rao, also clarified that abetment under Section 112 requires knowledge or intentional aid, which was entirely absent in the case at hand. The penalties based solely on untested statements were held to be unsustainable in law.

Absence Of CHALR Violations In SCN: CESTAT Sets Aside Customs Penalties u/s 112 Cargo Placement & Shipping Agencies Pvt. Ltd. vs Commissioner ofCustoms CITATION: 2026 TAXSCAN (CESTAT) 246

The New Delhi Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has set aside the imposition of customs penalties under Section 112 of the Customs Act, 1962.

The Tribunal held that in the absence of specific CHALR violations being made liable for violations of the Customs Act, penalties under Section 112 could not be sustained. The appeal was allowed reiterating that regulatory defaults and violations of statutory provisions exist in separate domains unless specifically made so.

Rule 9(1)(b) Not Applicable as Suppression Alleged does not have Supporting Evidence: CESTAT M/s. Agrasen Sponge Pvt.Ltd vs Commr., CGST & CX, RourkelaCommissionerate CITATION: 2026 TAXSCAN (CESTAT) 247

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, held that Rule (1)(b) of Cenvat Credit Rules, 2004 is not applicable when the alleged suppression of facts does not have supporting evidence.

The tribunal via R. Muralidhar (Judicial Member) observed that the department had only provided a bland statement of suppression and supplied no documentary evidence. CESTAT held that the Rule would not be applicable and the confirmed demand is not sustainable. The time bar was also taken into account and the appeal was allowed accordingly.

Redetermination of Lesser Value Against Higher Transaction Value Impermissible by Customs Valuation Rules: CESTATM/s. Surbhit Impex Pvt. Ltd vs Commissioner of Customs, Nhav Sheva-I CITATION: 2026 TAXSCAN (CESTAT) 248

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Mumbai Bench, held that redetermination of less value against higher transaction value was impermissible by Customs Valuation (Determinationof Value of Imported Goods) Rules, 2007.

The CESTAT held, on the matter concerning the imposition of ADD by the Commissioner, that one price range published by ICIS can’t be taken as transaction value only for the purpose of levy of ADD, this would be contrary to the Rules. The duties, interests, penalties and redemption fines were set aside as they are unsustainable both in law and facts.

Admissibility of DVD, Retracted Statements from Co-Accused Questioned: CESTAT Rules S.114AA Cannot be Imposed Vikash Kumar vs Commissioner of Customs CITATION: 2026 TAXSCAN (CESTAT) 249

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, decided on the admissibility of DVD and retracted statements from co-accused as evidence. The matter was appealed with respect to an order in which penalties under Section 114AA of the Customs Act, 1962 (the Act) were upheld.

The bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) allowed the appeal and held the orders imposing penalties under Section 114AA unsustainable.

VCES Declaration Cannot Be Rejected If ‘Issue’ Differs Post Negative List Regime: CESTAT Allows BIS Appeal Bureau of Indian Standards vs Commissioner of GST and Central Excise CITATION: 2026 TAXSCAN (CESTAT) 250

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that a Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES) declaration cannot be rejected if the “issue” involved in earlier show cause notices is different from the issue for the later period.

The tribunal observed that the two issues were not identical. The second proviso to Section 106(1) could not be invoked to reject the declaration. The impugned order was set aside and the appeal was allowed with consequential relief.

Customs did not Issue or Produce SCN: CESTAT Rejects Appeal in Larsen & Toubro Misrepresentation Case Commissioner of Customs vs M/s. Larsen & Toubro Ltd. CITATION: 2026 TAXSCAN (CESTAT) 251

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, rejected an appeal filed by the Commissioner ofCustoms against Larsen & Toubro Ltd. as it observed that no notice was issued or produced during the proceedings.

The CESTAT found that absence of notice clearly violates principles of natural justice which have been mentioned in Section 28(1) of the Customs Act. Therefore, the bench of Vasa Seshagiri Rao (Technical Member) and P. Dinesha (Judicial Member) dismissed the Revenue’s appeal and quashed the order passed by the Commissioner as there was no issuance of notice.

No S. 28AAA Recovery under Customs allowable without DGFT Cancelling FPS Scrips: CESTAT sets aside Duty Penalties Rishabh Salvage Energy Pvt Ltd vs C.C. – Mundra CITATION: 2026 TAXSCAN (CESTAT) 252

The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has ruled that recovery proceedings under Section 28AAA of the Customs Act, 1962 cannot be sustained unless the export incentive scrip in question is first cancelled by theDirectorate General of Foreign Trade ( DGFT ).

The Tribunal noting Commissioner of Customs Mumbai-I vs Adani Ports observed that as long as the scrips issued by DGFT remain valid and operative, the authorities cannot indirectly nullify them by demanding duty, imposing redemption fine, or levying penalties.

Tribunal Judgment cannot be treated as ‘Additional Evidence’ Under Rule 5 of Customs Appeals: CESTAT M/s Wipro GE Healthcare Pvt. Ltd. vs Commissioner of Customs (Import),Mumbai-III CITATION: 2026 TAXSCAN (CESTAT) 253

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal(CESTAT) held that a judgment of the Tribunal cannot be treated as “additional evidence” under Rule 5 of the Customs (Appeals) Rules, 1982, and set aside the remand order passed by the Commissioner (Appeals).

The tribunal pointed out that binding judicial precedents must be followed by appellate authorities, and in the absence of any stay, such decisions operate as law. Holding that the Commissioner (Appeals) was not justified in treating the Tribunal’s earlier order as additional evidence and remanding the matter on that basis, the Bench set aside the impugned orders and allowed the appeals.

18% IGST on LCD Monitors Used With Medical Equipment: CESTAT Allows Wipro GE Healthcare Appeal M/s Wipro GE Healthcare Pvt. Ltd. vs Commissioner of Customs (Import),Mumbai-III CITATION: 2026 TAXSCAN (CESTAT) 253

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal(CESTAT) held that LCD HB Colour Monitors imported for use with medical equipment are liable to Integrated Goods and Services Tax (IGST) at 18% and not 28%.

The tribunal explained that when a binding decision of the Tribunal, affirmed by the Supreme Court, covers the issue, the matter need not be examined again in detail. The appellant had paid IGST at 18% in line with the settled legal position, no differential tax was payable.

Non-mention of Commission Amount in Shipping Bills Mere Technical Breach: CESTAT allows Service Tax Refund to Tata Intl M/s. Tata International Limited vs Commissioner of GST & CentralExcise CITATION: 2026 TAXSCAN (CESTAT) 254

The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) recently set aside the rejection of a service tax refund claim filed by Tata International Limited, holding that non-mention of commission amount in shipping bills constitutes only a venial technical breach and cannot form grounds to deny substantive benefits for which they are eligible.

CESTAT held that the refund could not be rejected solely on that ground and set aside the impugned order and allowed the appeal with consequential relief.

Relief for Berger Paints: CESTAT Rules Painting Contracts Involving Supply of Paint Classifiable as ‘Works Contract Service’ M/s. Berger Paints India Limited vs Commissioner of Service Tax-II CITATION: 2026 TAXSCAN (CESTAT) 255

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that painting contracts involving supply of paint along with labour are classifiable as “Works Contract Service” and not as “Interior Decorator Service.”

The tribunal observed that when both goods and services are involved, the correct classification would be “Works Contract Service” as laid down by the SupremeCourt in Larsen & Toubro Ltd. The tribunal explained that works contract service became taxable only from 01.06.2007. The period involved in the present case was before that date but the demand was not sustainable in law.

No Excise Duty on Goods Removed for Repacking Within Factory: CESTAT Grants Relief to ITC Ltd M/s. ITC Limited vs Commissioner of C.G.S.T. and Central Excise CITATION: 2026 TAXSCAN (CESTAT) 256

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) held that repacking of goods within the factory after removal from the Daily Stock Account and before final clearance on payment of duty, does not attract excise duty at that intermediate stage.

Holding that the demand, interest and penalty were not sustainable, the Tribunal set aside the impugned order and allowed the appeal with consequential relief.

No Service Tax on CII for Facilitating Members’ Participation in Overseas Business Exhibitions for a Fee: CESTAT Confederation of Indian Industry vs Commissioner, CGST, Delhi East CITATION: 2026 TAXSCAN (CESTAT) 257

The New Delhi Principal Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the Confederation of Indian Industry (CII) is not liable to pay service tax on the facilitation of member participation in overseas business exhibitions by receiving a fee from the members. The Tribunal ruled that such activity does not fall within the ambit of “business exhibition service.”

The Tribunal held that such facilitation would not amount to rendering “business exhibition service” and set aside the demand raised on this count. The appeal was accordingly allowed to that extent, granting relief to CII from the service tax liability on overseas exhibition facilitation activities.