CESTAT Weekly Round-Up

CRS/GDS Incentives Not Taxable, Fuel Surcharge Not Part of Basic Fare for Air Travel Agents: CESTAT allows Yatra Appeals

M/s TSI Yatra Pvt. Ltd vsCommissioner of Central Goods & Service Tax, Gurugram

CITATION : 2026 TAXSCAN (CESTAT) 353

The Chandigarh Bench of the Customs, Excise,and Service Tax Appellate Tribunal (CESTAT) held that CRS/GDS incentives received by air travel agents are not taxable and that fuel surcharge cannot be included in the basic fare for the purpose of service tax.

The tribunal held that the demands raised on these issues are not sustainable in law. The tribunal set aside the impugned orders on these issues and allowed the appeals.

Minor Variation in Chemical Composition Matters in Eyes of Law: CESTAT Denies Concessional Duty on Boronated Calcium Nitrate

YARA FERTILIZERS INDIA PVT LTDvs COMMISSIONER OF CUSTOMS - Mundra Customs

CITATION : 2026 TAXSCAN (CESTAT) 354

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) determined that "Boronated Calcium Nitrate" is a distinct product from "Calcium Nitrate”, disqualifying from concessional customsduty benefits.

The bench of Dr. Ajaya Krishna Vishvesha (Judicial member) and Satendra Vikram Singh (technical member) said that when a tax exemption is at stake, the burden of proof lies entirely on the taxpayer to show they fit exactly within the Four Corners of the notification. If there is any ambiguity or "grey area," the interpretation must favor the government.

Retrospective Penalty not Leviable for Non-payment of Service Tax on RIPS: CESTAT

M/s Maddi Lakshmaiah &Company Ltd vs Pr. Commissioner of Central Tax Guntur - GST

CITATION : 2026 TAXSCAN (CESTAT) 355

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that retrospective penalty will not be leviable for non-payment of service tax on Renting of Immovable PropertyService (RIPS).

Therefore, the penalties were not applicable and liable to be set aside in terms of provisions under Section 80 and non-invokable nature of Section 78. The appeal was disposed of accordingly.

Incorrect Address Details of Service Providers cannot be reason to deny CENVAT Credit when substantiated with Invoice Evidence: CESTAT

M/s. Computer Point Ltd. vs TheCommissioner of CGST & Central Excise,Kolkata

CITATION : 2026 TAXSCAN (CESTAT) 356

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Kolkata Bench, held that incorrect address details of service providers cannot be reason to deny CENVAT Credit when substantiated with invoice evidence.

The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) held that the disallowance was to be set aside but confirmed the late fee. Accordingly, the appeal was disposed of.

Dept. Cannot allege Clandestine Removal of Goods without Proper Investigation u/s 9D Excise Act: CESTAT sets aside Order and Penalty

M/s. Jolla Steel Pvt. Ltd. vsThe Commissioner of Central GST Commissionerate

CITATION : 2026 TAXSCAN (CESTAT) 357

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Kolkata Bench, set aside an order and held that the department cannot allege clandestine removal of goods without proper investigation under Section 9D of the Central Excise Act, 1944.

CESTAT observed that they found no merit in the order and that it has been passed without proper investigation in contravention of Section 9D. The bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) held that the charge of clandestine removal of goods is not sustainable and the order was set aside. Finally, the appeal was allowed and the penalty was held not imposable.

CESTAT allows Refund of Service Tax Paid under RCM Post-GST, Holds Transitional Provision u/s 142(3) of GST Applies

R R Kabel Ltd vs COMMISSIONER OFC.E. & S.T.-DAMAN

CITATION : 2026 TAXSCAN (CESTAT) 358

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench held that service tax paid under the Reverse Charge Mechanism (RCM) after the implementation of Goods and Services Tax (GST) regime is eligible for a cash refund, provided the taxpayer was unable to avail input credit due to the transition between tax regimes.

Consequently, the Tribunal set aside the lower authorities' rejections and allowed the appeals, remanding the matter to jurisdictional officers for the processing and granting of the refund claims.

Late Fee on Supplementary BoE Unsustainable in absence of Default Made by Importer and Filed Original Bills: CESTAT

M/s. Kai International Private Limitedvs Commissioner of Customs (Preventive)

CITATION : 2026 TAXSCAN (CESTAT) 359

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata Bench, held that imposition of late fee for delayed filing of Supplementary Bills of Entry cannot be sustained if no default is attributable to the importer.

The Tribunal comprising K. Anpazhakan (Technical Member) held that the appellant had filed original Bills of Entry bona fide, and there was no fault on their part in the delay in filing supplementary documents which was due to circumstances beyond their control.

CENVAT Credit Cannot Be Denied on Procedural Lapse of Non-Disclosure in ST-3 Returns: CESTAT Grants ₹14.22 Lakhs Relief

M/s. Chakraborty Enterprise vsCommissioner of C.G.S.T. and Central Excise

CITATION : 2026 TAXSCAN (CESTAT) 360

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata Bench granted relief of ₹14.22 lakhs by holding that denial of CENVAT credit merely on the ground of non-disclosure in ST-3 returns is unsustainable.

Accordingly, the bench held that the appellant was entitled to higher CENVAT credit than what was in dispute and thus there was relief of ₹14.22 lakhs. The denial of such credit was termed unjustified and against legal principles.

Invoice Without Actual Supply: CESTAT Sustains Penalty on Director for Facilitating Irregular CENVAT Credit

Shri Krishna Gopal Rathi vsCommissioner of C.G.S.T. and Central Excise

CITATION : 2026 TAXSCAN (CESTAT) 361

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has sustained the imposition of penalty on a director for his involvement in facilitating irregular availment of CENVAT credit through issuance of invoices without actual supply of goods while granting partial relief by reducing the quantum of penalty.

It was noted by the Tribunal that the infrastructure in the appellant’s premises was lacking and the nature of the transactions was dubious and that the statements and the investigation reports indicated that the invoices had been issued without the actual supply of the goods and this had facilitated the giving of wrongful credit.

Penalty u/s 112 Unsustainable in Absence of Evidence Against Valid Pre Shipment Certificate: CESTAT

M/s. N. K. Hand & Sons vsThe Commissioner of Customs West Bengal

CITATION : 2026 TAXSCAN (CESTAT) 362

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata held that the penalty imposed under Section 112 of the Customs Act, 1962, was set aside as the Tribunal found that in the absence of corroboratory evidence against the valid Pre-Shipment Certificate the same could not be sustained.

Further, the Tribunal held that the appellant has produced evidence in the form of official communication which proves the status of the Bangladesh University of Textiles as a government authorized body and that the Revenue authorities failed to produce evidence on the record to contradict the certificate in question, which goes to prove the genuineness of the certificate.

CENVAT Credit Reversal Cannot Include Exclusive Dutiable Credit: CESTAT Sets Aside Service Tax Demand on TNPL

M/s. Tamil Nadu Newsprint andPapers Limited vs Commissioner of GST and Central Excise

CITATION : 2026 TAXSCAN (CESTAT) 363

The Customs, Excise and Service Tax AppellateTribunal (CESTAT) Chennai Bench has set aside the demand holding that CENVAT credit reversal under Rule 6(3A) cannot include credit exclusively attributable to dutiable goods.

The Bench comprising Justice Dilip Gupta, President and Mr. Vasa Seshagiri Rao (Technical Member) further held that the adjudicating authority had travelled beyond the show cause notice by reinterpreting the formula and proposing alternative liability. It also ruled that extended limitation was not invocable as the dispute was interpretational and based on disclosed records. Consequently, penalties were also set aside.

Cost Sharing for Joint Advertisement Not Taxable as Sponsorship Service: CESTAT Sets Aside ₹15.58 Lakh Demand

M/s. GR Thanga Maligai vsCommissioner of GST and Central Excise

CITATION : 2026 TAXSCAN (CESTAT) 364

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench has set aside a service tax demand of ₹15.58 lakh holding that cost sharing for joint advertisement does not amount to Sponsorship Service under the Finance Act, 1994.

The Bench further held that the essential ingredients of sponsorship.

Service Tax Demand Invalid Without Independent Verification of Transactions: CESTAT Quashes ₹56.72 Lakh Demand Based Solely on Income Tax Data

M/s. Jeetu Madnani vsCommissioner of C.G.S.T. and Central Excise

CITATION : 2026 TAXSCAN (CESTAT) 365

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata Bench has quashed a Service Tax Demand of ₹56.72 lakh, on the ground that a Demand raised merely on the basis of Income Tax data without any independent verification of transactions is not sustainable in law.

The Bench comprising K. Anpazhakan (Technical Member) pointed out that all facts were already within the knowledge of the Department, and they had already been considered at the time of audit thereby ruling out the question of suppression of information. Therefore, invocation of extended limitation was also found to be not valid.

CESTAT Denies Exemption under Subsequent Notification Filed Post B/E Date, upholds Duty Liability

M/s Vardhman Textiles Ltd vsCommissioner of Customs

CITATION : 2026 TAXSCAN (CESTAT) 366

The Customs, Excise andService Tax Appellate Tribunal (CESTAT), New Delhi has dismissed the appeal filed by the Tribunal held that the exemption cannot be claimed under the subsequent notification if the same was not in existence on the date of filing of the Bills of Entry.

Further, the Bench held that substitution of B/Es under Section 46(5) is discretionary and cannot be permitted when it prejudices revenue interests or is intended solely to avail a subsequent exemption.

Service Tax Demand on Cargo Space Transactions Unsustainable: CESTAT Allows Relief to Airlift Associates

M/s. Airlift Associates vsCommissioner of GST & Central Excise

CITATION : 2026 TAXSCAN (CESTAT) 367

The Customs, Excise and Service Tax AppellateTribunal (CESTAT) Chennai Bench has set aside the service tax demand on freight margins and reimbursable expenses holding that such transactions are not eligible for tax under the Finance Act, 1994.

The Tribunal noted that Rule 5 of Valuation Rules is ultra vires Section 67 and hence such expenses cannot be included in taxable value for the relevant period.Accordingly, the impugned orders were set aside to the extent contested and consequential relief was granted to the assessee.

Misclassification of IT Services as Consulting for SEIS Benefits: CESTAT Upholds Duty Recovery on Fraudulently Availed Scrips

M/s.MetricStream Infotech(India)Pvt.Ltd vs Principal Commissioner of Customs

CITATION : 2026 TAXSCAN (CESTAT) 368

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Principal Bench, has upheld the recovery of customs duty amounting to ₹2.05 crore for fraudulently availing benefits under the Service Exports from India Scheme (SEIS) by misclassifying its services.

The Tribunal held that SEIS scrips obtained through wilful misstatement and subsequently cancelled by the DGFT are void, thereby justifying duty recovery under Section 28AAA of the Customs Act, 1962.

Absence of COO Marking on Aluminium Scrap Not Ground to Deny Exemption: CESTAT Sets Aside Duty Demand Against Jindal Aluminium Ltd

Jindal Aluminium Ltd vsCommissioner of Customs

CITATION : 2026 TAXSCAN (CESTAT) 369

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench, has set aside the denial of exemption benefit holding that absence of country-of-origin (COO) markings on aluminium scrap cannot be a ground to deny concessional duty under the ASEAN–India Free Trade Agreement (AIFTA).

Accordingly, the Tribunal held that absence of COO markings on scrap goods does not impair their identification and particularly when documentary evidence is complete and reliable. The Tribunal set aside the impugned order and allowed the impugned goods the benefit of exemption from Basic Customs Duty under Notification No. 046/2011-Cus dated 01.06.2011.

CESTAT Allows Service Tax Refund on Construction Services to Military Engineering Services, Quashes Rejection

Agarwal Jagdish Construction Co.Pvt Ltd vs Commissioner(Appeals) and ADG, DGGSTI, Jaipur

CITATION : 2026 TAXSCAN (CESTAT) 370

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi has allowed the refund of service tax paid on construction services rendered to the Military Engineering Services (MES), setting aside the rejection orders passed by the lower authorities and remanding the matter for reconsideration.

The Tribunal held that the benefit of retrospective exemption and refund cannot be denied. The Tribunal further observed that the doctrine of unjust enrichment would not apply if the tax liability was borne by the Government entity.

CESTAT Quashes ₹1.08 Cr IGST Demand on Limitation, Upholds Inclusion of Freight & Insurance in Assessable Value

M/s. Rimjhim Ispat Ltd vsCommissioner of Customs (Preventive), Kolkata

CITATION : 2026 TAXSCAN (CESTAT) 371

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata Bench has quashed a demand of ₹1.08 crore towards IGST on the ground of limitation while upholding the legal requirement of including freight and insurance charges in the assessable value under the Customs Valuation Act, 2007

The Tribunal allowed the appeal setting aside the impugned order on limitation. However, it upheld that on merits, addition of freight and insurance to FOB value is legally justified under Rule 10(2) of the Customs Valuation Rules, 2007.

Relief for Bharat Electronics: CESTAT Upholds Shipping Bill Conversion Beyond 3 Months, CBEC Circular Time Limit Not Binding

Commissioner of Customs vs M/s.Bharat Electronics Ltd.

CITATION : 2026 TAXSCAN (CESTAT) 372

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal(CESTAT) ruled that amendment of shipping bills after export to claim duty drawback is permissible and that the time limit prescribed in CBEC circulars is not binding.

In view of these findings, the Tribunal found no infirmity in the impugned order. The appeal filed by the revenue was dismissed, and the cross-objection filed by the respondent was disposed of accordingly.

Expansion Services Not Excluded from Credit: CESTAT Upholds ₹84 Lakh CENVAT Credit for Komatsu

M/s. Komatsu India (P) Ltd. vsCommissioner of GST and Central Excise

CITATION : 2026 TAXSCAN (CESTAT) 373

In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that services used for expanding an existing manufacturing facility are not excluded from the definition of “input service” under the CENVAT Credit Rules, 2004, and allowed the company’s ₹84.08 lakh credit claim.

Accordingly , the tribunal allowed Komatsu India’s appeal, set aside the impugned order, and restored the CENVAT credit of ₹84.08 lakh.

Employee Secondment Liable to Service Tax: CESTAT Upholds Airbus Tax Demand, Grants Relief on Limitation and Penalty

M/s. Airbus Group India Pvt. Ltdvs Commissioner of Central Excise

CITATION : 2026 TAXSCAN (CESTAT) 374

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that employee secondment is liable to service tax, but the extended period of limitation and penalties cannot be sustained in the absence of suppression of facts.

The tribunal explained that where the issue involves interpretation and the assessee holds a bona fide belief, the extended period cannot be invoked. It pointed out that the Supreme Court in Northern Operating Systems Pvt. Ltd. had also held that extended limitation is not justified in such circumstances.

Construction of Coronation Park Amenities Exempted from Service Tax: CESTAT rejects Dept's appeal

M/s. Ajab Singh & Co. vsPrincipal Commissioner of Service Tax

CITATION : 2026 TAXSCAN (CESTAT) 375

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Bench, rejected the department’s appeal and held that the construction of Coronation Park amenities is exempted from Service Tax.

Relying on M/s Road Infrastructure Development Company of Rajasthan Ltd v. Commissioner, Jaipur, the bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) rejected the appeal by the department and allowed the exemption contained in SI. No. 12 of Notification No. 25/2012.

Residential use of Property by Company’s MD Not Taxable Despite Lease to Company: CESTAT quashes Service Tax Demand

Shri N Devarajan vs Commissionerof CGST & Central Excise

CITATION : 2026 TAXSCAN (CESTAT) 376

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chennai Bench held that rental income from a property used as a residence by a company’s Managing Director is exempted from service tax, even if the lease is formally signed with the company.

Accordingly, the appellate tribunal dismissed the service tax demand, stating that taxability is determined by the actual use of the property, not just the identity of the entity signing the lease.

Customs Fails to Prove Foreign Origin of Seized Peas: CESTAT Quashes Vehicle Confiscation & Penalty

Smt. Kanchan Devi vsCommissioner of Customs (Preventive)

CITATION : 2026 TAXSCAN (CESTAT) 377

The Kolkata bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that in the absence of any evidence to prove that seized green and yellow peas were of foreign origin, confiscation of the vehicle and imposition of penalty cannot be sustained.

The tribunal held that in the absence of proof of foreign origin, the confiscation of the vehicle could not be sustained and consequently, redemption fine and penalty imposed on the appellant were also not valid. The tribunal set aside the impugned order relating to confiscation and penalty and allowed the appeal with consequential relief.

Service Tax Not Payable on Security Services, Car Hiring & Employee Accommodation: CESTAT Grants Partial Relief to Mill

M/s. Tamralipta Co-operativeSpinning Mills Ltd. vs Commissioner of C.G.S.T. and Central Excise

CITATION : 2026 TAXSCAN (CESTAT) 378

In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata held that service tax is not payable on security services, hiring of cars and rent recovered from employees towards accommodation equivalent to House Rent Allowance, while confirming tax liability on legal services and goods transport agency services.

The tribunal also pointed out that in the facts and circumstances of the case, imposition of penalties is not justified. The tribunal held that no service tax is payable on security services, hiring of cars and rent collected from employees, while service tax is payable on legal services and goods transport agency services along with interest. Penalties were set aside.

Service Tax Demand raised under "Construction of Residential Complex Services" cannot be Confirmed under "Works Contract Services": CESTAT

M/s. Ajab Singh & Co. vsPrincipal Commissioner of Service Tax Delhi I, New Delhi

CITATION : 2026 TAXSCAN (CESTAT) 379

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, Principal Bench, held that service tax demand raised under “Construction of Residential Complex Services” cannot be confirmed under “Works Contract Service”.

The two-member bench comprising Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) drew support from M/s Goyal and Construction Ltd v Commissioner, ST, Ahmedabad and other relevant cases to hold that demand confirmed under WCS cannot be sustained and the same is set aside.

CESTAT Dismisses Customs Appeals on Confiscated Gold Bars as Penalty Below ₹50 Lakh Threshold

Principal Commissioner ofCustoms vs Sh. Deepak Vats

CITATION : 2026 TAXSCAN (CESTAT) 380

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Bench, dismissed an appeal filed by the Customs, wherein the penalty for confiscated gold bars was less than INR 50 lakhs, lesser than the monetary threshold.

The bench of S.K. Mohanty (Judicial Member) took into consideration that the dispute is concerning the penalties involved which are less than INR 50 lakhs and referred to the threshold of monetary limit as per the instruction dated 02.11.2023 Accordingly, the appeals filed by the Revenue were dismissed under the litigation policy of the Government.

Cum-Tax Benefit allowable where Consideration Includes Service Tax u/s 67(2): CESTAT orders Fresh Calculation of Tax

Sri Vedha Creations vsCommissioner of Central Excise & Service Tax

CITATION : 2026 TAXSCAN (CESTAT) 381

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench held that if a business does not separately collect service tax from its customers, the total amount received must legally be treated as already including the tax, a concept known as the "cum-tax benefit."

Therefore, while the Tribunal confirmed the company's right to the cum-tax benefit, it quashed the original tax demand order and sent the case back to the starting line. The authorities have been directed to consider all the evidence fresh, recalculate the exact tax owed using the cum-tax method, and adjust any interest or penalties accordingly.

No Evidence proving Excess Credit Availment to Evade Service Tax: CESTAT says ‘Extended Limitation period’ cannot be Invoked

M/s. Radiant Advertising AndMarketing vs The Commissioner of CGST & Central Excise

CITATION : 2026 TAXSCAN (CESTAT) 382

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, held that the alleged availment of excess credit lacked evidence to prove intention to evade service tax and that the extended limitation period cannot be invoked.

Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) credit the evidence as such documents like invoices brought forth by the appellant to counter the claim that they had wrongfully availed excess credit. It was noted that suppression of fact to evade tax cannot be established and the demand raised and confirmed was set aside as the extended period of limitation was not sustainable.

Service Tax Demand Unsustainable as SCN did not Categorize Construction Services under WCS: CESTAT Allows Appeal

M/s Mondal Construction vsCommissioner of Customs Excise, Kolkata

CITATION : 2026 TAXSCAN (CESTAT) 383

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Kolkata Bench, allowed an appeal wherein it held that the demand for service tax was unsustainable due to the fact that the show cause notice (SCN) did not categorise the services rendered by the appellant under Works Contract Service (WCS).

The CESTAT relied on the Supreme Court classification under WCS in the case of Larsen & Toubro Ltd. (2015). Accordingly, the bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) merited that the classification of the services rendered by the appellant is to be done under WCS and held that since no demand has been raised to that effect, the same is liable to be set aside.

Service Tax on Composite Contracts Before 01.06.2007 Unsustainable: CESTAT Held Classification Beyond SCN Not Permissible

M/s. Sri Renukadevi Enterprisesvs Commissioner of GST & Central Excise

CITATION : 2026 TAXSCAN (CESTAT) 384

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench, held that service tax demand on composite contracts cannot be sustained under “Erection, Commissioning and Installation Service” prior to 01.06.2007 and that classification beyond the scope of ShowCause Notice (SCN) is not permissible in law.

The Tribunal further held that the SCN is the foundation of demand and the Customs Department cannot travel beyond the allegations contained and it was observed that the respondent erred in confirming demand under “Works Contract Service” when the SCN proposed classification only under “Erection, Commissioning and Installation Service.”

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