CESTAT Weekly Round-Up [June 16 to June 21, 2025]

This weekly round-up analytically summarizes the key stories related to the Customs Excise and Service Tax Appellate Tribunal (CESTAT) reported at Taxscan from 16 June 2025 to June 21 2025.

Freight Forwarder's Profit from Space Trading Not a Taxable Service: CESTAT

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that profits earned by a freight forwarder from trading cargo space are not liable to service tax, as such activity does not amount to providing a taxable service. The revenue counsel countered that the appellant’s activities were in the nature of business support services and that the profit earned on freight should be taxable. They argued that since the appellant and the customers were both located in India, and no exemption applied, the service tax was rightly demanded.

CESTAT denies Service Tax Exemption for Mandi Constructions as Market Structures Fall Under 'Business or Commerce’

RAJASTHAN STATEAGRICULTURE MARKETING BOARD VS COMMISSIONER CGST & CENTRAL EXCISE CITATION : 2025 TAXSCAN (CESTAT) 661

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) denied the service tax exemption for mandi constructions, as market structures fall under 'business or commerce’

The relevant portion of the notification reads as follows: “12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of – (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession;”

Mere wrong availment of Cenvat Credit cannot be equated with suppression of fact, fraud intent to evade duty: CESTAT

M/s RPK India Pvt. Ltd.vs Commissioner of CGST CITATION : 2025 TAXSCAN (CESTAT) 663

In a recent case, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Mumbai bench held that mere wrong availment of cenvat credit cannot be equated with suppression of fact, fraud intent to evade duty.

The issue involved herein pertains to the alleged wrong availment of Cenvat Credit by the appellant of Service Tax paid on ‘outdoor catering services’ provided to its employees during the period January, 2015 to June, 2017 which, according to the department, do not qualify as an input service in terms of Rule 2(l) of Cenvat Credit Rules, 2004 post amendment effective from 01.04.2011. Accordingly a show-cause notice dated 22.01.2020 was issued proposing recovery of the inadmissible Cenvat Credit availed by the appellant culminating in the Order-in-Original dated 15.12.2020. The appeal filed by the appellant against the said Order-in-Original was rejected vide impugned order dated 31.08.2021.

Customs House Agent Cannot Be Penalized Without Direct Evidence or Involvement in Alleged Undervaluation: CESTAT

S A DALAL AND CO 277 vsCOMMISSIONER OF CUSTOMS(IMPORT) CITATION : 2025 TAXSCAN (CESTAT) 665

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that a Customs House Agent (CHA) cannot be penalized without direct evidence or involvement in the alleged undervaluation.

The appellant’s counsel argued that they were never called for investigation and that the entire penalty was based solely on statements given by third parties, specifically, the importer Shri Prabhat Tarsaria and a director of another customs agency, Shri Rupin Parekh. The appellant contended that none of the co-accused alleged any wrongdoing by them or stated that the CHA was aware of the undervaluation.

Use of Imported Raw Materials Does Not Disqualify Customs Exemption If DTA Goods Are Made from Indigenous Inputs: CESTAT

M/s Bharat Resins Ltd. vsC.G.S.T. & Central Excise-Surat CITATION : 2025 TAXSCAN (CESTAT) 666

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the use of imported raw materials does not disqualify a 100% Export Oriented Unit (EOU) from claiming customs exemption, provided the goods cleared to the Domestic Tariff Area (DTA) are manufactured from indigenous inputs.

The revenue counsel countered that the term "wholly" in the notification must be strictly interpreted to exclude any use of imported materials. According to them, if imported inputs are used anywhere in the production process, the exemption under Serial No. 3 of the notification would not apply. The department did not confirm whether any appeal had been filed against the Eurotex Industries decision but insisted that its interpretation was correct.

WAPs with MIMO but Without LTE Standards Eligible for Customs Duty Exemption: CESTAT Overrules Dept's Interpretation

M/s.Inflow TechnologiesPrivate Ltd vs The Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 667

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that Wireless Access Points (WAPs) using MIMO technology but not conforming to LTE standards are eligible for basic customs duty exemption under Notification No. 24/2005-Cus. The tribunal rejected the customs department’s interpretation that WAPs with MIMO alone fall within the scope of exclusion.

The Commissioner of Customs denied the exemption on the ground that the WAPs used MIMO technology, even though they did not conform to LTE standards. The Commissioner held that the exclusion clause in the notification should be read in a disjunctive manner, meaning products using either MIMO or LTE would be excluded from the benefit.

Win for Hindustan Unilever: CESTAT Confirms Classification of Petroleum Jelly Products like Aloe Vera and Baby Variants as Skincare Preparations

M/s. Hindustan UnileverLimited vs The Commissioner of GST & Central Excise CITATION : 2025 TAXSCAN (CESTAT) 668

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled in favour of Hindustan Unilever Limited (HUL), holding that its classification of petroleum jelly products such as Aloe Vera and Baby variants under skincare preparations is correct.

Aggrieved by the order passed by the Commissioner of Central Excise, Puducherry, HUL filed an appeal before the CESTAT. The appellant argued that the products in question are skincare preparations and were correctly classified under CETH 33049990. The appellant’s counsel referred to a recent decision by the same Tribunal in HUL’s own earlier case for a different period, where the Tribunal had accepted the same classification.

Win for Shipping Line: CESTAT Rules SCMTR Does Not Require Waiver of Detention Charges Beyond 60 Days

ASR INDIA PVT LTD vsCOMMISSIONER OF CUSTOMS-MUNDRA CITATION : 2025 TAXSCAN (CESTAT) 673

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that shipping lines are required to waive detention charges only for up to 60 days under the Sea Cargo Manifest and Transhipment Regulations, 2018 (SCMTR), and that any waiver beyond this period is not mandatory.

The department’s counsel argued that ASR India had violated the SCMTR by not following its instructions and by failing to respond clearly to official letters seeking full waiver of charges. They argued that ASR’s inconsistent responses amounted to non-compliance and justified the revocation of its registration and the imposition of a penalty.

Commissioner (Appeals) Failed to Address Allegations and Defence: CESTAT Orders Re-examination in Import Misdeclaration

Ketan Sood vs PrincipalCommissioner CITATION : 2025 TAXSCAN (CESTAT) 669

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) set aside an order passed by the Commissioner of Customs (Appeals), finding that the appellate authority failed to discuss key allegations and the defence presented in a case involving alleged misdeclaration of imported goods valued at Rs. 2.83 crore.

The adjudicating authority rejected the defence and imposed a penalty of Rs. 90 lakh on each appellant under the Customs Act. The Commissioner (Appeals) upheld the penalties without addressing the detailed submissions made by the appellants or explaining the reasons for sustaining the findings of the original authority. The order merely stated that the appellants arranged the Importer Exporter Code (IEC) for consideration and had coordinated the clearance of the consignments.

CESTAT Quashes Penalty on Diamond Firm Director: No Proof of Misdeclaration or Overvaluation in Exports

Shri Prakash Goti vsCommissioner of Customs (Airport & ACC)

CITATION : 2025 TAXSCAN (CESTAT) 672

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that no penalty could be imposed on a diamond company director in the absence of any evidence showing misdeclaration or overvaluation in exports.

During the investigation, some consignments linked to these importers were examined, and the goods were seized. The name of the appellant’s company came up during this process. A company employee stated that a broker had brought diamonds to be exported through Dharmanandan Diamonds. Later, a show cause notice was issued to the appellant proposing the confiscation of goods and imposition of a penalty under Section 114 of the Customs Act.

No Extended Limitation or Penalty Where Clearance Details Were Disclosed in ER-1 Returns: CESTAT

Commissioner of CentralExcise & Service Tax, Guntur vs Safe Parentals Ltd CITATION : 2025 TAXSCAN (CESTAT) 671

The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the excise duty demand against Safe Parentals Ltd and Safe Formulations Ltd must be recalculated after allowing credit for duty already paid, and the extended period for raising the demand cannot be invoked since all relevant details had been disclosed in statutory returns.

The department’s counsel argued that clearances made under other brand names should have been included in the value calculation and that the adjudicating authority had erred by confirming only a part of the demand. It claimed that the omission justified invoking the extended period of limitation and imposing penalties.

No Service Tax Payable on Amount Collected as Liquidated Damages: CESTAT

Bharat Dynamics Ltd vsCommissioner of Central Tax Hyderabad

CITATION : 2025 TAXSCAN (CESTAT) 670

The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that no service tax is payable on amounts collected as liquidated damages, as such collections are compensatory in nature and do not represent consideration for any service.

The department’s counsel did not oppose the appellant’s position and agreed that the issue had already been settled. They stated that the Tribunal’s earlier ruling in Bharat Dynamics Ltd’s favor had been accepted and not appealed further.

Penalty u/s 114AB of Customs Act not imposable in any instrument by fraud, collusion, wilful mis-statement or suppression of fact: CESTAT

New Era Trading Pvt. Ltd.vs Principal Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 675

In a recent case, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that a penalty under section 114AB of the Customs Act, 1961 is not imposable in any instrument by fraud, collusion, wilful mis-statement or suppression of fact.

As per the contracts, the appellant was required to supply the goods on the prices stated in the agreement on FOB terms and to a place notified by the buyer. In terms of the contract, Concorde Shipping & Logistics India was solely responsible for undertaking shipping as per the instructions of the buyer.

No Service Tax on Reimbursements Received as Pure Agent: CESTAT

M/s. Seamax ShippingIndia Pvt. Ltd. vs Commissioner of GST & Central Excise CITATION : 2025 TAXSCAN (CESTAT) 676

The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that no service Tax applicable on reimbursements received asa pure agent.

However, the demand in respect of five claims and reimbursements of transport / weighment charges have been confirmed on the ground that the amounts spent on these heads and the amount recovered from the customers are not equal and in some cases the expenditure is more than the income. Counsel for the appellant relies on the judgment of the Supreme Court in the case of Union of India Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. – 2018 holding that Rule 5 of the Service Tax (Determination of Value) Rules, 2000 as being ultra vires, section 67 of the Finance Act, 1994.

Products Generated During Rice Bran Oil Refining Treated as “Waste”, Exempt from Excise Duty: CESTAT

M/s Godavari Edible BranOil Pvt Ltd. vs Commissioner of Central Tax Visakhapatnam– GST CITATION : 2025 TAXSCAN (CESTAT) 677

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the products generated during the refining of rice bran oil, namely R.B. Fatty Acid, R.B. Wax, and R.B. Gums, were to be treated as “waste” and were exempt from excise duty under Notification No. 89/95 CE.

The two member bench comprising Angad Prasad ( Judicial Member) and A.K.Jyotishi (Technical Member) considered submissions from both sides and reviewed the records. It noted that the issue was limited to whether the products generated during the refining of rice bran oil qualified as waste or by-products, and whether they were eligible for exemption under Notification No. 89/95-CE dated 18.05.1995.

CESTAT Sets Aside ₹55 Cr Penalty: No Customs Violation as Overvaluation Led to Higher Duty

Shri SaravananPalaniappan vs Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 679

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in its recent ruling, set aside penalties totaling ₹55 crore and vitiated the Revenue’s attempt to re-determine value of goods imposed on multiple appellants in connection with imports of Black Pepper.

This overvaluation was proved by showing evidence of the imported black pepper being sold at lower prices to unrelated entities in India, for which the invoices were also produced. The Commissioner concluded that this overvaluation was done to circumvent the MIP subsequently making the import improper and rendering the black pepper "prohibited" under the DGFT Notification.

CESTAT Directs Assessee to Submit Work Order Issued to Main Contractor as Activity Undertaken was Similar, Remands Matter

M/s. Poonam Construction& Co. vs The Commissioner of Central Excise & Service Tax CITATION : 2025 TAXSCAN (CESTAT) 674

In a recent case, the Kolkata bench of the Customs, Excise And Service Tax Appellate Tribunal (CESTAT) direct the assessee to submit work order issued to main contractor as activity undertaken was similar and remanded the matter back to the Commissioner (Appeal) to ascertain the said fact on production of work orders issued to the main contractor by the appellant.

The appellant provided services of sub contractor by way of works contract to another contractor providing works contract which are exempted. The appellant also submitted that on the basis of Form 26 AS demand cannot be raised against the appellant. But the Commissioner (Appeal) held that the work has been executed by the appellant on the basis of work order awarded by private contractors and confirmed the demand against the appellant.

No Denial of Accumulated CENVAT Credit Refund even if Exported Service is Non-Taxable: CESTAT directs ₹61.12L Refund

M/s. Symphony MarketingSolutions India Pvt. Ltd vs The Commissioner of Central Excise CITATION : 2025 TAXSCAN (CESTAT) 678

The Bangalore Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in its recent ruling directed the refund of ₹61,12,804 to an Information Technology EnabledServices (ITES) provider holding that the refund of accumulated Central Value Added Tax (CENVAT) credit cannot be denied merely because the exported services were not taxable at the relevant time.

The Tribunal further by relying on the mPortal India Wireless Solutions observed that the department’s inconsistent conduct in allowing refund claims for earlier and later periods without raising any dispute about the nature of exported services further supported the appellant’s claim.

CESTAT sets aside Demand in respect of Cargo Handling Services and GTA Services in respect of Raw Sugar

M/s. Aspinwall & Co.Ltd. vs Commissioner of GST & Central Excise CITATION : 2025 TAXSCAN (CESTAT) 680

In a recent case, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal( CESTAT) sets aside the demand in respect of Cargo Handling Services and GTA Services in respect of raw sugar on finding that the appellants have been subjected to repeated proceedings on the same issue which is decided by the Tribunal in the appellant’s own case.

Counsel for the appellant submitted that the issue regarding the port services is no longer res integra having been decided by this very Bench in the same case in the first round; they have paid the applicable service tax in respect of cargo handling service and GTA service. Penalties were also set aside by the Tribunal and therefore nothing survives in the case. Accordingly, the impugned order needs to be set aside.

CESTAT Sets aside Penalty under Customs Act for Assissiting Illegal Export when Confiscation of Exported Consignment Already set aside

M/s Safewater Lines (I)Pvt Ltd. vs Commissioner of Customs (Export) CITATION : 2025 TAXSCAN (CESTAT) 681

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside the penalty under section 114(iii) of the Customs Act as it cannot be levied upon the appellant for assisting illegal export when Confiscation of exported consignment was already setaside.

This approach ensures competitiveness by partially absorbing the elevated freight costs, aligning with the objectives of the FMS. As per the contracts, Color Cottex was required to supply the goods on the prices stated in the agreement on FOB terms and to a place notified by the buyer. In terms of the contract, freight forwarders were solely responsible for undertaking shipping as per the instructions of the buyer.

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