CESTAT WEEKLY ROUND-UP [June 30 to July 05, 2025]

CESTAT quashes Service Tax Penalties, upholds Admitted Demands

M/s. Anand Motor Agencies Ltd.vs Commissioner, Central Excise & Service Tax

CITATION : 2025 TAXSCAN (CESTAT) 733

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad bench, quashed significant service tax penalties on the assessee, while upholding the service tax demands that were admitted by the company. In its order pronounced on January 10, 2025, the Tribunal modified its earlier decision, confirming the admitted service tax demands and ordering appropriation of the amounts already paid by the appellant. However, it quashed the penalties imposed under the Finance Act, 1994, recognizing that the tax dues had been paid prior to the issuance of the show cause notice. CESTAT emphasized that in such circumstances, penalties were not warranted.

Wafers are entitled to reduced rate of excise duty under exemption notification: CESTAT sets aside Order

M/s. Mondelez India Foods Pvt.Ltd vs The Commissioner of CGST

CITATION : 2025 TAXSCAN (ITAT) 1201

The New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that ‘Wafers’ are entitled to reduced rate of excise duty under exemption notification and set aside the order imposing penalty under Excise Act.

On scrutiny of the ER-1 returns of the appellant, the department formed a view that the Products manufactured by the appellant are classifiable under ETI 1905 32 11 instead of ETI 1905 32 90. Accordingly, 25 periodical show cause notices were issued to the appellant for the period from November 2006 to July 2017 alleging that the Products manufactured by the appellant deserve classification under ETI 1905 3211 and would, therefore, not be eligible for reduced rate of duty under the Exemption Notification.

Commissioner Excise (Appeals) could not condone Delay in filing Appeal beyond 30 days: CESTAT

M/s Style Digital Color Lab vs Commissionerof Central Excise & Service Tax

CITATION : 2025 TAXSCAN (CESTAT) 734

The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the Commissioner of Excise (Appeals) could not condone the delay in filing the appeal beyond 30 days and dismissed the appeal.

Section 35 of the Act states that any person aggrieved by any decision or order passed under this Act by a Central Excise Officer, lower in rank than a Commissioner of Central Excise, may appeal to the Commissioner of Central Excise (Appeals) [hereafter in this Chapter referred to as the Commissioner (Appeals)] within sixty days from the date of the communication to him of such decision or order.

CESTAT Directs to decide Services Tax Appeal Filed with due Compliance of Pre Deposit

M/s Royal Construction and Mining Works vs Commissioner of Central Excise & CGST

CITATION : 2025 TAXSCAN (CESTAT) 735

The Allahabad bench of the Customs, Excise & Service TaxAppellate Tribunal (CESTAT) has held that since the impugned order do not considers the appeal filed by the appellant on merits, no decision has been rendered on merits by Commissioner (Appeals), the tribunal remanded the matter back to the Commissioner (Appeals) for decision on merits.

It is evident that the Commissioner (Appeals) has dismissed the appeal of the appellant only for want of mandatory pre-deposit. The Appellant has requested for adjournment. I have heard Shri Santosh Kumar Authorized Representative appearing for the revenue.

Sub-Contractors Liable to Pay Service Tax Even if Main Contractor Has Already Paid: CESTAT

M/s. United Fabricators andTechnical Services Pvt Ltd. vs The Commissioner, Central Tax

CITATION : 2025 TAXSCAN (CESTAT) 736

The New Delhi Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that sub-contractors are liable to pay service tax even if the main contractor has already paid service tax on the same project.

The tribunal explained that service tax is levied on the provision of taxable services by any person to another person, including sub-contractors, and there is no exemption from liability for sub-contractors under the law. The tribunal held that the classification under “Erection, Commissioning or Installation Services” was correct, the appellant was liable to pay service tax as a subcontractor, and the extended period and penalties were valid.

Affiliation Fees Collected by Universities Not Taxable Under Service Tax, Rental Income Exempt if Within Threshold: CESTAT

Rajeev Gandhi ProudyogikiVishwavidyalay vs The Principal Commissioner

CITATION : 2025 TAXSCAN (CESTAT) 738

The New Delhi Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that affiliation fees collected by a university are not taxable under service tax, and rental income also remains exempt when threshold limits apply.

The counsel relied on the Karnataka High Court’s decision in the Rajiv Gandhi University of Health Sciences case, upheld by the Supreme Court, which held that granting affiliation is a statutory function in the furtherance of education and not a taxable service. The counsel also argued that since the affiliation fees were not taxable, the university’s rental income remained within the exemption threshold limit and was not taxable.

Removal of PPCP to Moulders for Making Battery Parts Not Trading: CESTAT Rules Rule 6 Cenvat Credit Reversal Inapplicable

M/s. Exide Industries Limited vsCommissioner of GST and Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 737

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the removal of Polypropylene Co-Polymer (PPCP) to moulders for making battery parts under reversal of credit is not “trading” and does not attract reversal under Rule 6 of the Cenvat Credit Rules (CCR).

The two-member bench comprising Ajayan T.V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that PPCP was cleared to moulders for manufacturing battery parts exclusively for Exide and returned for further use, making it an integral part of the manufacturing process. It was further observed that prior orders, including one by the same adjudicating authority, had accepted PPCP as input under Rule 2(k) and its clearance under Rule 3(5) as valid.

Security services qualify as input service u/r 2(l) of CCR, as service utilized for manufacture of dutiable final products: CESTAT

M/s Grasim Industries Limited vsCommissioner, CGST

CITATION : 2025 TAXSCAN (CESTAT) 739

The Allahabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that security services qualify as input services under rule 2(l) of the Cenvat Credit Rules (CCR),2004, as services utilized for the manufacture of dutiable final products.

In lieu of security services, M/s. Fitcomb Secure Service, raised invoices on the Appellant with applicable Service Tax. Upon receipt of such invoices, the Appellant paid the total consideration amount, including the service tax, to M/s, Fitcomb Secure Service and availed Cenvat credit of the Service Tax paid on such invoices. Cenvat credit was availed by the Appellant under a bona fide belief that the said services had a direct nexus with the manufacturing activity of the Appellant, thereby qualifying as an eligible input service defined under Rule 2 (1) of the Credit Rules.

Industrial gases in VITT transported by carrier agency upon issue of Consignment Note qualify as GTA service and not renting and leasing: CESTAT

M/s. Reehal Roadlines vsCommissioner of CGST & Central Excise

CITATION : 2025 TAXSCAN (CESTAT) 740

The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that Industrial gases in VITT transported by carrier agency upon issue of a consignment note qualify as GTA service and not renting and leasing.

Respondent-Department’s stand is that such service does not constitute Goods Transport Agency service but a declared service namely transfers of goods by way of hiring, leasing, licensing etc. without transfer of rights to use the goods in terms of Section 66E(f) of the Act. Accordingly, Appellant was put on show-cause notice for the above said period with above referred amount as Service Tax demand along with interest and penalty and subsequently it got adjudicated against Appellant’s stand that resulted in confirmation of duty demand, interest and penalty as referred above. Legality of the said order is assailed before this forum.

Kerala HC Upholds validity of SCN Served on Adult Member of Noticee u/s 153 of Customs Act

MANU VALIYAVEETTIL MADHU vsADDITIONAL COMMISSIONER OF CUSTOMS

CITATION : 2025 TAXSCAN (HC) 1206

The Kerala High Court upheld the validity of a show cause notice served on the adult member of the noticee under Section 153 of the Customs Act, 1962. The contentions of the petitioner that the proper opportunity was denied to contest the matter cannot be accepted while upholding the validity of the notice served.

According to the petitioner, at the time when the show cause notice was issued, he was abroad and therefore, he could not submit a proper reply to the said show cause notice. It was also averred in the writ petition that, the elderly parents of the petitioner, who were served with the notice, lacked the requisite literacy or understanding, with regard to the contents of notice, and thus the petitioner was deprived of an opportunity to provide a timely reply to show cause notice.

Demand of Service Tax cannot be Solely based on Income Tax Data in Form 26AS: CESTAT Quashes Demand

M/s Shree Ganesh Telecom Pvt.Ltd vs Commissioner (Appeals)

CITATION : 2025 TAXSCAN (CESTAT) 741

In a recent case, the New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that the service tax demand cannot be based solely on Income Tax Data in Form 26AS without establishing receipt of consideration and held that the appellant is wrongly alleged to have suppressed the material facts.

Counsel for the appellant has submitted that the demand of service tax based on the income tax returns/any third party data is not sustainable. Further submitted that while replying to the audit memo pointing out the said shortcoming itself, the appellant had explained the reason for non-payment of the equivalent amount of service tax. It was clearly informed to the department that the amount which has not been received by the appellant has not been included in the taxable value and the tax has otherwise been fully paid on the amount of consideration received by the appellant.

Declaration of Value of Goods Cannot be Treated as Suppression Merely Being Incorrect: CESTAT quashes Penalty under Customs Act

M/s Goldstar Glasswares Pvt.Ltd. vs Principal Commissioner of Customs

CITATION : 2025 TAXSCAN (CESTAT) 742

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that the declaration of the value of goods was a bonafide declaration and merely because it is ultimately found to be incorrect will not mean that the valuation was with a bad motive not declared correctly and quashed the penalty under the Customs Act, 1962.

The appellant is a private limited company with Arjinder Singh Gulati and Nirmal Paul Gulati as Directors of the Company. The appellant started the unit in 1988 and manufactured Opel Glassware but the unit was subsequently closed. Thereafter, the appellant started manufacturing melamine table wares (crockery) by using food grade melamine, which is manufactured through a high pressure process.

CENVAT Credit Cannot Be Denied If Service Tax Is Paid and Accepted: CESTAT Remands All Nippon Airways’s Case for Verification

M/s. All Nippon Airways Co Ltd.vs Commissioner Service Tax-IV

CITATION : 2025 TAXSCAN (CESTAT) 743

The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that CENVAT credit cannot be denied if service tax has been paid and accepted by the Revenue, even if it does not qualify as a taxable service. The Tribunal remanded the matter for verification of service tax payments of five interconnected appeals filed by All Nippon Airways Co. Ltd

The Revenue contended that the services, such as those related to PSF, DF, and UDF, were provided by airport operators like the Airports Authority of India and Mumbai International Airport Pvt. Ltd., and not by the airline. As a result, it was alleged that the airline was not eligible to take CENVAT credit on input services used in respect of those charges.

Penalty on Co noticee is invalid when main case is settled under SVLDRS: CESTAT

SHRI RAJENDRA PYARELAL AGRAWALvs COMMISSIONER CENTRAL GST & CENTRAL EXCISE

CITATION : 2025 TAXSCAN (CESTAT) 745

The Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that once the duty demand case is settled under SVLDRS-2019, as per scheme itself, there is a waiver of penalties on the main assessee against whom, the demand was confirmed as well as on other co-noticees.

The above mentioned show cause notice was adjudicated by the lower adjudicating authority vide the order dated 22.12.2017 confirming demand of Central Excise duty of Rs. 20,36,913/- against appellant No. 1 under Section 11A(10) of the Central Excise Act, 1944 along with interest on the confirmed demand under Section 11AA of the Act and imposed penalty of Rs. 20,36,913/-. Upon appellant No. 1 under Section 11AC(1) of the Act with benefit of reduced penalty and also imposed penalty of Rs. 2,00,000/- upon appellant No. 2 under Rule 26(1) of the Rules.

CESTAT Quashes Provisional Release Order of Seized Goods based on Furnishing Bank Gurantee as Circular not require furnishing same for Star Export Houses

M/s B P Wire Industry vsCommissioner, Customs (Preventive), Lucknow

CITATION : 2025 TAXSCAN (CESTAT) 744

The Allahabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has quashed the provisional release order of seized goods which required the furnishing of bank guarantee on finding that Circular 32/2009-Cus dated 25.11.2009 is justified as this does not require furnishing of bank Guarantee for any category for Star Export Houses.

The High Court examined Section 129C(4) of the Customs Act and held that a bare reading of the said provision that any case, which is assigned to a Bench can be decided by one of the members sitting singely if the value of the goods confiscated without option to redeem under Section 125 does not exceed Rs 50 lakhs.

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