Half-Yearly Customs, Excise and Service Tax Case Digest: CESTAT Decisions 2025 [Part IV]

This half-yearly round-up analytically summarizes the key Indirect Tax-Customs, Excise and Service Tax rulings of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) reported at Taxscan.in during the first half of 2025.

Relief to Toyota: CESTAT Sets aside Order Rejecting Refund of excess CENVAT credit being Contrary to S. 142(3) of CGST Act

Toyota Kirloskar MotorPrivate Limited vs Pr. Commissioner of Central Tax CITATION: 2025 TAXSCAN (CESTAT) 291

In a ruling in favour of Toyota Kirloskar Motor Private Limited, the Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) set aside the order rejecting the refund of excess cenvat credit being contrary to section 142 (3) of the Central Goods and Service Tax (CGST), Act, 2017.

Thereafter, the appellants submitted the refund application in Form ‘R’ to the Deputy Commissioner, Pune vide reference No. TKM/GST/DIV6/ 050/18-19 dated 11.3.2019, comprising the closing balance of Education Cess of Rs.1,00,770/- & SHE Cess of Rs.50,537/- totaling to Rs. 1,51,307/-.Assistant Commissioner of Central Tax, Pune, had issued a Show Cause Notice No. PI/Ref-SCN/01/Toyota/ 2019-20 dated 16.4.2019, proposing to reject the refund claim of Rs. 1,51,307/-, based on the allegation that the refund of closing balance of Education Cess & SHE Cess lying in CENVAT credit account is not covered in any of the categories of duty of excise as provided under sub-section (2) of Section 11B of CEA, 1944; Rule 5 of CCR, 2004 shows that refund of unutilized CENVAT credit in relation to duty paid on input or input services has been provided only in cases of export of the final products; except for such a contingency, it appears that there is no provision for grant of refund or encashment of CENVAT credit, in the entire framework of the CCR, 2004.

CESTAT quashes Rs. 35.68 Lakh CENVAT Credit Recovery against Hindustan Coca-Cola Beverages Pvt Ltd

Hindustan Coca-Cola Beverages Pvt Ltd vs Commissioner of CGST &Customs CITATION: 2025 TAXSCAN (CESTAT) 287

The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the recovery demand of Rs. 35.68 lakh in CENVAT credit, which was levied against Hindustan Coca-Cola Beverages Pvt Ltd (HCCBPL).

The CESTAT observed that “the impugned order confirms the recovery of credit taken and distributed under Rule 7 of the CENVAT Credit Rules, 2004, by the input service distributor (ISD). However, the appellant merely utilised the credit, and since there’s no violation of Rule 3(4), they shouldn’t be held accountable for its source. The obligation under Rule 3(1) applies to the ISD, not the recipient.”

CESTAT Directs Re-Adjudication of Customs Matter after Authority Fails to Furnish Test Reports

M/s. Shyam Sel & Power Limited vs Commissioner of Customs(Preventive) CITATION: 2025 TAXSCAN (CESTAT) 293

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has set aside an order and directed fresh adjudication in a customs dispute involving Shyam Sel & Power Limited and Shyam Metalics & Energy Limited. The tribunal ruled that the customs authorities had failed to provide test reports to the appellants before finalizing the assessment, violating principles of natural justice.

The tribunal, consisting of Judicial Member R. Muralidhar and Technical Member K. Anpazhakan, observed that the customs authorities had an obligation to share the test reports before finalizing the assessments. The bench ruled that failure to do so constituted a violation of natural justice, as the appellants were denied an opportunity to rebut the findings. CESTAT held that assessments made without furnishing key evidence to the affected parties cannot be sustained under the law.

Relief to LG Electronics: CESTAT Allows CENVAT Credit on Call Centre Services for After-Sales Support

M/s L G Electronics India Pvt. Ltd vs Commissioner, Central Excise,Noida-II CITATION: 2025 TAXSCAN (CESTAT) 294

The Allahabad Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has held that LG Electronics India Pvt. Ltd. is entitled to avail CENVAT credit on service tax paid for call centre services utilized for after-sales support. The Tribunal found that such services directly contribute to the brand image and sales promotion of the company’s manufactured goods, thereby qualifying as an input service under Rule 2(l) of the CENVAT Credit Rules, 2004.

The Tribunal relied on several judicial precedents, such as CCE, Nagpur v. Ultratech Cement Ltd. (2010) where ut was held that any service that contributes to the final value of a product is eligible for CENVAT credit. Similarly in the case of Coca-Cola India Pvt. Ltd. v. Commissioner (2009) the court had recognized that services used in brand building and customer engagement qualify as input services.

Establishment of Fake or Fabricated Invoice Not necessary to reject Transaction value u/r 12 of Customs Valuation Rules: CESTAT

M/s Mittal Appliances Limited vs The Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 295

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has stated that the transaction value is not the only basis for assessment of the duty. It is sufficient if the proper officer has reasonable doubt for the transaction value to be rejected under Valuation Rule 12.

While dismissing the appeal, the bench ruled that rejecting the transaction value does not need proof that the invoice was fraudulent or falsified. Furthermore, it is not required to prove a family connection between the buyer and seller. It is sufficient if the proper officer has reasonable doubt for the transaction value to be rejected under Valuation Rule 12.

Data from NIDB cannot be Basis for Enhancement of Value under Customs Act: CESTAT

M/s Seafox Impex vs The Commissioner of Customs (Appeals) New Delhi CITATION: 2025 TAXSCAN (CESTAT) 296

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that datafrom the National Import Database (NIDB) cannot be the basis for enhancement of value under the Customs Act, 1962. The judicial member Rachna Gupta’s single bench has ruled that the department still has the responsibility of proving the aforementioned claims. In the event that the burden is not met, the appellant’s statement or payment of the differential duty will not be enough to waive the need to challenge the reassessment.

The tribunal concluded that there was no reasonable doubt regarding the accuracy of the transaction value or the value declared by the appellant in the contested Bill of Entry because the appropriate official had not verified, examined, or tested the items. Prior to rejecting the aforementioned value, the department apparently and admittedly did not complete the investigation required by Rule 12 of the Valuation Rules. Additionally, no exercise was conducted as required by Customs Act Sections 4 and 17. The department solely used the NIDB data to reevaluate the products’ value at a higher price and reject the value stated in the Bills of Entry.

Relief to Indian Oil Corporation: CESTAT Sets aside Order rejecting Customs Duty Refund Citing Limitation

Indian Oil Corporation Limited vs Commissioner of Customs-Jamnagar CITATION: 2025 TAXSCAN (CESTAT) 297

In a ruling in favour of Indian Oil Corporation, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) set aside the order which reject the refund of customs duty citing the bar of limitation.

The bench viewed that the Bill of Entry was finalized on 15.03.2007 and final assessment was done for the first time on 15.03.2007 after the cut-off date 13.07.2006, after which the doctrine of Unjust Enrichment became applicable.The bench agreed with contention, that the appellant did not become entitled for a refund on their filing of the Bill of Entry for warehousing but only after it was finalized. After the first final assessment order, the appellant filed an appeal before Commissioner (Appeals) which was allowed vide order dated 03.06.2008. Therefore, assessee became entitled for refund as a result of the order of Commissioner (Appeals) dated 03.06.2008.

No Stranger to Contracts, Including Customs Officer Cannot Modify FOB Value of Goods: CESTAT

M/S JBN APPARELS PVT LTD vs COMMISSIONER OF CUSTOMS-NEW CITATION: 2025 TAXSCAN (CESTAT) 298

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has stated that no stranger to the contract, including any Customs officer has any right to interfere with the Free on Board ( FOB ) value of the goods.

The bench allowed the appeal, ruling that the entire investigation, the SCN that followed, and the adjudication proceedings gave the false impression that the Customs officers had the authority to change the FOB value or that the drawback, MEIS, and ROSL, which must be paid as a percentage of FOB according to the drawback schedule and the FTP, could instead be paid on a different value that the officers decided.

Customs Broker not Responsible for Relocation of Client to New Premises after Completion of Address Verification: CESTAT

M/S AKANKSHA GLOBAL LOGISTICS PVT LTD vs COMMISSIONER, CUSTOMS-NEW DELHI CITATION: 2025 TAXSCAN (CESTAT) 299

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has ruled that once address verification is finished, the customs broker is not liable if the client relocates.

The two member bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) observed that according to Regulation 10(n), the Customs Broker is not required to continuously monitor the customer to make sure he is still operating from that address and hasn’t altered his business practices. Consequently, the Customs Broker cannot be held accountable for the client’s act or omission if, after the address has been verified, the client moves to a different location and fails to notify the authorities or have his documents updated.

Relief for NRAI: CESTAT finds No ‘Actual User’ Condition in Exemption Notification, Permits Sale of Imported Arms

M/s National Rifle Association of India vs Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 300

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the Exemption Notification No. 146/94-Cus does not impose an ‘Actual User’ condition and allowed the National Rifle Association of India (NRAI) to sell imported arms and ammunition to affiliated State Rifle Associations and District Clubs.

The two-member bench, comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member)observed that the exemption notification did not mandate that the importer itself must use the arms but only required their use in approved championships. The tribunal found that there was no ‘Actual User’ condition and that NRAI’s supply to affiliated associations did not violate the exemption.

Relief to Shapoorji Pallonji: CESTAT rules Non-Filing of Forms A-1 & A-2 does not Invalidate SEZ Service Tax Exemption

Shapoorji Pallonji & Company Limited vs Commissioner of CentralExcise CITATION: 2025 TAXSCAN (CESTAT) 301

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled in favor of Shapoorji Pallonji & Company Limited, ruling that the failure to submit Forms A-1 & A-2 does not invalidate the SEZ service tax exemption under the Special Economic Zones ( SEZ ) Act, 2005.

The failure to submit Forms A-1 & A-2 was deemed a procedural lapse rather than a substantive non-compliance, and such minor deficiencies cannot override the statutory exemption granted under the SEZ Act. The tribunal set aside the service tax demand of Rs. 14.52 crores along with penalties and interest, ruling that Shapoorji Pallonji was entitled to SEZ service tax exemption despite not submitting Forms A-1 & A-2.

Misdeclaration of Quantity and Value in MACE Grade III Import: CESTAT sets aside Re-determined Value and Penalties

M/s. Anisha Trends vs mmissioner of Customs (Imports) CITATION: 2025 TAXSCAN (CESTAT) 302

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT)set aside the re-determined value, fine, and penalties in a case involving the alleged misdeclaration of quantity and value in the import of ‘MACE GRADE III’ from Indonesia.

It found that the Department failed to provide key documents, including the relied-upon Bill of Entry, and the Spice Board’s report lacked clarity on the grade of goods. Citing a Supreme Court ruling Commissioner of Central Excise, Bangalore vs. M/S Brindavan Beverages (P) Ltd., the tribunal held that a vague Show Cause Notice denied the importer a fair chance to respond. It reiterated that the burden of proving undervaluation rested on the Department and that NIDB data could not be used unless it met legal criteria for identical or similar goods.

Denial of CENVAT Credit for Non-Production of Documents: CESTAT Sets Aside Order for Document Verification

M/s.New Rina TV vs The Commissioner of GST & Central Excise CITATION: 2025 TAXSCAN (CESTAT) 303

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) set aside the order denying CENVAT Credit due to non-production of documents, directing the assessee to provide the necessary documents for verification and reconsideration of the claim.

It directed the assessee to appear before the Commissioner, provide the necessary documents, and allow for verification. If satisfied, the authority would consider the CENVAT Credit claim. The assessee was also asked to cooperate and ensure a speaking order was passed within 30 days.

Non-Filing of Documents within Prescribed period under Customs Provisional Duty Assessment Regulations CESTAT reduces Penalty imposed on SAIL

M/s. Steel Authority Of India Limited vs Commissioner (Appeals) CGST,Central Excise & Customs CITATION: 2025 TAXSCAN (CESTAT) 306

In a recent case, the Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) reduced the penalty imposed on Steel Authority of India Limited( SAIL) for non-filing of documents within the prescribed period under customs provisional duty assessment regulations, 2000.

The Advocate appearing on behalf of the appellant submits that the appellant is a Public Sector Undertaking and has to gather documents from various sources in order to file all the documentary evidence before the Customs Authority. This has resulted in a delayed filing of the documents before them. Therefore, he submitted that considering these facts, the adjudicating authority has correctly imposed a penalty of Rs.45,000/-. It was argued that the Commissioner of Appeals has gone to another extreme by imposing penalty of Rs.50,000/- on each and every bill of entry, which has resulted in a huge penalty of Rs.44,00,000/-.

Service Tax Demand on Construction of Complex Service: CESTAT Sets Aside Demand for Individual Houses

M/s.K.B. & Co vs The Commissioner of GST & Central Excise CITATION: 2025 TAXSCAN (CESTAT) 305

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT)sets aside demand for service tax on the construction of individual houses under the ‘Construction of Complex Service.’

The impugned order referred to a statement by the assessee’s proprietor, which confirmed that more than 12 individual houses were constructed, and this was not disputed by the Revenue. The appellate tribunal concluded that since the appellant built individual residential units, which were not covered under ‘Construction of Complex Service,’ the demand for service tax was not applicable.

Denial of Service Tax Exemption: CESTAT Grants Exemption for Powder Coating Activity

M/s.Trident Coatings Pvt. Ltd. vs The Commissioner of GST & CentralExcise CITATION: 2025 TAXSCAN (CESTAT) 304

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) granted exemption to the assessee for its powder coating activity, setting aside the denial of service tax exemption under Notification No. 8/2005-ST and ruling that the activity was not taxable under Business Auxiliary Service (BAS).

The assessee sought the benefit of Notification No. 8/2005, but the AA wrongly referred to Notification No. 4/2004-ST and denied the benefit. The Commissioner (Appeals) also doubted the delivery of goods to the SEZ units, even though the assessee claimed delivery, the SEZ units didn’t dispute it, and payment was made by cheque. Since the AA accepted the delivery and no appeal was made by the Revenue, the impugned order was unfair and violated natural justice.

Failure to Consider Judicial Decisions on Redemption Fine and Penalty: CESTAT Sets Aside Order

M/s.SLV Trading Company vs The Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 308

The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT) set aside an order after finding that the Commissioner (Appeals) failed to consider binding judicial decisions while imposing a redemption fine and penalty under Sections 112(a) and 114AA of the Customs Act, 1962.

A single member bench comprising P. Dinesha (Judicial Member) allowed the early hearing and took up the appeal for final disposal. It set aside the impugned order and remanded the case to the Commissioner (Appeals) to consider binding judicial decisions and issue a fresh order. All other contentions on the redemption fine and penalty remained open. The miscellaneous application was allowed, and the appeal was disposed of.

Tyre Re-Treading Classified as Works Contract: CESTAT Sets Aside Service Tax Demand

M/s. Tojo Tyre Retread vs Commissioner of GST and Central Excise CITATION: 2025 TAXSCAN (CESTAT) 307

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal(CESTAT) ruled that tyre re-treading qualified as a works contract and set aside the service tax demand.

It held that tyre re-treading was a works contract, making the materials used liable only to sales tax. The demand covered 2005–06 to 2008–09, but the Show Cause Notice was issued on 16.09.2010 by invoking the extended limitation period. Since the demand for 2008–09 was already dropped, the tribunal found that extending the limitation period for 2005–06 to 2007–08 was unjustified.

Refund Claim Filed Within Time Rejected Without SCN: CESTAT Sets Aside Order for Natural Justice Violation

M/s.Rasi Seeds Private Limited vs The Commissioner of GST & CentralExcise CITATION: 2025 TAXSCAN (CESTAT) 309

The Chennai Bench of Customs,Excise and Service Tax Appellate Tribunal(CESTAT)set aside an order rejecting a refund claim filed within time without issuing a show-cause notice (SCN), holding that the failure to provide an SCN violated natural justice and rendered the order legally unsustainable.

The two member bench comprising P.Dinesha(Judicial Member) and Vasa Seshagiri Rao(Technical Member) held that the Revenue should have issued a SCN before rejecting the refund claim. An SCN was essential to inform the assessee of the reasons for rejection and ensure compliance with natural justice. Calling for a personal hearing did not replace this requirement.

CESTAT Sets Aside Service Tax Demand on Electrification Work Over Unjustified Extended Limitation

M/s. P & C Constructions (P) Ltd vs Commissioner of GST and CentralExcise CITATION: 2025 TAXSCAN (CESTAT) 310

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) set aside a service tax demand on electrification work, ruling that the extended limitation period was unjustified.

The SCN was issued on October 22, 2012, beyond the normal time limit. The appellate tribunal found that the Revenue failed to prove suppression of facts with intent to evade tax. The demand was based only on non-compliance despite reminders, and Circular No. 80/10/2004-ST was not considered.

CESTAT Sets Aside Service Tax Demand on Air Freight Mark-Up, Cites Lack of Third-Party Involvement Under BAS

M/s.AVR Cargo Agency Pvt. Ltd. vs The Commissioner of GST & CentralExcise CITATION: 2025 TAXSCAN (CESTAT) 311

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) set aside the service tax demand on the air freight mark-up, ruling that there was no third-party involvement to classify it under Business Auxiliary Service (BAS).

Citing decisions in DHL Logistics (P) Ltd. and Continental Carriers, the tribunal found that freight rebates and incentives from bulk cargo space purchases did not fall under ‘BAS. Since the assessee bought and sold cargo space directly, without acting on behalf of a client, the transaction was not a taxable service.

Setback for Ashok Leyland: CESTAT Rejects Input Service Credit on Windmill Expenses Over Lack of Lease Arrangement

M/s. Ashok Leyland Limited vs The Commissioner of GST & CentralExcise CITATION: 2025 TAXSCAN (CESTAT) 312

The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT) dismissed Ashok Leyland’s appeal, rejecting its claim for input service credit on windmill expenses due to the absence of a lease arrangement in the agreement

The Revenue countered that the agreement with ALWEL only covered the sale of electricity, not windmill leasing. The appellate tribunal found that ALWEL handled windmill operation and maintenance, bore the costs, and retained ownership. The agreement did not mention any lease arrangement.

Misinterpretation of Regulation 10: CESTAT Clarifies Customs Brokers Are Not Responsible for Educating Clients on Compliance

Sarajdeep Logistics Pvt Ltd vs Principal Commissioner of Customs(General) CITATION: 2025 TAXSCAN (CESTAT) 313

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that customs brokers cannot be held responsible for educating clients on compliance under Regulation 10 of the Customs Brokers Licensing Regulations (CBLR), 2018.

The two-member bench comprising C.J. Mathew (Technical Member) and Ajay Sharma (Judicial Member) observed that customs brokers are responsible for the correct filing of documents but are not expected to act as educators or enforcers of compliance for their clients. The tribunal further observed that there was no substantive evidence to support the allegations and that the charges relied entirely on statements deemed inadmissible in law.

Excise Duty not leviable by Student Almanac and Teacher Planner: CESTAT

M/s Sona Printers Pvt. Ltd. vs The Commissioner of Central Tax CITATION: 2025 TAXSCAN (CESTAT) 366

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that no excise duty is required for teacher planners or student almanacs. The assessee’s argument that the Student Almanac is a product of the printing industry because it is only used by students at a specific school is rejected by the two-member bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member).

Sona Printers Pvt. Ltd., the appellant/assessee, printed these items and removed them at no duty, classified them under Chapter 49 of the Central Excise Tariff Act, 1985 Schedule, which covers printed books, newspapers, photographs, and other printing-related products. According to the Department, these products are subject to duty at a rate of 12.5% ad valorem under Chapter 48 as “Articles of Paper or of Paper Board.” Additionally, the department claims that the assessee failed to pay duty, which made the extended term of limitation applicable. As a result, the assessee’s director was subject to a penalty under Rule 26 of the Central Excise Rules, 2002.

The Tribunal agreed with the finding of the Commissioner (Appeals) in the impugned order that there was no evidence of intention to evade payment of duty and suppression of facts because it was possible for the assessee to have entertained the belief that the Student Almanac and teacher planner were not exigible to duty and, therefore, to have NOT declared them in their excise returns.

“Pendants” Labeled as Jewelry Not Exempted from Excise Duty as it Cannot be Distinguished on Purity of Gold: CESTAT

M/S. P.P. JEWELLERS PVT. LTD. vs PRINCIPAL COMMISSIONER CITATION: 2025 TAXSCAN (CESTAT) 367

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that pendants” labeled as jewelry are not exempted from excise duty as it cannot be distinguished on purity of gold.

Articles of jewelry or both falling under Heading 7113 of the Tariff Act are defined as “articles” in Rule 3(f) of the Articles of Jewellery (Collection of Duty) Rules, 2016; the term “articles of jewelry” will have the meaning assigned to it under Chapter Note 9 of Chapter 71 of the Tariff Act.

CESTAT Grants Interest on Pre-Deposit Refund Under Pre-Amended Provisions of Excise Act

M/s Amkap Marketing Pvt. Ltd vs Commissioner of Central Excise &CGST CITATION: 2025 TAXSCAN (CESTAT) 368

The Allahabad Bench of Customs,Excise and Service Tax Appellate Tribunal(CESTAT) granted interest on a pre-deposit refund under the pre-amended provisions of the Central Excise Act, 1944.

The tribunal reviewed the Parle Agro Pvt. Ltd. case, which had ruled that Section 11B did not apply to revenue deposits, and concluded that an interest rate of 12% per annum was fair for revenue deposit refunds. In the Continental Engines Pvt. Ltd. case, the tribunal ruled that the appellant was entitled to a full refund with interest, following the Supreme Court’s Sandvik Asia Ltd. decision. It found an adjustment of Rs. 38,79,769 to be unjustified and ordered interest at 12%.

Win for Kalyan Jewellers: CESTAT rules Non-Studded Silver Articles Classifiable as ‘Articles of Jewellery’ with Nil Duty

Kalyan Jewellers India Pvt Ltd vs Commissioner of Central Tax CITATION: 2025 TAXSCAN (CESTAT) 369

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that non-studded silver articles manufactured by Kalyan Jewellers are classifiable under ‘Articles of Jewellery’ (CETH 7113) and are eligible for a nil rate of excise duty, provided the exemption conditions are satisfied.

The appellant’s counsel argued that the classification dispute was interpretational and not driven by any intent to evade duty, and all transactions were properly accounted for in audited records. The appellant’s counsel argued that it had sold only non-studded silver jewellery eligible for nil duty under Notification No. 12/2012-CE (as amended), and had duly reversed proportionate CENVAT credit after the introduction of stricter conditions in Notification No. 6/2017-CE.

CESTAT Lacks Jurisdiction on Appeal Over Goods Imported or Exported as Domestic Baggage as per S. 129A(1) of Customs Act

Noorul Ayin vs Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 375

Recently, the Chennai Customs, Excise and Service Tax Appellate Tribunal (CESTAT) clarified that there cannot be a presumption that the baggage that is carried by a person arriving from a domestic airport in India during the aircraft’s domestic run is covered by the Customs Act, 1962, to which the Baggage Rules, 2016 can automatically apply.

According to the two-member bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member), imported consumer goods are freely accessible within the nation and cannot be assumed to be illegally imported or smuggled if they are discovered on the person or in the luggage of people arriving at domestic airports while the flight is operating domestically.

CESTAT Bars Recovery u/s 73 Without Prior Revision of Refund Orders u/s 84

Commissioner of Service Tax, Delhi vs M/s Colt Technologies ServicesIndia Pvt. Ltd. CITATION: 2025 TAXSCAN (CESTAT) 374

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has dismissed an appeal filed by the Commissioner of Service Tax, Delhi, and held that recovery proceedings under Section 73 of the Finance Act, 1994, cannot be initiated without first revising the original refund orders under Section 84 of the same Act.

The Tribunal referred to several decisions including Topcem India v. Union of India and RNB Carbides & Ferro Alloys Pvt. Ltd., and also relied on the judgment of the Delhi High Court in BT (India) Private Limited, reinforcing that quasi-judicial refund orders cannot be revisited or set aside through collateral proceedings. The Bench also stated that the alleged absence of nexus between input and output services should be determined in the course of credit eligibility proceedings, not during refund grant.

No Penalty for Indian Oil: CESTAT Finds No Mens Rea in Duty Payment Case

Indian Oil Corporation Ltd vs Commissioner of Central Goods &Service Tax CITATION: 2025 TAXSCAN (CESTAT) 372

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has set aside the penalty imposed on Indian Oil Corporation Ltd ( IOCL ), Panipat Refinery, in a Central Excise dispute involving the clearance of Superior Kerosene Oil ( SKO ) during the period February 2009 to March 2012. CESTAT held that there was no intention to evade duty on part of the public sector undertaking and thus, the imposition of penalty under Section 11AC of the Central Excise Act, 1944 was not justified.

CESTAT, after considering the arguments and material on record, observed that there was no evidence of deliberate suppression or intention to evade duty by the appellant. The Bench noted that similar views had been taken in earlier decisions, including in the appellant’s own case, where it was held that disputes involving classification or interpretation do not warrant penalty.

CESTAT Rules Food Sales at PVR Cinemas Counters Not Taxable as Services, Except in Gold Class Category

M/s. PVR Limited vs Principal Commissioner of Goods & Service Tax& Central Excise CITATION: 2025 TAXSCAN (CESTAT) 376

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that no service tax is leviable on food and beverages sold at cinema counters within PVR multiplexes, except in the Gold Class category where table service is provided.

The tribunal held that such services attract service tax, but regular counters serving pre-packaged or reheated food for takeaway within the cinema premises do not involve any service element and are not open to the general public but only to ticket-holders, thereby classifying the activity as the sale of goods. The tribunal allowed the appeal.

CESTAT Rules in Favor of Maruti Suzuki: Allows Cenvat Credit on Catering for Business Events, Denies for Factory Workers Post-2011 Amendment

M/s Maruti Suzuki India Limited vs Principal Commissioner of CGST CITATION: 2025 TAXSCAN (CESTAT) 373

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has partly allowed appeals filed by Maruti Suzuki concerning the admissibility of Cenvat credit on outdoor catering services. The Tribunal upheld the company’s eligibility to claim Cenvat credit on catering expenses related to business events such as Auto Expos and product launches. However, it denied the benefit for outdoor catering services availed for employees or factory workers after the 2011 amendment to Rule 2(l) of the Cenvat Credit Rules.

The Tribunal also took note of the findings in the Toyota Kirloskar Motors Pvt. Ltd. case, upheld by the Supreme Court, which held that outdoor catering services primarily for personal use are not eligible for credit. However, it drew a distinction for business events, recognizing that catering at exhibitions and launches supports sales promotion and business activity.

CESTAT Allows CENVAT Credit for SEZ Developer Supplies, Citing High Court Rulings & Export Treatment

M/s Keselec Schreder Pvt Ltd vs Commissioner of Central Goods &Service CITATION: 2025 TAXSCAN (CESTAT) 377

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chandigarh Bench, has allowed the appeal filed by the appellant, holding that CENVAT credit is not required to be reversed in respect of goods supplied to Special Economic Zone ( SEZ ) developers. The Tribunal found that such supplies are to be treated as exports and thus fall outside the purview of the reversal provisions under Rule 6(6)(i) of the CENVAT Credit Rules, 2004.

After hearing both sides, the Tribunal observed that there was no stay on the cited High Court rulings and found merit in the appellant’s arguments. It held that the law, as interpreted by the Kerala and Karnataka High Courts, should be followed and allowed the appeal with consequential relief to the appellant.

CESTAT Sets aside Penalty imposed on IOCL, Excise duty Evasion cannot be Alleged against a PSU

Indian Oil Corporation Ltd vs Commissioner of Central Goods &Service Tax CITATION: 2025 TAXSCAN (CESTAT) 379

According to a ruling by the Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Indian Oil Corporation Ltd. (IOCL) is a Public Sector Undertaking (PSU) and cannot be accused of having the purpose to evade paying taxes.

The two member bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that nothing has been brought on record to indicate any mens rea on the part of the appellants as the applicable duty as well as interest have been paid before issuance of the show cause notice. It has been held in a number of cases under identical circumstances, that penalty cannot be imposed.

CESTAT Favors Berger Paints: Ethyl Benzene Recognized as Xylene Isomer in Customs Classification Dispute

M/s.Berger Paints India Limited vs Commissioner of Customs (Port) CITATION: 2025 TAXSCAN (CESTAT) 378

In a significant ruling made by the Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), the tribunal held that Ethyl Benzene qualifies as a Xylene isomer for the purpose of classification under CTH 29024400.

The tribunal accepted the appellant’s argument that Ethylbenzene is a Xylene isomer, sharing the same molecular formula (C₈H₁₀). Including it, the isomer content exceeded 95%, meeting the HSN criteria for CTH 29024400. Hence, the original classification was upheld.

Crushing Chillies into Powder Not ‘Manufacture’, Exempt from Excise Duty: CESTAT

M/s. Sara Spices vs Commissioner of Central Excise and Customs CITATION: 2025 TAXSCAN (CESTAT) 382

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that crushing chillies into powder does not amount to “manufacture” under excise law and is exempt from excise duty.

The tribunal ruled that clearances of such spice powders could not be included in the turnover for the purpose of SSI exemption under Notification No. 8/2003-CE. The tribunal allowed the appeals and extended consequential relief to the appellant under the law.

Setback for Infosys: CESTAT Rules Updates and Upgrades Not Goods, Service Tax Payable on Full ATS Invoice Value

Infosys Technologies Limited vs Commissioner of Service Tax CITATION: 2025 TAXSCAN (CESTAT) 381

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that Infosys Technologies Ltd. is liable to pay service tax on the full value of its Annual Technical Support (ATS) invoices, ruling that software updates and upgrades provided under ATS do not qualify as “goods”.

The two-member bench comprising Dr. D.M. Misra (Judicial Member) and R. Bhagya Devi (Technical Member) examined the ATS agreement and found that the nature of updates and upgrades provided did not support the claim of sale or transfer of goods. The bench rejected the appellant’s claim for abatement under Notification No. 12/2003-ST, finding no evidence of a separate value for goods as required under the notification.

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