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

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.

CENVAT Credit Availed Without Separate Records for Exempted and Dutiable Goods: CESTAT Orders Demand Recomputation

The Andhra Sugars Ltd vs Commissioner of Central Tax CITATION: 2025 TAXSCAN (CESTAT) 525

The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that a manufacturer availing CENVAT credit on input services used for both dutiable and exempted goods without maintaining separate records must recompute the credit attributable to exempted goods, and that the extended period of limitation and penalties are not applicable in the absence of suppression or fraud.

The tribunal observed that the issue was interpretative and that extended limitation under Section 11A was not applicable due to the absence of suppression, fraud, or willful misstatement. Accordingly, the penalty under Rule 15(2) and Section 11AC was also set aside.

Freight and Insurance Included in Assessable Value for FOR Destination Sales: CESTAT

Pawan Power & Telecom Ltd vs Commissioner of Central Tax CITATION: 2025 TAXSCAN (CESTAT) 526

The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that in cases of FOR (Free on Road) destination sales, the cost of freight and insurance must be included in the assessable value, as the sale concludes at the buyer’s premises, not the factory gate.

The tribunal ruled that the place of removal was the buyer’s premises and that freight and insurance costs were rightly includable in the assessable value. Finding no infirmity in the Commissioner (Appeals)’s orders, the tribunal upheld the demand and dismissed the appeals.

Certificate u/s 36B of Central Excise Act is Mandatory for Admissibility of Printouts fom Seized Electronic Evidence :CESTAT

M/s. Composite Impex vs ThePrincipal Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 543

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that printouts of confiscated electronic evidence cannot be admitted without a certificate, as required by Section 36B of the Central Excise Act.

The Tribunal pointed out that the printout was taken from secondary evidence, specifically the pen drive, which, according to section 138C of the Customs Act, could not have been used as evidence in the absence of a certificate.

CESTAT finds Impugned Order Cryptic in Nature: Remands Matter for Denovo Adjudication

Rishab Mineral Industries vs Commissioner of Central Goods, Service Tax& Central Excise CITATION: 2025 TAXSCAN (CESTAT) 540

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) remanded the matter for denovo adjudication as it found the impugned order cryptic in nature.

GST on Real Estate & Works Contracts – Your Ultimate Guide to GST in the Real Estate Sector!, Click Here

The bench, by going through the impugned order, noted that it was cryptic in nature. The tribunal noted that, except for relying upon the decision of this tribunal in the case of M/sMSPL Limited vs. Commissioner of Central Excise, Belgaon reported 2009 (013) STR 0554, no other findings have been given by the Commissioner (Appeals). The bench remanded the matter back to the original adjudicating authority.

Denial of Tax Credit Violates Articles 14 & 300A: CESTAT Holds Rejection of Transitional Credit Refund on Limitation Grounds Unsustainable

M/s. Advance Micro Fertilizers Pvt.Ltd. vs Commissioner of CentralExcise CITATION: 2025 TAXSCAN (CESTAT) 541

The Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the denial of transitional tax credit to the appellant violated constitutional rights under Articles 14 and 300A of the Indian Constitution.

The bench, by going through the decisions of various high courts, observed that denial of credit of tax or duty paid under existing law would amount to a violation of Articles 14 and 300 A of the Constitution of India and that, according to Article 300 A of the Indian Constitution, unused credit is recognised as a vested right and property.

Service Tax on Conversion Charges for Long-Term Industrial Lease: CESTAT Allows Refund u/s 104 of Finance Act

Commissioner of Central Goods & Service Tax vs M/s. Sesame FoodsPvt. Ltd. CITATION: 2025 TAXSCAN (CESTAT) 545

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT) dismissed the department’s appeal and upheld the refund of service tax paid on conversion charges under Section 104 of the Finance Act, 1994, related to a long-term industrial lease.

The appellate tribunal agreed the refund was allowed correctly under Section 104. Since the refund was supported by law, other arguments were not considered. The CESTAT found no reason to change the order and confirmed it.

Relief to Punjab Gramin Bank: CESTAT Rules Cenvat Credit Allowed Without ISD Registration If Reflected in ST-3 Returns

Punjab Gramin Bank vs Commissioner of Central Excise, Goods &Service Tax CITATION: 2025 TAXSCAN (CESTAT) 546

The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that Cenvat credit cannot be denied solely for lack of Input Service Distributor (ISD) registration if the distribution of credit is duly reflected in ST-3 returns.

The single-member bench of S.S. Garg (Judicial Member) observed that the appellant was performing ISD-like functions and that the distribution of credit through ST-3 returns aligned with the functional intent of an input service distributor. The tribunal observed that substantive benefits cannot be denied due to procedural lapses, particularly when there is no dispute regarding the receipt and use of input services.

Mere Postal Dispatch Without Proof of Delivery Does Not Satisfy Service Requirements u/s 37C(1) of Central Excise: CESTAT

M/s Hotel Elora vs Commissioner of Central Excise CITATION: 2025 TAXSCAN (CESTAT) 544

The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that mere postal dispatch of an order without proof of delivery does not satisfy the service requirements under Section 37C(1)(a) of the Central Excise Act, 1944, and remanded the case for decision on merits.

The two-member bench comprising Judicial Member P.K. Choudhary observed that mere dispatch of an order is not enough, and the department must provide proof of delivery in accordance with the law. In the absence of such proof, the presumption of service is not legally sustainable. The tribunal held that the dismissal of the appeal on limitation was unjustified and contrary to legal requirements.

No Service Tax on Section 194J Income Below ₹10 Lakh Threshold Under Exemption Notification: CESTAT

M/s. Baakir Real Estate Private Limited vs Commissioner of CGST CITATION: 2025 TAXSCAN (CESTAT) 554

The Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi bench, ruled that service tax is not payable on income declared under Section 194J of the Income Tax Act if the amount received is below the Rs. 10 lakh threshold as per the exemption granted under Notification No. 33/2012 dated 20.06.2012.

The two-member bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) observed that not all income subject to TDS under Section 194J automatically attracts service tax liability. It emphasized that even if the amount was taxable, the receipts fell within the threshold exemption limit for small service providers under Notification No. 33/2012.

Stay Updated with the Latest Audit Report Formats & Audit Trials Requirements!, Click Here

Inclusion of Outward Freight in Assessable Value: CESTAT Allows CENVAT Credit Citing FOR Sale Basis

Montage Enterprises Pvt Ltd vs Commissioner of Central Excise and Service Tax CITATION: 2025 TAXSCAN (CESTAT) 556

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) of Chandigarh Bench allowed the appeals filed by the assessee, holding that CENVAT credit was rightly claimed on outward freight included in the assessable value, as the goods were sold on a FOR (Free on Road) basis.

The Himachal Pradesh High Court, after reviewing various Supreme Court judgments and the Larger Bench decision, ruled that in an FOR sale where freight is included in the value, the appellant was entitled to CENVAT credit on service tax. The tribunal referred to the CBIC circular dated 8.6.2018, which supported this view and was binding on the department.

No Evidence Linking IT Disclosure to Taxable Services: CESTAT sets aside Service Tax Demand Based on Assumptions

Commissioner of CGST & Central Excise vs M/s. Lotus Cons BuildTechnocrate Pvt. Ltd CITATION: 2025 TAXSCAN (CESTAT) 557

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) dismissed an appeal filed by the department challenging the dropping of a service tax demand of Rs.74,16,000 on M/s. Lotus Cons Build Technocrate Pvt. Ltd.

The original adjudicating authority dropped the demand, citing a lack of evidence to prove that the income was derived from taxable services. The department appealed this decision, arguing that the respondent’s admission of unaccounted income implied tax liability.

Suspension of Customs Broker Licence Without Valid Grounds: CESTAT Sets Aside Suspension, Restores Licence

M/S SILVERLINE GLOBAL FREIGHT PVT vs COMMISSIONER OF CUSTOMS CITATION: 2025 TAXSCAN (CESTAT) 555

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) set aside the suspension and ordered restoration of the Customs Broker licence of the assessee, holding that the action lacked valid grounds.

Regarding the exporter’s existence, the CESTAT noted that the assessee had collected KYC documents like PAN, Aadhaar, IEC, GST registration, and a bank certificate. It also pointed out that the exporter had filed a writ petition in the Delhi High Court, which showed that the firm did exist.

Importer Brought Restricted Insecticides Unknowingly: CESTAT Allows Re-Export Citing Goods Not Prohibited

M/s Best Crop Science Pvt. Ltd. vs Principal Commissioner of Customs(Import) CITATION: 2025 TAXSCAN (CESTAT) 561

The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that re-export of mistakenly imported restricted insecticides is permissible when the import was a bona fide error and the goods are not prohibited under law.

The two-member comprising Judicial Member P.K. Choudhary observed that the appellant had quickly raised concerns with the supplier, sought re-export before receiving chemical analysis results, and did not benefit from the mistaken import. Referring to precedents such as Siemens Public Communication Networks Ltd. and Supreme Court rulings in Atul Automations Pvt. Ltd., the tribunal distinguished between restricted and prohibited goods.

CESTAT Upholds Rejection of Refund Claim as Time-Barred, Dismisses Appeal Citing Binding Limitation Under S.102

Deepak Pandey vs Commissioner of Service Tax CITATION: 2025 TAXSCAN (CESTAT) 559

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has upheld the rejection of a refund claim filed by the assessee, ruling that the application was time-barred under Section 102 of the Finance Act, 2016. The tribunal dismissed the appeal, affirming that the six-month limitation period prescribed by the law was binding and could not be extended, regardless of the merits of the claim.

The assessee has made an application for a refund of service tax paid on government construction work during the period from April 2015 to December 2015. He based his claim on Section 102 of the Finance Act, which provided retrospective exemption from service tax for such services and allowed refunds for taxes already paid. The assessee’s application, which was filed on 9-2-2017, was rejected by the Assistant Commissioner and later by the Commissioner (Appeals) on the grounds that it was submitted beyond the six-month deadline stipulated under Section 102(3) of the Act. The Finance Act, 2016, received presidential assent on 14-5- 2016, making the deadline for refund applications 14-1–2016.

‘Extended Limitation Period Invalid without Deliberate Suppression by Manufacturer’: CESTAT sets aside Service Tax Demand

M/s. Jainco Enterprises Private Limited vs Commissioner of CGST CITATION: 2025 TAXSCAN (CESTAT) 558

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) set aside the service tax demand by noting that the conscious and deliberate withholding of the information by the manufacturer is necessary for extending the limitation period.

The bench further noted, “If the department had full knowledge or the manufacturer had reasonable belief that he was not requested to give particular information, only the normal period of limitation, only 1 year, is applicable.”

CESTAT Holds Agricultural Warehousing and Allied Services as Tax-Exempt Composite Activity

M/s. Shree RamAgro Services vs Commissioner of Central GST and CentralExcise CITATION: 2025 TAXSCAN (CESTAT) 560

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has ruled in favour of the appellant, holding that the cleaning, grading, handling, and transportation of agricultural produce are exempt from service tax, as they form part of a composite service of storage and warehousing.

The tribunal noted that cleaning, grading, handling, and transporting the agricultural produce are all part of one combined service. As clarified by the TRU on 28.02.2006, when services are bundled like this, they should be treated as a single service based on the main activity, and what really matters is the main purpose of the service, not how the charges are split.

20-Day Delay in Review Order Cannot be Excused Without Board Extension or Condonation: CESTAT Dismisses Dept’s Appeal against Nippon

Commissioner of Customs vs M/s. Nippon Thermostat (India) Ltd. CITATION: 2025 TAXSCAN (CESTAT) 562

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dismissed the department’s appeal, holding that the delay in issuing the review order by 20 days could not be excused in the absence of a condonation request or an extension granted by the Board under Section 129D(3) of the Customs Act, 1962.

Planning smarter for FY 2025–26? Don’t miss this trusted guide used by thousands of tax professionals & CA students!, Click Here

However, the Tribunal noted that in the present case, no evidence was produced to show that the appellant had submitted any application to the Board seeking an extension of time, nor was any such extension order issued by the Board. The tribunal also observed that the appellant did not file any condonation application for the delay.

CESTAT Finds No Actual Transfer of EOU Machinery, Reduces ₹9.04 Lakh Duty Demand to ₹3.98 Lakh

M/s UKB Electronics Pvt. Ltd vs Commissioner of CGST CITATION: 2025 TAXSCAN (CESTAT) 565

The Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT )found no actual transfer of machinery imported for a 100% Export Oriented Unit (EOU) and accordingly reduced the customs duty demand from ₹9.04 lakh to ₹3.98 lakh.

Officers visited the premises on 21/22.09.2010 and made a panchnama. It showed that some machines, like the vertical injection moulding machine (TMK-C350) and plug testers, were found uninstalled inside the 100% EOU unit. The DG set was installed on the roof.

CESTAT Allows CENVAT Credit on Job Work Capital Goods as Duty Was Paid by Principal Manufacturer on Final Products

M/s UKB Electronics Pvt. Ltd., vs Commissioner of CGST CITATION: 2025 TAXSCAN (CESTAT) 565

The Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed CENVAT credit on capital goods used for job work, ruling that denial of credit was not justified when duty was paid by the principal manufacturer on the final products.

However, the tribunal referred to the Madras High Court’s decision in Kyungshin Industrial Motherson Ltd., which held that goods manufactured on job work basis are not exempted goods, and therefore, Rule 6 of the CENVAT Credit Rules did not apply. It also relied on Supreme Court and tribunal rulings in Escorts Ltd. and Sterlite Industries Ltd., which clarified that credit could not be denied for goods cleared without duty under job work procedures, as long as duty was ultimately paid on the final product.

CVD Exemption Benefit Can Be Claimed Later Even If Not Initially Invoked: CESTAT

M/s Garg Impex vs Commissioner of Customs-ICD New Delhi CITATION: 2025 TAXSCAN (CESTAT) 568

The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that Countervailing Duty (CVD) exemption benefits under customs notifications can be claimed even if not invoked at the earlier stage.

The two member bench comprising S.S.Garg(Judicial Member) and P.Anjani Kumar(Technical Member) reviewed the arguments and documents from both sides and focused on whether the appellants were entitled to exemption from payment of CVD under Notification No. 30/2004-CE dated 09.07.2004.

Extended Period Wrongly Invoked for Misclassification and Undervaluation: CESTAT Sets Aside Demand Citing Full Disclosure

M/s Mishrambu Beverages Pvt. Ltd. vs Commissioner of Central Excise& Service Tax CITATION: 2025 TAXSCAN (CESTAT) 567

The Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT) set aside the extended period of limitation invoked against the assessee for alleged misclassification and undervaluation of dry fruit sharbats, syrups, and squashes, finding that the assessee had fully disclosed the nature, classification, and ingredients of its goods at registration and in quarterly returns accepted during the initial audit.

The two member bench comprising P.K.Choudhary(Judicial Member) and P.Anjani Kumar(Technical Member) examined whether the extended period of limitation was properly applied. The original order said the assessee suppressed facts and evaded duty by not submitting a price list and wrongly claiming SSI exemption despite high turnover.

Service Tax Applies to Sub-Contractor in MCD Parking Project, Mega Exemption Not Applicable: CESTAT

Commissioner of Service Tax vs M/s Navnirman Construction Company CITATION: 2025 TAXSCAN (CESTAT) 563

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) noted that service tax applies to sub-contractor in the Municipal Corporation of Delhi (MCD) project, and that mega exemption was not applicable.

The bench noted that M/s VSK Infrastructure, is not a governmental authority and thus the original adjudicating authority, had wrongly relied upon the said notification while dropping the demand for the construction services being provided by the respondent to M/s VSK Infrastructure Ltd./MCD.

 Your Ultimate Guide to GST in the Real Estate Sector! Click here 

CESTAT Quashes ₹49.6 Lakh Customs Duty Demand Over Unproven Diversion of Imported Goods

M/s UKB Electronics Pvt. Ltd vs Commissioner of CGST CITATION: 2025 TAXSCAN (CESTAT) 565

The Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT) quashed ₹49.6 lakh customs duty demand against the assessee due to unproven diversion of imported goods.

It noted that the letter from the Deputy Commissioner and the statement of Shri Pankaj Bhardwaj did not clearly show any such diversion. The tribunal also looked at two invoices through which UKB transferred the goods to its Pune unit. Both invoices referred to purchases made from East West Automation Technologies Pvt. Ltd. A certificate from this supplier confirmed that the goods supplied were as per UKB’s order, and this was neither disputed nor verified by the department.

Value of Imported Goods Cannot Be Enhanced Solely Based on DRI Alert: CESTAT

M/s Garg Impex vs Commissioner of Customs-ICD New Delhi CITATION: 2025 TAXSCAN (CESTAT) 568

The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that the value of imported goods cannot be enhanced solely based on a Directorate of Revenue Intelligence (DRI) alert.

The tribunal also pointed out that Customs Valuation Rules, not the DRI alert, governed when and how the value could be enhanced. Therefore, the value could not be increased without properly rejecting the declared transaction value.

Customs Officers Cannot Alter FOB Value as It Reflects Buyer-Seller Agreement: CESTAT

M/S MAHAJAN FABRICS PRIVATE LIMITED vs PRINCIPALCOMMISSIONER/COMMISSIONER OF CUSTOMS CITATION: 2025 TAXSCAN (CESTAT) 566

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT) held that customs officers cannot alter the FOB value of export goods, as it reflects the transaction value mutually agreed upon between the buyer and seller.

In conclusion, the bench held that only the transaction value agreed between buyer and seller could be treated as FOB value, and export incentives must be paid accordingly.

CESTAT Upholds Service Tax Exemption for PGCIL Projects; Department’s Appeal Beyond SCN Dismissed

Commissioner of Service Tax vs M/s Navnirman Construction Company CITATION: 2025 TAXSCAN (CESTAT) 563

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the service tax exemption for M/s Power Grid Corporation of India Ltd. (PGCIL) projects and noted that the ground raised by the department was beyond the show cause notice (SCN).

The departmental representative argued that the adjudicating authority erred in dropping the demand for services provided by the noticee to M/s PGCIL and M/s VSK Infrastructure Pvt. Ltd. before 01.07.2012, which pertained to site preparation activities during 2010-11 and 2011-12, as detailed in the show cause notice dated 15.10.2015.

Difference between the financial statement and ER-1 returns, insufficient to prove alleged clandestine removal: CESTAT

M/s. Indore Composite Pvt. Ltd. vs Commissioner of CGST & Central Excise CITATION: 2025 TAXSCAN (CESTAT) 564

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that the difference between the financial statement and ER-1 returns was insufficient to prove alleged clandestine removal.

The CESTAT noted that the department has failed to prove the allegations of clandestine removal of goods. The bench observed that the allegation of clandestine removal would not be sustained by just noting the difference in the balance sheet with ER-1.

No Service Tax Demand can be raised and confirmed based on Notional Income: CESTAT

M/s. Indore Composite Pvt. Ltd. vs Commissioner of CGST & Central Excise CITATION: 2025 TAXSCAN (CESTAT) 564

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) noted that service ac demand cannot be raised and confirmed based on notional income.

The bench noted that service tax can be levied only when there is a clear identification of the service provider, the service recipient, and consideration paid for the same. It was observed by the CESTAT that no service tax demand can be raised and confirmed on the basis of notional income.

No Service Tax on Equipment Hire Without Retained Control: CESTAT

Commissioner of Service Tax vs M/s Navnirman Construction Company CITATION: 2025 TAXSCAN (CESTAT) 563

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) stated that no service tax can be imposed on hire without retained control.

It is to be noted that the adjudicating authority dropped the demand of hire charges for giving DG sets, motor graders, hydraulic, excavators, etc., by noting that the amount on account of the sale of goods is not taxable under service tax and, therefore, the respondent is not liable to pay service tax on account of the amount booked for sale of goods.

Sub-contractor of Works Contract was also exempt from Service Tax if main contractor was exempt from it: CESTAT Sets aside Demand of Service Tax

M/s AECS Engineering and Geotechnical Services Pvt. Ltd. vs Principal Commissioner of Central Goods & Services Tax CITATION: 2025 TAXSCAN (CESTAT) 569

The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal( CESTAT) set aside the demand of service tax, holding that a sub-contractor of a works contract was also exempt from Service Tax if the main contractor was exempt from it

The said work relates to installing of drainage system in connection with sewerage treatment or disposal pertaining to Supreme Court, Additional Office Complex, Pragati Maidan, New Delhi. The award was for Rs.2,82,40,000/-. During F.Y. 2016-17, the Appellant provided services in terms of said contract for an amount of Rs.36,36,586/-. The Service Tax involved on such value of services was worked out to be Rs.2,18,195/-. The said service was exempt from Service Tax in terms of clause (e) of Sl. No.12 of Notification No.25/2012-ST dated 20.6.2012. Thus, the demand of Rs.2,18,195/- is liable to be dropped.

Booking cancellation charges are compensation, No Service tax Demandable: CESTAT

M/s Nimbus Motors Pvt. Ltd. vs Commissioner of Central Goods &Services Tax CITATION: 2025 TAXSCAN (CESTAT) 570

The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) has held that booking cancellation charges are compensation, and no service tax demandable on the same.

Your ultimate guide for mastering TDS provisions - Click here 

The non-defaulting party in such a case is entitled to damages from the defaulting party. The damages could be in the form of liquidated damages in which case the amount to be paid as compensation is decided before hand and indicated in the contract itself. Liquidated damages are not a consideration for contract of service but a compensation for breaking the contract. Where a customer books a car, he enters into a contract agreeing to buy it. If he re-negates on the contract, an amount is recovered as damages which in this case is called as “booking cancellation charges”.

CESTAT Overturns CENVAT Denial, Rules 11 Input Services Eligible Despite Department’s Objections

M/s. Cetex Petrochemicals Limited vs The Commissioner of CGST &Central Excise CITATION: 2025 TAXSCAN (CESTAT) 572

In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai Bench has set aside the denial of CENVAT credit on 11 input services availed, holding them eligible under the CENVAT Credit Rules, 2004. The Tribunal rejected the department’s objections, emphasizing the nexus of these services with the manufacture and clearance of final products.

Business auxiliary services, including market research and sales promotion, were held to aid manufacturing decisions. Cargo handling services, used for raw material receipt and export dispatch, were ruled eligible, with the Tribunal noting that place of removal for exports is the port, not the factory. Cleaning services, though partly for statutory compliance, were deemed necessary for safety and quality in a petroleum-based industry.

CESTAT quashes Excise Demand, Rules CENVAT Credit Restrictions Unconstitutional

M/s. Astalife vs The Commissioner of CGST & Central Excise CITATION: 2025 TAXSCAN (CESTAT) 571

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, recently quashed a duty demand against a manufacturer, ruling that the restriction on utilizing CENVAT credit for duty payment during default periods, as stipulated under Rule 8(3A) of the Central Excise Rules, 2002, is unconstitutional. This decision was delivered in an appeal stemming from an order by the Commissioner of Central Excise, Puducherry.

The Tribunal noted that the sole issue for consideration was the sustainability of demands made for violation of Rule 8(3A). The appellant’s advocate, K.V. Subramanian, argued that the condition in Rule 8(3A) requiring payment of duty “without utilizing the cenvat credit” had been declared unconstitutional by the Gujarat High Court in the case of Indsur Global Ltd v Union of India (2014). He also highlighted that the Madras High Court in Malladi Drugs & Pharmaceuticals Ltd. v. Union of India (2015) had concurred with this view. These decisions, he submitted, were followed by the Tribunal’s own bench in previous orders.

No Service Tax Payable on Student Recruitment Services Rendered to Foreign Universities: CESTAT

TC Global India Pvt. Ltd. vs Additional Director General CITATION: 2025 TAXSCAN (CESTAT) 573

The New Delhi bench of the Customs Excise & Service Tax Appellate Tribunal (CESTAT) has held that foreign consultancy fee received by TC Global India, for providing student recruitment services such as marketing, promotion, roadshows, etc. is not liable to service tax and qualifies as an ‘Export of Service’.

The departmental Representative, contended that students counselling is part and parcel of the main service i.e. “Students Recruitment Service‟ and since the appellant is providing these services like an agent / broker / middleman it is rightly held to be engaged in providing services as Intermediary‟ in terms of rule to 2(f) of Place of Provision of Service Rules, 2012.

Amendment of Bill of Entry to Claim CVD Exemption After Five Years Not Allowed Without Reassessment: CESTAT Sets Aside Appellate Order

Commissioner of Customs(Port) vs M/s. Krish Fabrics India Pvt. Ltd. CITATION: 2025 TAXSCAN (CESTAT) 596

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) set aside the Appellate order, holding that amending a Bill of Entry to claim Countervailing Duty ( CVD) exemption nearly five years after import was not permissible without reassessment.

The Bangalore Tribunal dismissed the appeal, stating the correction could not be treated as a clerical error under Sections 149 or 154. The appellant failed to claim the exemption at the time of assessment and tried to amend the Bill of Entry nearly six years later.

EPCG Exemption for Sericulture Projects Does Not Waive Block-Wise Export Obligation, Only Average Export Requirement: CESTAT

M/s Kasare Vanya Silk Mills Pvt. Ltd vs The Commissioner, Customs CITATION: 2025 TAXSCAN (CESTAT) 600

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the exemption under the EPCG notification for sericulture projects waives only the requirement to maintain average export performance and does not exempt exporters from meeting export obligations within specified time blocks.

The two-member bench comprising Justice Dilip Gupta and Technical Member P.V. Subba Rao held that while the exemption under the EPCG notification removed the need to maintain average export performance, it did not remove the obligation to meet the specified export targets in each time block. The tribunal upheld the recovery of customs duty with 15 percent interest for failure to meet the obligation. It found no evidence of diversion of goods or deliberate suppression and set aside the related duty demand, penalties, and confiscation orders.

CESTAT Holds Construction Services for DDA Not Taxable Under CCIS as Projects Serve Public Purpose

M/s Vats Builders & Suppliers vs Principal Commissioner of Central CITATION: 2025 TAXSCAN (CESTAT) 599

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT ) held that construction services provided to the Delhi Development Authority (DDA) for Commonwealth Games 2010 projects are not taxable under Commercial or Industrial Construction Services (CCIS) as these works served a public purpose.

Regarding the water supply line at Saket Sports Complex, although the assessee denied having executed the work, the tribunal noted that this claim was made by counsel before the adjudicating authority. Still, it held that such work fell outside the scope of taxable commercial construction, as supported by earlier decisions in Hyundai Heavy Industries, Nagarjuna Construction Co., and Indian Hume Pipe Co. Ltd.

The UAE Tax Law Is Evolving — Stay Ahead Before Clients Find Someone Who Already Is, Enroll Now

Redemption Fine Not Justified on Re-Exported Goods Due to Supplier’s Mistake: CESTAT

Durga Computers vs Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 598

The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that the redemption fine was not justified on goods re-exported due to the supplier’s mistake.

The appellate tribunal pointed out that the law on imposing a redemption fine on goods allowed to be re-exported was settled by earlier decisions, including one from this bench in Skylark Office Machines. That decision said if goods are allowed for re-export, no redemption fine can be imposed.

No Service Tax Liability on Artwork and Design Charges Paid in Foreign Currency: CESTAT

M/s. Artifacts India vs Commissioner of Central Excise (Appeals) CITATION: 2025 TAXSCAN (CESTAT) 601

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT )held that no service tax was payable on artwork and design charges paid in foreign currency.

However, the purchase order with the client M/s TESCO showed the appellant was required to pay these charges as per the agreement. The artwork charges were received by the buyer abroad, and the appellant paid them according to the contract. There was no proof that the assessee received design services. Therefore, no service tax was due on these charges.

Extended Limitation Not Invocable When Service Tax Demand is Based Solely on Income Tax Disclosures: CESTAT

Ajitabh Mishra vs Commissioner of Central Excise & CGST CITATION: 2025 TAXSCAN (CESTAT) 602

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the extended period of limitation under Section 73 of the Finance Act, 1994, cannot be used when the case is based only on information already shared in the assessee’s income tax returns and financial records.

The bench, led by Judicial Member Binu Tamta, observed that the appellant had already shared all the financial details in his tax returns and balance sheet, and these records were used by the department itself to make the case. The tribunal observed there was no proof that the appellant had tried to hide anything.

Bank Charges Paid to Foreign Banks Not Taxable Under Reverse Charge Mechanism: CESTAT

M/s. Artifacts India vs Commissioner of Central Excise (Appeals) CITATION: 2025 TAXSCAN (CESTAT) 601

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that bank charges paid to foreign banks are not taxable under the Reverse Charge Mechanism ( RCM ) as the service is provided outside India and there is no direct service relationship between the foreign bank and the Indian exporter.

The CESTAT also relied on the decision in Greenply Industries Ltd. v. CCE, where it was held that no tax is applicable if there is no direct link between the foreign bank and the Indian exporter. Accordingly, the tribunal ruled that service tax was not applicable on the foreign bank charges paid by the assessee.

No Service Tax Liability on Foreign Commission Payments under RCM as They Constitute Trade Discounts: CESTAT

M/s. Artifacts India vs Commissioner of Central Excise (Appeals) CITATION: 2025 TAXSCAN (CESTAT) 601

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that there is no service tax liability on foreign commission payments under the Reverse Charge Mechanism (RCM) as they constitute trade discounts.

The appellate tribunal observed that while commission agent services fall under “business auxiliary service,” and reverse charge applies when such services are received from abroad, the key factor is identifying the actual service recipient. It referred to the purchase order from M/s TESCO, which stated that artwork charges, foreign bank charges, and agent commission were to be borne by the assessee as part of the sale terms.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates