Half-Yearly Customs, Excise and Service Tax Case Digest: CESTAT Decisions 2025 [Part XII]
A Round-Up of all the CESTAT Decisions in the First Half of 2025
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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.
CESTAT Rejects PFCL’s ₹2 Crore Refund Claim on Employee Secondment to Subsidiary, Observes Service Tax Collection from PFFCL
Power Finance Corporation Limited vs Commissioner of Central Excise andService Tax-LTU Delhi CITATION: 2025 TAXSCAN (CESTAT) 252
The Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) situated in New Delhi recently dismissed an appeal filed by Power Finance Corporation Limited (PFCL) challenging the rejection of their refund claim on service tax of ₹2,49,16,169 paid by virtue of secondment of employees to their subsidiary PFC Consulting Limited (PFFCL).
Further considering that PFFCL exercised operational control over the seconded employees the Bench concluded that there was manpower supply service implicit in the transfer of the appellant’s employees to PFFCL. Therefore, CESTAT upheld the impugned order passed by the Commissioner (Appeals) and affirmed the rightful levy of service tax on PFCL, vitiating their claims of refund of the same.
Tribunal Not Competent to Remand Matter Back to Authority other than one which passed Order : CESTAT
Principal Commissioner of Customs (Preventive) vs Blue Ribbon Emporium CITATION: 2025 TAXSCAN (CESTAT) 254
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the tribunal lacks the authority to change the show cause notice or return the case to the original authority.
According to the CESTAT, the Tribunal’s jurisdictional structure allows it to either confirm, amend, or revoke a decision or order in an appeal or return the case to the original entity that made the decision, with or without guidance. The tribunal determined that the appeal was unsuccessful because the requested remedy was outside the purview of the authority granted to it under section 129B of the Customs Act of 1962.
The two member bench of C J Mathew (Technical Member) and Ajay Sharma (Judicial Member) while dismissing the customs department’s appeal held that the appeal does not succeed as the relief sought therein is beyond the scope of the jurisdiction assigned to the Tribunal in section 129B of Customs Act, 1962.
No Service Tax on Installation Charges on Machinery Imported under EPCG Scheme: CESTAT
Powerband Industries Pvt Ltd vs C.C.E. & S.T.-Daman CITATION: 2025 TAXSCAN (CESTAT) 251
The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) notably ruled that no service tax can be levied under the categories of installation and commissioning charges for machinery imported under the Export Promotion Capital Goods (EPCG) Scheme.
Averring that the export obligation under EPCG Scheme is linked to total value declared during import, CESTAT held that the Authorities had priorly accepted the value declared by the Appellant as assessable value, inclusive of erection and commissioning.
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In light of all the observations made, the Bench set aside the demand of service tax along with the impugned order passed by the Commissioner (Appeals).
Relief to Hindustan Coca Cola, CCR Rule 3(1) Obligation Cannot Be Transferred to Credit Recipient: CESTAT
Hindustan Coca-Cola Beverages Pvt Ltd vs Commissioner of CGST &Customs CITATION: 2025 TAXSCAN (CESTAT) 255
The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled in favour of Hindustan Coca-Cola, stating that the beneficiary of credit under rule 7 of the CENVAT Credit Rules, 2004 cannot be obligated under rule 3(1) of the same rules.
The department said that the appellant in this case was properly invoked under rule 14 of the CENVAT Credit Rules, 2004 because the procedures had been started because the appellant had misused credit. According to him, the “input service distributor (ISD)” system is just a transit and does not impose any requirement that the distributor be evaluated for compliance with the definition of “input service” as stated in rule 2(l) of the CENVAT Credit Rules, 2004.
Wrong Availment of Exemption Notification Does Not Prove Intention was to Evade Payment of Central Excise Duty: CESTAT
M/s. Aglowmed Ltd vs Commissioner Central Goods and Service Tax CITATION: 2025 TAXSCAN (CESTAT) 256
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Bench in New Delhi has ruled that merely using an exemption notification incorrectly does not imply that the use was made to avoid paying central excise duty.
While allowing the appeal, the Tribunal held that “Mere wrong availment of an Exemption Notification would not lead to a conclusion that it was with an intent to evade payment of central excise duty unless the department is able to not only allege but substantiate that the said suppression was deliberate with an intent to evade payment of central excise duty.”
Leasing of Scaffolding Equipment liable to VAT as “Deemed Sale”, no Transfer of Ownership: CESTAT quashes Service Tax Demand
Standard Belex India Pvt Ltd vs Commissioner of C.E. & S.T CITATION: 2025 TAXSCAN (CESTAT) 250
In a landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Bench at Ahmedabad has quashed a hefty service tax demand imposed. The tribunal held that leasing of scaffolding equipment, while not involving a transfer of ownership, constitutes a “deemed sale” for VAT purposes due to the transfer of the right to use, possession, and effective control to the lessee.
Presiding over the matter, Judicial Member Ramesh Nair and Technical Member C L Mahar examined the contractual clauses in detail. The tribunal observed that the agreements provided for the lessee’s exclusive right to use, possession, and control of the equipment during the lease term, clearly satisfying the criteria for a deemed sale under Article 366(29A)(d) of the Constitution.
CESTAT Allows CENVAT Credit on ‘Catch Covers’ Used in Physician Samples
Softsule Pvt. Ltd vs Commissioner of Central Excise, Mumbai-III CITATION: 2025 TAXSCAN (CESTAT) 257
The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Mumbai Bench has ruled in favor of the appellant by allowing CENVAT credit on ‘catch covers’ used in physician samples. The tribunal set aside the order of the Commissioner of Central Excise ( Appeals ), Mumbai-III, which had earlier upheld the denial of CENVAT credit.
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The tribunal also observed that the same issue had been previously decided in favor of the assessee for different periods. In Final Order No. A/88078/17/SMB dated 16.06.2017, the tribunal had ruled that there was no legal requirement to include packing material costs in the final product’s value for availing CENVAT credit. Similarly, in Final Order the tribunal reaffirmed this view. Since the current dispute pertains to January 2012 to September 2012, the tribunal maintained consistency with its previous rulings.
Appeal Against Suspension of CHA License Dismissed as Infructuous by CESTAT
M/s.Shri Krishna Logistics Solutions vs The Commissioner of Customs CITATION: 2025 TAXSCAN (CESTAT) 258
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in Chennai has dismissed an appeal by M/s. Shri Krishna Logistics Solutions concerning the suspension of its Customs House Agent (CHA) license. The appeal challenged the Order-in-Original No. 40737/2015, dated August 13, 2015, issued by the Commissioner of Customs, Chennai VIII Commissionerate, which continued the suspension of the CHA license.
During the hearing on December 12, 2024, Advocate S. Murugappan, representing M/s. Shri Krishna Logistics Solutions, informed the tribunal that a subsequent Order-in-Original No. 48262/2016, dated July 8, 2016, had been issued. In this order, the Commissioner did not revoke the CHA license but imposed a penalty of Rs.50,000 on the appellant. Additionally, the Revenue has appealed this penalty before the CESTAT in Appeal No. C/42048/2016, which is currently pending. Given these developments, Advocate Murugappan argued that the original appeal regarding the suspension had become infructuous.
Export Duty Not Payable on Indian Refractory Mortar: CESTAT
Commissioner of Customs (Port) vs M/s Alliance International CITATION: 2025 TAXSCAN (CESTAT) 253
The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no export duty payable on Indian Refractory Mortar.
The export product, according to the tribunal, is not really utilized in the metallurgical sector for the extraction of Section XV metals (chromium is covered in Chapter 81). It will go to M/s ITACA Spain, which manufactures ceramic additives, frits, glazes, pigments, and inks. It is not common practice in the metallurgical sector to combine chromite with bentonite and magnesite. Based on the HSN explanatory notes and chapter note 2 of chapter 26, it is clear that the exported product does not come under category 2610.
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M/s Emami Limited vs Commissioner of CGST & Central Excise CITATION: 2025 TAXSCAN (CESTAT) 260
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Kolkata has ruled that the activity of packaging bulk goods into retail packs qualifies as “manufacture” under the Central Excise Act, 1944, and is not liable for service tax. The tribunal held that such job work is covered under the negative list of services under Section 66D(f) of the Finance Act, 1994, thereby exempting it from service tax liability. The tribunal set aside the tax demand raised by the Principal Commissioner, CGST & Central Excise, Guwahati, and ruled in favor of the appellants.
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The Revenue had invoked the extended limitation period to justify the tax demand, arguing that Emami Limited and Pradip Das had suppressed material facts. The tribunal rejected this argument, stating that the appellants had disclosed their activities and agreements to the tax authorities, and there was no deliberate misrepresentation. The tribunal cited the Supreme Court ruling in International Merchandising Co. LLC v. CST, New Delhi (2022), which held that extended limitation cannot be applied in cases involving interpretation of tax laws.
Unjustified Procedural Delays by Authorities: CESTAT sets aside Customs Broker License Revocation Order
M Dharamdas & Co vs Commissioner of Customs (General) CITATION: 2025 TAXSCAN (CESTAT) 259
The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) set aside the revocation of the customs broker license due to unjustified procedural delays by customs authorities.
The tribunal observed that the customs authorities failed to provide any explanation for the delay and that procedural deadlines cannot be bypassed arbitrarily. The tribunal held that in the absence of a valid justification, the revocation order was not sustainable. Without digging deeper into the merits of the case, CESTAT set aside the revocation order and allowed the appeal.
Challenge on Service Tax Liability on Income Generated out of ‘Renting Out Immovable Properties’ of Muncipality: CESTAT remands Matter
M/s. Velur Town Panchayat vs Commissioner of GST and Central Excise CITATION: 2025 TAXSCAN (CESTAT) 261
In a recent case, the Chennai bench of the Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) remanded the challenge on Service Tax liability on income generated out of ‘Renting Out Immovable Properties’ of Muncipality.
In the case of St. Thomas Mount Cum Pallavaram Cantonment Board after referring to the above conflicting decisions, held it proper to remand the matter back to the file of original authority observed that “8. For the foregoing reasons, the impugned order dated 30-92022 passed by the respondent is hereby quashed and the matter is remanded back to the respondent for fresh consideration on merits and in accordance with law, within a time frame to be fixed by this Court. The respondent shall pass final orders, after giving due consideration to the orders of this Court in the cases of (a) Cuddalore Municipality v. Joint Commissioner of GST and Central Excise in W.P. No. 8900 of 2017, dated 22-3-2021 as well as (b) St. Thomas Mount Cum Pallavaram Cantonment Board v. The Additional Directors and others in W.P. Nos. 28468 and 28080 of 2021, dated 10-8-2022, within a period of twelve weeks from the date of receipt of a copy of this order.”
CESTAT quashes Demand Order on Lack of Evidence against Clandestine Clearance Allegations, slashes Penalty on Directors
Sri Deepak Keshan M/s. Budge Budge Refineries Ltd vs Commissioner ofCentral Excise Kolkata-VII Commissionerate CITATION: 2025 TAXSCAN (CESTAT) 262
The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) set aside the demand of Rs. 53,38,184 on account of clandestine clearance.
The tribunal observed that the demand for clandestine removal was based solely on presumptions and lacked tangible evidence. The adjudicating authority had relied on a comparison between laboratory registers and dispatch registers, but the tribunal found no concrete evidence to support the allegation of clandestine clearance. The tribunal emphasized that allegations of such a serious nature require tangible evidence, which was absent in this case. Consequently, the demand was set aside as unsustainable.
Reimbursements Received Cannot Considered as ‘Consideration’ Towards Any Taxable Service: CESTAT
M/s. Assam Gas Company Limited vs Commissioner of Central Excise &Service Tax CITATION: 2025 TAXSCAN (CESTAT) 263
In a recent case, the Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that the reimbursements received by the assessee cannot be considered as ‘consideration’ towards any taxable service.
“The personnel engaged are the employees of the assessee company and the assessee is paying all salaries etc. to such employees,” the Tribunal said in granting the appeal. The JV only reimburses the actual cost of these employees’ salaries. Therefore, according to rule 2(g) of the Service Tax Rules, the entire agreement between the assessee and the JV does not constitute a taxable service of manpower supply service.
Absence of Recorded Reasonable Belief for Smuggling Case: CESTAT quashes Confiscation of Gold
Shri Prasanta Sarkar vs Commissioner of Customs (Preventive) CITATION: 2025 TAXSCAN (CESTAT) 264
The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) quashed the confiscation of gold and the imposition of penalties due to the absence of a recorded reasonable belief that the gold was smuggled.
The bench observed that the appellants had produced documents to support their claim of legitimate possession, and there was no evidence to prove that the gold was smuggled. The Tribunal also found that the provisions of Section 111(b) and 111(d) of the Customs Act, which deal with the confiscation of goods imported in violation of specified routes or prohibitions, were not applicable in this case.
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