Custom, Excise & Service Tax Tribunal judgments

CESTAT Chandigarh holds that refund claims for mistaken service tax payments by educational institutions are subject to the one-year limitation period under Section 11B of the Central Excise Act. The ruling underscores strict compliance with procedural timelines, even for exempted entities, impacting tax refund claims across sectors.

CESTAT Allahabad holds that importers retain the right to challenge customs reassessment under Section 17(5) of the Customs Act, 1962, even after submitting written consent. The ruling clarifies that coercive consent does not estop importers from contesting valuation, safeguarding their right to a speaking order and fair assessment.

CESTAT Kolkata holds that Export Obligation Discharge Certificates (EODCs) issued by DGFT are binding and conclusive evidence of export obligation fulfilment under FTP schemes. The ruling sets aside a ₹14.97 crore customs demand, reinforcing legal certainty for exporters and importers relying on DGFT authorisations.

CESTAT Kolkata ruled that when statutory documents are unavailable due to passage of time, actual production records submitted by the assessee hold legal precedence. The Tribunal set aside an excise duty demand of ₹73.1 lakh, reinforcing that tax authorities cannot rely on procedural lapses caused by delay to deny consequential relief to manufacturers.

CESTAT rules that a customs broker cannot be penalized under Section 117 of the Customs Act for exporting controlled substances like Ergotamine without a No Objection Certificate (NOC), as CBLR 2018 requires a specific penalty provision. The decision underscores that general penalty clauses cannot override regulatory compliance mandates under NDPS regulations.

CESTAT Kolkata holds that 67% service tax abatement under Notification No. 1/2006-ST cannot be denied merely due to procedural lapses like non-claim in ST-3 returns. The ruling reinforces that substantive benefits under tax laws prevail over technical non-compliance, impacting construction and works contract service providers.

CESTAT ruled that reversing CENVAT credit proportionately on inputs used for exempted electricity sales does not amount to non-availment under Rule 6 of the CENVAT Credit Rules. The Tribunal set aside demands totaling ₹7.13 crore, clarifying that separate record-keeping is not mandatory if credit reversal is already effected, offering relief to manufacturers with captive power plants.

CESTAT Kolkata quashes excise demands against small-scale manufacturers for alleged SSI exemption misuse, ruling that mere eye estimation and uncorroborated records cannot substantiate alleged clandestine removal. The decision reinforces that brand name usage alone does not disqualify SSI benefits and mandates physical verification as a non-negotiable condition for any duty demand, protecting genuine small units from arbitrary assessments.

CESTAT Kolkata rules that manufacturers can claim Cenvat credit for service tax paid on outward freight even after April 1, 2008, if ownership of goods transfers at the buyer’s premises, as per the pre-amendment definition of 'place of removal'. This clarifies a critical ambiguity for manufacturers shipping to distant customers under contract terms requiring them to bear delivery costs and risk.

CESTAT Allahabad ruled that service tax liability under the Reverse Charge Mechanism requires unambiguous identification of imported services. The tribunal held that revenue neutrality precludes tax demands where Cenvat credit offsets liability, setting aside a ₹77 crore demand against Samsung for advertisement and sales promotion charges paid to foreign entities.

CESTAT rules that Cenvat credit cannot be denied based solely on third-party statements or fake invoices unless the Revenue proves the assessee's knowledge of fraud or provides corroborative evidence. The ruling reinforces natural justice principles, requiring direct evidence linking the assessee to fraudulent transactions to disallow credit claims.

CESTAT rules that sales of MS scrap to SEZ units are exempt from customs duty under Section 26(1)(e) of the SEZ Act, 2005. The tribunal set aside the demand, interest, and penalties, holding that the department violated principles of natural justice by not providing a fair hearing to the appellant.

CESTAT quashed a ₹10 lakh penalty under Section 112(b) of the Customs Act, ruling that vague third-party statements and absence of proof of knowledge or physical possession of confiscable goods cannot sustain penalty imposition. The decision reinforces that strict compliance with mens rea and possession requirements is mandatory for penal action under the Customs Act.

CESTAT rules that penalties under Section 112(b) of the Customs Act cannot be imposed without concrete evidence of the appellant's knowledge or physical possession of illicit goods. The tribunal underscores that mere association with a supplier or failure to prove mens rea invalidates penalty imposition, reinforcing natural justice principles in customs enforcement.

CESTAT Allahabad rules that the department cannot invoke extended limitation under service tax law if it was already aware of the facts at the time of the first show cause notice. The tribunal sets aside a Rs.13.36 lakh demand, reinforcing that suppression of facts cannot be alleged where no new information emerges.

CESTAT rules that importers who unconditionally accept and pay enhanced customs valuation without protest waive their right to challenge it later. The tribunal distinguished the Delhi HC's Niraj Silk Mills precedent, emphasizing procedural fairness in valuation disputes under the Customs Act.

CESTAT rules that supplies to SEZ units under Section 26(1)(e) of the SEZ Act are exempt from customs duty, and any penalty imposed without proper notice or evidence violates principles of natural justice. The tribunal set aside a ₹72 lakh demand, reinforcing that procedural fairness is non-negotiable in duty exemption cases affecting traders and SEZ operators.

CESTAT Kolkata rules that confiscation of goods under the Customs Act requires concrete evidence of IPR violation, not mere suspicion. The tribunal set aside arbitrary confiscation orders and reduced penalties, reinforcing that due process and reasoned adjudication are mandatory for enforcement actions under the IPR Enforcement Rules.

CESTAT Kolkata rules that the transfer of a manufacturing unit to a sister concern for captive consumption does not result in revenue loss if excise duty is paid on the final output. The Tribunal emphasizes procedural compliance over ownership changes, provided the duty chain remains intact.

CESTAT Hyderabad clarifies that the one-year limitation period for refund claims under Rule 5 of the Cenvat Credit Rules begins from the date of foreign exchange receipt, not the quarter-end. The ruling mandates strict adherence to the Foreign Inward Remittance Certificate (FIRC) and invoice correlation, impacting exporters filing refund claims.

CESTAT Hyderabad rules that penalty charges levied for delayed payment of DEMAT account maintenance fees constitute a 'declared service' under Section 66E(e), making them taxable even if structured as penalties. This clarifies that financial intermediaries cannot evade service tax by reclassifying contractual default fees as non-taxable interest-like amounts, impacting all stock brokers and depository participants.

CESTAT Ahmedabad rules that sub-contractors remain liable for service tax even if the main contractor has discharged the liability, but directs recomputation under Section 67(2) of the Finance Act, 1994 to avoid double taxation. The ruling clarifies that CENVAT credit must be applied to prevent unjust enrichment, impacting sub-contractors and tax practitioners dealing with service tax disputes.

CESTAT Chandigarh has ruled that police-provided security services to banks constitute sovereign functions, not taxable commercial services, affirming that statutory public duties performed without profit motive fall outside the scope of service tax. This clarifies the boundaries of tax liability for state agencies performing core public safety roles, impacting hundreds of police departments across India that contract security services.

CESTAT Hyderabad rules that Rosoboronexport, a Russian state intermediary, does not qualify as a 'scientific or technical institution' under Notification 12/2003 for Reverse Charge Mechanism (RCM) exemption. The ruling clarifies that inter-governmental agreements alone do not confer such status, impacting tax liability for similar foreign entities under service tax provisions.