TaxTMI Updates e-Newsletter
Feb 23,2026

Extension of time for filing appeal - protection from dismissal on ground of limitation - pre-deposit requirement for statutory appeal - adjudication on merits - HELD THAT:- No good ground to interfere with the impugned order [2025 (12) TMI 1795 - DELHI HIGH COURT] passed by the High Court.

We extend time for filing the appeal till 16-3-2026. If the appeal is filed on or before the said date, it shall not be dismissed on the ground of limitation and shall be adjudicated on merits.

With the above observations, the Special Leave Petition is disposed of.

Cancellation of GST registration for non-filing of returns - absence of fraudulent transaction or tax-evasion allegations - restoration of registration on filing of returns and payment of taxes, interest, penalty, fees and charges - conditional setting aside of cancellation order - direction to activating officer to enable compliance - HELD THAT:- It is noticed that the petitioner’s registration has been cancelled only on the ground of failure to furnish return for a continuous period of six months. It is not the case of the revenue that the petitioner has been involved in any fraudulent transaction or any other transaction of the like for the purpose of evasion of tax. There is also no allegation of involvement in any dubious activity or mischief like suppression etc. for evading tax in the notice to show cause and there is no finding in such regard in the order for cancellation of registration.

This Court is of the considered view that if the petitioner’s registration under GST is not restored, that would not only adversely effect the petitioner but would also cause loss of revenue to the State.

Therefore, this court is minded to give the petitioner one more opportunity to get its registration restored. Taking queue from the order of the Hon’ble Division Bench in the case of Subhankar Golder vs. Assistant Commissioner of State Tax, Serampore Charge & Ors. [2024 (5) TMI 1262 - CALCUTTA HIGH COURT] dated April 09, 2024, it is directed that the order of cancellation of registration would stand set aside subject to the condition that the petitioner shall file returns for the entire period of default, pay all the taxes, costs, charges interest, fine, penalty and late fees, as leviable, imposable an applicable in the present case upon the petitioner within a period of four weeks from date.

It is clarified that if the petitioner fails to comply with any of the conditions mentioned in this order within the time specified herein, the writ petition shall stand automatically dismissed and the order of revocation of cancellation shall stand revived.

Accordingly, the order dated March 28, 2025 stand set aside.

Vagueness and non-disclosure of material particulars in a show-cause notice - principles of natural justice and meaningful opportunity of hearing - independent exercise of quasi-judicial power - no dictation by investigating wing - cancellation of GST registration under Rule 21(e) and Section 16 must be founded on objective satisfaction and reasons - non-speaking order and pre-determination in revocation proceedings - HELD THAT:- The undisputed record authored by the GST authorities makes it abundantly clear that such a request was made at a stage when the investigation was ongoing.

The statute does not contemplate that a quasi-judicial authority, while exercising its power under Section 29 of the CGST Act, 2017, read with Rule 21(e) of the CGST Rules, 2017, acts at the dictate of an investigating wing.

The power to cancel registration has a serious civil consequence. It deprives a taxable person of the ability to carry on business in a regime where registration is the gateway to the trade. Such power must be exercised on objective satisfaction of jurisdictional facts, founded on the material disclosed to the noticee by adherence to the principles of natural justice.

The show cause notice dated 10.09.2025, states, in its entirety, that the petitioner has “availed input tax credit in violation of Section 16 of the Act, 2017 and the Rules made thereunder.”

No tax period is mentioned. No invoice is identified. No supplier is named. No quantification is provided.

Section 16 of the Act, 2017, prescribes the conditions for eligibility to input tax credit; Rule 21(e) of the Rules, 2017, contemplates cancellation, where registration is obtained or retained by fraud, willful misstatement or suppression of fact, or where credit is availed in violation of the Act in a manner that attracts the Rule.

There is nothing on record to indicate that the proper officer independently evaluated the material or formed a satisfaction based on reasons of his own.

A quasi-judicial order must speak for itself. It must demonstrate application of the mind to the objection raised. The repetition of the investigative allegation, as the sole ground of rejection, is indicative of the mechanical exercise of power.

Cancellation of registration is not to be used as a tool of coercion during investigation.

The act provides adequate machinery for assessment, adjudication and recovery. To cancel registration solely on the basis of an interim investigation report, without furnishing particulars and without independent satisfaction, amounts to obstructing the statutory process.

In view thereof, the impugned show-cause notice dated 10.09.2025, order of cancellation dated 25.08.2025 and order dated 31.10.2025 are set aside.

The petitioner’s registration shall stand restored forthwith.

It is, however, opined to the authority under the GST Act, 2017 to initiate fresh proceeding in accordance with law, if so advised, by issuing a detailed show-cause notice specifying the precise allegations; the tax period involved; the invoices and the suppliers relied upon and the quantification of the alleged ineligible credit and by affording the petitioner a reasonable opportunity of hearing.

The writ petition is allowed as indicated hereinabove.

Service of notice through the common GST portal - valid service u/s 169 of the CGST Act - right to personal hearing u/s 75(4) of the CGST Act - principles of natural justice (audi alteram partem) - HELD THAT:- It is admitted to the Revenue that the impugned proceedings initiated by the issuance of show-cause notice dated 16.11.2024 and culminating into the impugned order dated 13.01.2025 were post the surrender/ cancellation of the GST registration of the petitioner, in pursuance of his application dated 29.04.2023.

As the facts are not in dispute, therefore, we are of the opinion that the instant writ petition is squarely covered by the law laid down in the aforesaid judgment of the Allahabad High Court in M/s Ahs Steels vs. Commissioner of State Taxes [2024 (10) TMI 1038 - ALLAHABAD HIGH COURT] and the order passed in Writ Petition, “M/s Jaipal Singh vs. Commissioner, State Goods and Services Tax Commissionerate, Dehradun, Uttarakhand & another [2026 (2) TMI 995 - UTTARAKHAND HIGH COURT]”.

Having regard to the same, we, hereby, quash the impugned order dated 13.01.2025. The petition is disposed of with liberty to the petitioner to file his reply to the show-cause notice bearing Reference No. ZD051124009726N, dated 16.11.2024, within two weeks and thereafter, it shall be open to the respondent- Department to pass fresh order strictly in accordance with law. The petitioner shall be provided personal hearing in terms of Section 75(4) of the GST Act.

The petition stands disposed of.

Videography of statement recordings - right to be accompanied by an advocate during summons u/s 70 of the CGST Act - cooperation in summons inquiry - humanitarian consideration for serious illness during departmental proceedings - limited, non-precedential orders in exceptional facts - HELD THAT:- The case of the Petitioners is that all such transactions were genuine and supported by valid tax invoices, which, according to the Petitioner were duly reflected in the GSTR-2B returns. It is also Petitioner’s case that payments in respect of the said transactions were made through proper banking channels. The Petitioners contend that the GST registrations of the said suppliers came to be cancelled by the Department and that the suppliers have filed statutory appeals before the jurisdictional GST authorities, which are stated to be pending consideration.

The Petitioners contend that the Petitioners are ready and willing to cooperate with the inquiry as initiated, subject matter of the summons in question. It is further contended that Petitioner No. 2 is suffering from cancer which would therefore require appropriate humanitarian consideration at the hands of the Department.

We are of the opinion that the request as made by the Petitioners could have been appropriately considered by the concerned officials. Petitioner No. 2 is stated to be undergoing treatment for cancer. The Petitioner, at his own cost, seeks that the proceedings be videographed. It is also brought to our notice that in Suumaya Industries Ltd. [2022 (10) TMI 371 - BOMBAY HIGH COURT] a Co-ordinate Bench of this Court had accepted a similar arrangement.

Considering the nature of the inquiry, which is pursuant to summons issued under Section 70 of the CGST Act, 2017, and bearing in mind that the Petitioner No. 2 expresses willingness to cooperate with the investigation, we are inclined to accept the limited request as made on behalf of the Petitioners.

Petition deserves to be disposed of in terms similar to the directions issued in Sumaya Industries Ltd. (supra).

Profiteering u/s 171 - identifiability of recipients for distribution of profiteered amount - recalculation of base price by adjusting additional input tax credit - liability to pay interest under Rule 133(3)(b) of the CGST Rules, 2017 - penalty u/s 171(3A) of the CGST Act, 2017 -

Profiteering under Section 171 of the CGST Act, 2017 - HELD THAT:- Tribunal finds that the Respondent vide its email dated13.10.2025 has accepted the profiteered amount calculated by the DGAP in its report. Further, the Applicants namely Shri Lalit Tyagi, Shri Amarendra Pratap Singh, and Shri Akhilesh Kumar Singh have submitted applications seeking withdrawal of their complaints vide their letters attached to emails dated 11.02.2026 wherein they have submitted that “no benefit, monetary or otherwise, including any alleged benefit of ITC under GST laws (Section 171 of the CGST Act, 2017), remains outstanding or accrued in our favour from the Respondent Company”.

Thus, the tribunal is of the view that the Respondent has profiteered by an amount of Rs. 98,72,474/- which needs to be passed on to home buyers. Further, as per Rule 133(3)(b) of the Central Goods and Services Tax Rules, 2017, the Respondent is liable to pay interest as applicable to Applicant. The Respondent shall pay the profiteered amount of Rs. 98,72,474/- to the homebuyers along with applicable interest within 30 days and submit compliance report to the jurisdictional CGST/SGST Commissioner with intimation to the DGAP within 2 months.

Penalty u/s 171(3A) of the CGST Act, 2017 - HELD THAT:- Penalty under Section 171(3A) of the CGST Act is concerned, the said provision came into force w.e.f. 01.01.2020, and as the period of contravention in the present case is from 01.07.2017 to 31.03.2024. therefore, penalty is leviable as per Section 171(3A) of the CGST Act.

The case is disposed of, accordingly.

Obligation u/s 171(1) of the CGST Act to pass on input tax credit benefit - computation of profiteered amount using differential ratio of ITC to purchase value - obligation to refund profiteered amount with applicable interest under Rule 133(3)(b) of the CGST Rules - non-retrospectivity of penalty provision -

Obligation u/s 171(1) of the CGST Act to pass on input tax credit benefit - HELD THAT:- This Tribunal has carefully considered the DGAP Report dated 26.03.2025, the submissions made by the Respondent, the statements of the Applicants, and the material placed on record. It is evident that the Respondent derived additional ITC benefit of 0.92% during the post-GST period and failed to pass on the same to the homebuyers, thereby contravening the provisions of Section 171(1) of the CGST Act, 2017.

Non-retrospectivity of penalty provision - As penalty under Section 171(3A) of the CGST Act is concerned, the said provision came into force w.e.f. 01.01.2020, whereas the period of contravention in the present case is from 01.07.2017 to 31.03.2019. Accordingly, the penalty provision cannot be applied retrospectively.

In view of the foregoing findings, the DGAP Report dated 26.03.2025 is hereby accepted.

Obligation to refund profiteered amount with applicable interest under Rule 133(3)(b) - The Respondent is directed to pass on the profiteered amount of Rs. 47,71,823/- along with applicable interest in terms of Rule 133(3)(b) of the CGST Rules, 2017, to the eligible homebuyers in accordance with the buyer-wise computation set out in Annexure-13 of the DGAP Report, within a period of thirty (30) days from the date of this Order.

The Respondent shall submit a compliance report before the DGAP and the jurisdictional GST Commissioner(s) within the aforesaid period, evidencing disbursement to all eligible recipients.

The proceedings stand disposed of accordingly.

Condonation of delay under the proviso to section 100(2) of the CGST Act, 2017 - time bar/limitation for filing appeal against an AAR order - appeal dismissed without adjudication on merits - manual filing permitted under Rule 107A of the CGST Rules, 2017 - transaction in immovable property characterised as 'neither a supply of goods nor a supply of service' under Schedule III - treatment as supply of service under Clause 5(e) of Schedule II - HELD THAT:-As per the provisions of CGST Act, 2017, the Appellate Authority can only condone the delay up to a period of 30 days beyond the normal period of 30 days of communication of AAR order to the appellant, provided that sufficient cause is presented by the appellant for such delay. In the instant case, there is a delay of 220 days from the last date of filing of appeal in normal course, which is beyond the power vested on Appellate Authority for condonation of the delay, not examining as to whether sufficient cause for the delay was submitted or not.

It is seen that statute allows manual filing of an application, intimation, reply, declaration, statement, in respect of any process or procedure where reference to electronic filing has been prescribed. Accordingly, the appellant’s claim that as the impugned order in this Appeal has not been uploaded in the Portal, they were in doubt, whether the order passed as such would have been filed Appeal Electronically or manually, is not tenable in view of the provisions of Rule as discussed above.

It is a fact that this Appellate Authority is created by a statute and is empowered under the provisions of CGST/SGST Act, 2017. The condonation of delay up to a period of 30 days in filing the appeal, is empowered to this Authority are prescribed in Section 100 of the CGST Act, 2017. The proviso of sub-Section (2) of Section 100 of CGST Act, 2017 makes it clear that the Authority has no power to allow the appeal beyond 30 days after a normal period of 30 days of communication of the AAR Order.

Accordingly, since the filing of the appeal in the instant case, falls beyond the scope of powers conferred under proviso to Section 100(2) of the CGST Act, 2017, we hold that the appeal cannot be allowed to proceed on account of time limitation, and as a result, the question of discussing the merits of the issue in this case in appeal does not arise.

Thus, we are of the considered view that we are not empowered to condone the delay beyond the statutory period in filing this appeal.

Classification of goods - paper bags - interpretation of taxation entries in rate notification - applicability of concessional rate for paper sacks/bio-degradable bags - residual classification under Heading 4819 (except 4819 10, 4819 20) -

Classification of goods and/or services or both -HELD THAT:- Under the Customs Tariff Act, Chapter 48 covers paper and paperboard and the articles made there from, and within this chapter, the heading 4819 is the specific heading relevant to the present matter, as it deals with Cartons, boxes, cases, bags and other packing containers, of paper, paperboard, cellulose wadding or webs of cellulose fibres; box files, letter trays, and similar articles, of paper or paperboard of a kind used in offices, shops or the like.

We further examine the relevant entries of Notification No. 09/2025-CT(R). Entry 319 of Schedule I prescribes a GST rate of 5% for “Paper Sacks/Bags and bio-degradable bags” under Chapters 39 and 48. However, its wording does not extend to ordinary paper bags falling under Heading 4819 unless the goods specifically qualify as biodegradable bags.

We observe that no material has been submitted to establish that the applicant's product is a biodegradable bag or that it falls within an environmentally-classified category under the said entry. Even no claim has been made of bio-degradability for the product by the applicant. Therefore, Entry 319 cannot be applied merely because the product is a paper bag.

We examine Entry 322 of Schedule I, which grants 5% rate only to “Cartons, boxes and cases” of corrugated or non-corrugated paper or paperboard. Since the applicant manufactures “bags” and not cartons or cases, this entry is not applicable as applicant submitted that they are engaged in making paper bags.

We also examine Entry 185 of Schedule II, which covers “All goods” of Heading 4819 except those falling under subheadings 4819 10 and 4819 20. Since the applicant's product is neither a corrugated carton (4819 10) nor a non-corrugated carton (4819 20), the product falls under the residual category of Heading 4819. Entry 185 therefore applies, attracting GST at 18% (9% CGST + 9% SGST).

Accordingly, we find that “paper bags” of the applicant are appropriately classifiable under Heading 4819 and are covered under Entry 185 of Schedule II of Notification No. 09/2025-Central Tax (Rate), attracting GST at 18%.

Classification of goods -biodegradable/compostable bags - Harmonized System of Nomenclature (HSN) - Applicability of concessional notification conditional on biodegradability - Jurisdictional limitation of Advance Ruling Authority to determine scientific/technical biodegradability - Interpretation of Entry No. 319 of Notification No. 9/2025-scope of "Paper Sacks/Bags and bio-degradable bags" - HELD THAT:- We find that the applicant has submitted a certificate issued by a notified agency indicating that the product is “compostable.” We also note that the applicant states that the product conforms to standards prescribed for compostable polymer materials. However, the mere submission of such a certificate does not authorize this Authority to make any scientific, technical or environmental determination regarding the actual biodegradability or compostability of the product.

We therefore observe that although a compostability certificate has been furnished, we are not the competent authority to verify or affirm whether the product is biodegradable or compostable, nor can we conclude on the sufficiency or correctness of the certification produced. We have neither examined any physical sample of the product nor have we seen the process or procedure followed in drawing the sample for testing. The determination of biodegradability or compostability is a scientific and technical matter falling within the jurisdiction of the environmental authorities and not within the scope of this Authority under Section 97(2) of the CGST Act.

We find that the bags in question are made from polymer materials and are classifiable under Chapter 39 - Plastics and articles thereof, specifically under heading 3923, being articles for the conveyance or packing of goods. This classification is independent of whether the material is biodegradable or not.

We further observe that Entry No. 319 of Schedule I to Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025 provides a concessional GST rate of 5% for “Paper Sacks/Bags and bio-degradable bags” under Chapters 39 and 48. The concessional rate is therefore conditional in nature and applies only if the goods supplied are biodegradable as understood in the context of the said entry.

Accordingly, while we cannot determine whether the applicant's product is biodegradable or compostable, we hold that if the bags supplied by the applicant are biodegradable, then the benefit of Entry No. 319 of Schedule I to Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025, would be available and GST would be payable at the rate of 5% (2.5% CGST + 2.5% SGST). If the product is not biodegradable, then the concessional rate would not apply, and the applicable rate under the general classification for plastic bags under Chapter 39 would apply.

Advance ruling on supply being undertaken or proposed - maintainability of application for advance ruling - eligibility of input tax credit u/s 17(5)(c) - plant and machinery including foundation and structural supports - Whether the construction services used for the foundation and structural supports for heavy machinery qualify as ‘works contract services for construction of an immovable property (other than plant and machinery)’ attracting the blockage u/s 17(5)(c) - HELD THAT:- On a plain reading of the Explanation to Section 17, it is clear that the definition of “plant and machinery” is inclusive, and it explicitly includes the “foundation and structural supports” used to fix the equipment to the earth, provided they are used for making outward supply of goods or services but excludes land, building any other civil structure, telecommunication towers and pipelines laid outside the factory premises.

Further, for the purpose of section 17(5)(C), the expression “Construction”, which is capitalized to the said immovable property will only be eligible for taking ITC.

The applicant submitted details of time of supply and ledger copy of M/s Sribal construction company but no document regarding details of date of eligibility of ITC, payment made, whether the ITC has been availed or not and filing of 9C has been provided. These documents and submission were required to ascertain the type of construction work, authenticity of transactions, time-period of transactions and value of ITC availed but they are not helpful to decide the quantum of ITC as its requires on-site inspection, verification of the books of accounts, contracts, measurement books, and invoices. However, on perusal of ledger of the contractor, suggests that the construction of foundation and structural supports for heavy machinery has already been done prior to date of filing application for Advance Ruling. Even the applicant himself at the time of filling application has stated that during 2023-24, the contractor has raised tax invoices for the total consideration which suggest that the construction activity has been completed in 2023.24 i.e. prior to the date of filling application.

Further, as per Section 31 of the CGST Act, 2017, an invoice for supply of services needs to be issued before or after the provisions of service but not later than thirty days from the date of provision of service.

From the documents submitted by the applicant, it is found that they have received services of construction service for construction of foundation and structural supports for heavy machinery. Thus these activities have already been rendered and completed in the years 2023-24 and 2024-25.

As per Section 95 the definition of Advance Ruling, Advance ruling means a decision provided by the relevant authority on question to the supply of gods or services or both being under taken or proposed to be undertaken by the applicant. Hence, the activities have to be either undertaken in the present or should be proposed to be undertaken to seek a ruling.

Applicant had furnished details for the activities already done in the yester years. Hence, this authority is constrained in considering this question on merits. Therefore, no ruling is extended in respect of this question as the same is not related to the activities being undertaken or proposed to be undertaken.

TDS u/s 194C - Addition u/s 40(a)(ia) - payments which were determined as fixed percentages of the net sales rather than actual expenses incurred - disallowing reimbursement of expenditure from which tax had been duly deducted tax at source - whether the disallowance was warranted in a scenario where the recipients of these payments had duly accounted for and paid taxes on the amounts they received, thereby raising questions about the timing and manner of TDS deduction?

HELD THAT:- This Court is of the opinion that the Tribunal correctly applied the provisions of Section 40(a)(ia) in conjunction with Section 194C. The payments under scrutiny were not reimbursements for expenses that had already been incurred and substantiated through bills or vouchers, rather, they represented contractual consideration for services specifically, activities like advertising, sales promotion, handling and storage that were agreed upon as fixed percentages of the net sales.

Tribunal rightly emphasized that the payments did not correspond to actual, verifiable expenses incurred by the recipients. Genuine reimbursements are characterized by their nature as payments made post-facto, directly linked to specific, documented expenses supported by bills, vouchers or other tangible evidence.

Payments in question lacked such detailed documentation and instead appeared to be structured as fixed commissions or service fees, amounts that are inherently not reimbursements but contractual consideration for services rendered. While commercial arrangements often involve apportioning costs based on historical data or arm’s-length negotiations, such practices cannot override the statutory requirement to deduct TDS at the time of payment or credit when the transactions are contractual in nature and fall within the scope of Section 194C.

This Court is convinced that the Tribunal’s reasoning was sound, well-reasoned and supported by the record evidence. The payments in question, being contractual and not genuine reimbursements, squarely fall within the scope of Section 194C. The failure to deduct TDS in these circumstances justifies the disallowance u/s 40(a)(ia). The appellant’s arguments to the contrary lack merit and do not withstand scrutiny.

This Court finds no grounds to overturn the Tribunal’s order. The order, which upheld the disallowance towards sales promotion, advertisement and marketing expenses, as well as towards handling, storage and collection charges u/s 40(a)(ia), is hereby affirmed. Decided in favour of revenue.

Rejection of application seeking waiver of interest u/s 234B - petitioner, who did not deposit advance tax due to a bona fide reliance on an earlier decision of the jurisdictional High Court - Hon’ble Supreme Court held that marketing societies are not entitled to benefit of exemption under Section 80P(2) - Scope of Amendment Act of 1998 retrospectively amended Section 80P(2) whereby benefit of exemption was denied to Marketing Societies -

Assessing Authority denied exemption. The petitioner at this stage started claiming waiver of interest. The petitioner is entitled to waiver of interest in view of CBDT Circular dated 23.05.1996 read with Circular dated 30.01.1997 -

Respondents submits that petitioner was liable to make deposit of tax in advance and in case of failure liable to pay interest under Section 234B. The petitioner cannot claim benefit of circular because judgment of this Court was impliedly overruled by Supreme Court in 1993 - HELD THAT:- There was judgment of this Court of 1989 in favour of the petitioner. The said judgment was never challenged by respondent. On 25.02.1993, Supreme Court formed an opinion contrary to opinion of this Court. Supreme Court in January’ 1994 doubted its judgment of February’ 1993 and referred the matter to a Larger Bench.

It means legal position was not clear even after judgment of February’ 1993. The matter remained pending before Supreme Court from January’ 1994 to May’ 1998. The period in question is in between January’ 1994 to May’ 1998. The issue was finally adjudicated in favour of assessee.

The amendment in Section 80P(2) was made subsequent to period in question though it was retrospective. The petitioner did not deposit tax on account of lack of clarity on the issue involved. The amount of tax was not a meagre amount. We are not oblivious of the fact that petitioner is a Public Sector Undertaking, thus, there could be no mala fide intention to evade or avoid payment of tax. In such circumstances, the petitioner was entitled to waiver of interest payable under Section 234B. The CBDT Circular too supports cause of the petitioner.

In the wake of above discussions and findings, we are of the considered opinion that the instant petitions deserve to be allowed and accordingly allowed.

Validity of order passed u/s 143(3) ex-parte order - best judgment assessment made - petitioner submitted that on account of certain financial strains/distress, the petitioner/company went into insolvency AND IRP was appointed by the National Company Law Tribunal ‘NCLT’) -IRP and erstwhile management were unable to place material before the AO on account of insolvency-related constraints - HELD THAT:- IRP and the present management of the petitioner-company were bona fidely deprived of placing the material before the AO. The IRP continued de-jure but could not effectively do so, as he was not having knowledge of facts, transactions and access to the documents whereas, the management was not having legal authority, maybe having acquaintance with the affairs of possession of material and documents. Hence, all factual and legal pleas which could have been taken before the AO were not taken.

We are firmly of the opinion that an opportunity of hearing and placing the case before the AO needs to be given to the petitioner, particularly, when the addition(s) which the AO has made, relates to the cost of purchase of the property by the petitioner-company which was not taken into account. And if the cost of acquisition was taken into consideration, the high pitched assessment was perhaps not made.

Appellate Authority may or may not deal with the pleas and documents which were not placed before the AO. Hence, remedy of appeal would be illusory. That apart, the petitioner would be required to or constrained to pay at least 10% of the demand, else its appeal will not be heard. A company which has barely been able to come out of insolvency will be put to unwarranted financial burden, which can otherwise be avoided.

We are, therefore, persuaded to set aside the impugned orde passed by the AO because, the present case falls within the exceptions which have been carved out by Hon’ble the Supreme Court in a catena of judgements.

Foreign Tax Credit being TDS on foreign receipts - claim rejected because Form No. 67 was not uploaded within the time prescribed - PCIT power to condone the delay in uploading of Form No. 67 - HELD THAT:- Petitioner omitted or failed to upload Form No. 67 by the due date of return but simply because of this technical or venial breach, its substantial right of getting Foreign Tax Credit deducted from its receipt cannot be denied. If that be so, it would amount to withholding of a substantial amount of an assessee without there being any authority of law which would amount to unjust enrichment in turn.

In the case of Vijay Gupta [2016 (3) TMI 977 - DELHI HIGH COURT] wherein it had been held that the Principal Commissioner of Income Tax has enough powers to consider application u/s 264 in the event of default by the assessee. In the instant case also, it is the default of the petitioner and the same could have been, rather should have been condoned by the Commissioner, while exercising powers u/s 264 of the Act of 1961. If Section 119 confers a power upon the Commissioner, he could have invoked such powers. We could have simply quashed the order and remanded the matter back to the Commissioner for deciding the application u/s 264 afresh, but the same would be an empty formality.

Concededly, the petitioner has subsequently furnished Form No. 67 on 14.09.2022. While exercising writ jurisdiction, we hereby direct the AO that in case the same has been furnished, he shall allow Foreign Tax Credit after verifying the facts in accordance with law.

Addition u/s 69A - unexplained investment towards purchase of agricultural land and unexplained cash deposits in the bank account - Assessee is a non-filer of return of income -

Unexplained investment towards purchase of agricultural land - HELD THAT:- We find the AO while examining the source of purchase of agricultural land found that the assessee while explaining the source of investment has explained that he has received a loan of Rs. 10 lakhs from Shri Gawade Maruti Ramdas.

AO rejected the contention of the assessee on the ground that the assessee has not given the bank statement of Shri Gawade Maruti Ramdas for the entire year but has given the statement for the part period and that Shri Gawade Maruti Ramdas has declared income of Rs. 4,28,216/- only for the assessment year 2018-19.

A perusal of the two bank statements shows that before issue of cheques for Rs. 5 lakhs each on 23.11.2017 there is cash deposit of Rs. 1,00,000/- on 18.11.2017 in the bank account No.23440210000663 and Rs. 1,08,000/- on 18.11.2017 in the bank account. Since, there are no immediate cash deposits prior to the giving of loan except the above two amounts and since Shri Gawade Maruti Ramdas is a practicing doctor has regularly filed his return of income and has confirmed to have given the loan of Rs. 10 lakhs to the assessee, we, therefore, accept his creditworthiness to the extent of Rs. 8 lakhs and the balance amount of Rs. 2 lakhs is not proved from the bank statement. We, accordingly, modify the order of the Ld. CIT(A) / NFAC and sustain an amount of Rs. 2 lakhs as against the amount of Rs. 10 lakhs sustained by the CIT(A) / NFAC. Thus, the assessee gets relief of Rs. 8 lakhs. AO is directed to modify the order accordingly.

Addition u/s 69A on account of unexplained cash deposit - assessee is showing business income from Missal Pav Centre and has declared turnover and offered presumptive income @ 8% - The business income declared by the assessee has been accepted by the AO. We, therefore, find merit in the arguments of the Ld. Counsel for the assessee that the source of the said deposit is out of the business receipt of the Missal Pav Centre as well as the previous withdrawals. It is an admitted fact that the assessee has offered presumptive income @ 8% on turnover u/s 44AD of the Act. Therefore, there is no justification on the part of the CIT(A) / NFAC in sustaining the addition made by the AO u/s 69A.

Denial of deduction / benefit u/s 11(1) - advance given to Trustee as violation of Section 13(1)(c) and 13(1)(d) - short declaration of contractual receipts - Difference between the receipts shown in the income and expenditure account and income received as per the TDS Certificate issued u/s 194C - As submitted that the difference is because of the fact that the turnover is shown without including the GST amount - for interest payment AO found that the trustee of the trust has received loan

HELD THAT:- Trust has not received any donations as per the record before us nor undertaken any act of general public utility or charitable in nature. Obtaining contract and executing the contract cannot be treated as a general public utility or charitable in nature, rather it can be treated as ‘business of contracts’.

The assessee has received contract payments as well as TDS deducted u/s 194C of the Act leading credence to the fact that the assessee is in the work of executing contracts. Preservation of watersheds environment can be treated as general public utility, but any entity obtaining a contract for water works, drainage, or any other similar work cannot be treated as charitable work. The assessee-trust has obtained contract and executed the contract obtained from Govt. of Gujarat which is a business venture like any other contractor.

Amounts as received and paid on a running account basis from the person specified u/s13(1) of the Act. Thus, the activities of the trust give no credence to the objects reckoned and are not in the nature of activities allowed u/s 2(15) of the Act.

Though the assessee is claiming that the trust had carried out working of supplying water through pipelines and making pumping stations, it is found that the pipeline work is indeed a contract work obtained from Govt. of Gujarat. The supplying water through pipelines and making pumping station is not the charitable activity of the trust but performed as a work contract obtained from Govt. of Gujarat in the capacity of a contractor. The main income of the Trust is contract income received from Govt. of Gujarat. There is no work of charity involving carrying out the work contract obtained from the Govt. after tendering for the same. This clearly shows that the activity undertaken by the assessee-trust is not an Incidental Business, the profits of which can be exempt, whereas in this case the receipts are from civil contracts that cannot be exempt as the business is not incidental to the attainment of the trust's objectives and no separate books of account are maintained.

The civil contract activity is not incidental to the main charitable objective but is instead a primary profit-making motive, the exemption cannot be accorded. A trustee can receive compensation only if it represents reasonable remuneration for services rendered, rather than profit-taking.

Using trust funds for the personal benefit of a trustee is strictly prohibited and shall lead to the loss of tax exemptions u/s 11 and 12, with income taxed at the Maximum Marginal Rate. Section 13(3) prohibits directing income / property to specified persons, including trustees, founders, or managers. Funds used for the benefit of a trustee are to be taxed at the maximum marginal rate.

Levy of late filing fee u/s 234E - belated filling of TDS return - HELD THAT:- As emanated from the facts that the assessee filed TDS return in Form 26Q (3rd quarter) for A.Y.2013-14 belatedly, for which, the Revenue had levied fee u/s. 234E. That as per examination of the facts and circumstances and the judicial principles upheld in the above referred decisions, there was no power with the Revenue to impose fee u/s. 234E of the Act prior to 01.06.2015.

Imposition of late filing fee u/s. 234E of the Act would be effective with the Department from F.Y.2015-16 relevant to A.Y.2016-17 onwards and not prior to that. The present case pertains to A.Y.2013-14 (3rd quarter) which is therefore outside the purview of levy of late fee u/s. 234E of the Act. Hence the A.O is directed to delete the said late fee from the hands of the assessee. Assessee appeal allowed.

Addition u/s 56(2)(viii) - interest received u/s. 28 of the Land Acquisition Act on enhanced compensation - HELD THAT:-Proposition of law laid down by Hon’ble Supreme Court [2009 (7) TMI 12 - SUPREME COURT], Hon’ble Gujarat High Court [2016 (5) TMI 488 - GUJARAT HIGH COURT] and ITAT Pune Bench [2024 (8) TMI 487 - ITAT PUNE] is that the interest income under section 28 of Land Acquisition Act, is not taxable under section 56(2)(viii) of the Income Tax Act, 1961.

Penalty u/s. 271(1)(c) is not sustainable as we have already held that interest received by Assessee u/s. 28 of Land Acquisition Act is not taxable under section 56(2)(viii).

Deduction u/s 54F - assessee was required to deposit whole of the consideration in capital gain account scheme before furnishing return of income, and since the assessee only deposited part in the above capital gains account scheme

HELD THAT:- As in the case of K. Ramchandra Rao [2015 (4) TMI 620 - KARNATAKA HIGH COURT] we are of the considered opinion that the real intention of the legislature is to get the amount of sale consideration invested in purchase of residential house within the prescribed period and not to get the amount deposited in capital gain accounts scheme.

Admittedly, in the instant case the whole of the sale consideration was invested by the assessee in purchase of residential house within a period of one year from the date of sale of original asset therefore in the light of above judgement passed in the case of K. Ramchandra Rao [2015 (4) TMI 620 - KARNATAKA HIGH COURT] the assessee is entitled to get deduction u/s 54F of the IT Act. Assessee appeal allowed.

Addition u/s 68 - unsecured loan transaction - As alleged creditworthiness of the lender being mere a paper company was not established, the nature of source of the funds remained un-proved - CIT(A) / NFAC relying on various decision deleted the addition made by the AO on the ground that no addition can be made u/s 68 since the loan was received through banking channel and was also repaid during the same financial year

HELD THAT:- No infirmity in the order of the CIT(A)/ NFAC on this issue.

Admittedly, the assessee during the course of assessment proceedings has filed the confirmation letter from M/s. Aneri Fincap Ltd along with the bank statement substantiating the receipt of money through proper banking channel and also the repayment of the loan during the same financial year.

As been held in various decisions that where the assessee took loan from the loan creditor and had furnished the requisite material showing the identity of loan giver and that the assessee was not the beneficiary as loan was repaid during the same year or even in subsequent year, then no addition u/s 68 of the Act could be made.

As decided in the case of Bairagra Builders (P) Ltd. [2024 (6) TMI 945 - BOMBAY HIGH COURT]has held that where the assessee had taken unsecured loan from two companies and had submitted all evidences to substantiate the loan including confirmation from the creditors and the loans were taken and repaid through banking channel, AO was not justified in treating the said unsecured loans being unexplained cash credit.

As in the present case loan was repaid during the impugned assessment year itself. The various other decisions relied on by the CIT(A) / NFAC as well as assessee in his paper book also support his case to the proposition that when the assessee during the course of assessment proceedings has filed the bank statement, confirmation of the loan creditor and has proved that the loan was accepted through proper banking channel and the same has been repaid in the same year through proper banking channel, the addition u/s 68 cannot be made since the assessee is not a beneficiary of the said loan. Appeal filed by the Revenue is dismissed.

Validity of reopening of assessment - reopening made beyond four years - information received from the Investigation Wing, DIT (Inv.)-3(1), Mumbai, uploaded on the Insight Portal - change of opinion - fictitious short term capital loss - enquiries conducted by the Investigation Wing revealed a modus operandi adopted in certain mutual fund schemes managed particularly in JM Equity Hybrid Fund – Dividend Option - transactions relating to investment in mutual fund units and the applicability of section 94(7) and section 94(8) - According to the AO pre-planned investments were made into the scheme prior to declaration of dividend. Substantial dividend was received. Immediately thereafter, redemption of units was undertaken resulting in short term capital loss. The short term capital loss was set off against other capital gains. The dividend income was claimed as exempt.

HELD THAT:- In the present case, the reopening has been made beyond four years from the end of the relevant assessment year. Therefore, the first proviso to section 147 is attracted. In such circumstances, reopening is permissible only if there is failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.

No such failure has been demonstrated by the Revenue. The investment, dividend income and redemption details were part of the return and were furnished during scrutiny. Hence, the condition precedent under the first proviso to section 147 is not satisfied. Accordingly, we hold that the reopening suffers from the vice of change of opinion and is hit by the proviso to section 147.

Notice u/s 148A(b) contains general allegations regarding manipulation by JM Financial and dividend stripping. It does not establish any specific material showing that the assessee had participated knowingly in any sham transaction. Further, the notice itself reflects inconsistency as to whether the allegation pertains to JM Balanced Fund – Annual Dividend Option or JM Equity Hybrid Fund – Quarterly Dividend. This ambiguity itself demonstrates non-application of mind. Thus, even assuming information was received, it cannot be said that there was specific tangible material establishing escapement of income in the hands of the assessee.

Alleged fictitious short term capital loss AND final addition was made under section 68 treating dividend as fictitious, after adjusting short term capital loss - Hon’ble Bombay High Court in Jet Airways (I) Ltd. [2010 (4) TMI 431 - BOMBAY HIGH COURT] and Ranbaxy Laboratories Ltd.2011 (6) TMI 4 - DELHI HIGH COURT] have held that reassessment must be confined to the reasons recorded and if the original ground fails, the AO cannot sustain reassessment on a different ground.

In the present case, the ground recorded was fictitious loss, whereas the addition has been made treating dividend as unexplained cash credit. The foundation and superstructure are different. Therefore, reassessment cannot survive.

Treating dividend as unexplained cash credit u/s 68 - If purchase and sale transactions are accepted as genuine, dividend arising therefrom cannot be selectively treated as fictitious without cogent evidence.

As decided in CIT vs. Walfort Share & Stock Brokers (P.) Ltd. . [2010 (7) TMI 15 - SUPREME COURT] has clearly held that dividend stripping transactions prior to insertion of section 94(7) cannot be treated as sham and that Parliament has not treated such transactions as bogus but only restricted loss to extent of dividend. Even post section 94(7), loss is to be restricted only to the extent of dividend received and not entire transaction to be treated as sham.

In the present case, the AO himself allowed loss on sale of 12% units. Therefore, transaction is partly accepted as genuine. In such circumstances, treating dividend as unexplained cash credit under section 68 is legally untenable. Dividend received from mutual fund is not a “cash credit” in the nature contemplated by section 68. Its source is the mutual fund scheme, which is identifiable and regulated entity. There is no material to show that the dividend amount represents unaccounted money introduced by the assessee.

Assessee appeal allowed.

Levy of penalty u/s 271(1)(c) - addition of 12.5% of the total non-genuine purchases - HELD THAT:- We find in case of Krishi Tyre Retreading and Rubber Industries[2014 (2) TMI 21 - RAJASTHAN HIGH COURT] that where an addition is made purely on an estimate basis, no penalty under section 271(1)(c) of the Act is leviable. Similar view has been expressed in CIT v/s Sangrur Vanaspati Mills Ltd [2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT] and Subhash Trading Co. Ltd [1995 (11) TMI 37 - GUJARAT HIGH COURT].

Thus, we are of the considered view that a penalty under section 271(1)(c) of the Act cannot be levied merely on the basis of an estimated addition - Assessee appeal allowed.

Penalty u/s 272A(1)(d) - three successive notices u/s 142(1) - allegation of non-compliance of the impugned notices issued by AO u/s 142(1) - multiply penal consequences for a singular lapse arising out of the same cause - As argued successive notices have been issued within a short span of time to examine a single issue

HELD THAT:- We find merit in the contention of the Ld. AR that where the notices have been issued by the AO, one after another, for examination of same issue, it will not multiply the default and it would constitute a single default. The object of section 272A(1)(d) is to ensure compliance and not to multiply penal consequences for a singular lapse arising out of the same cause.

This proposition is supported by plethora of decisions including the recent decision given in Devraj Vishwasrao Jadhav [2025 (10) TMI 1332 - ITAT PUNE] Same view has also been accepted by this very bench in Ganpat Singh [2025 (12) TMI 791 - ITAT INDORE] Accordingly, in the light of same and also considering the provisions of section 273B of the Act, we are of the view that the penalty for first non-compliance deserves to be confirmed and for the subsequent non-compliances penalty deserves to be deleted. Assessee appeal is partly allowed.

Denial of foreign tax credit (FTC) - AO did not grant the relief claimed by assessee u/s 90/90A for the reason that the Form No. 67 was not filed by assessee.

HELD THAT:- The assessee had intended to claim FTC for AY 2021-22 from the very inception, and the lapse was purely technical and inadvertent in nature, arising from selection of an incorrect AY while e-filing Form No. 67. For such a mistake, in our considered view, the assessee cannot be denied the statutory relief as available u/s 90/90A.

As decided in Asha Rani Pandya [2024 (7) TMI 90 - ITAT INDORE] already held that the filing of Form No. 67 is a procedural/directory requirement and that FTC being a substantive relief available u/s 90/90A cannot be denied merely for delay or technical lapse in filing of Form No. 67

The assessee is entitled to the relief u/s 90/90A, subject to verification of the correctness of the claim and quantum by AO. Accordingly, we direct the AO to verify the Form No. 67 filed by assessee on 27.12.2024 for AY 2021-22 and grant relief u/s 90/90A to assessee in accordance with law.Assessee appeal is allowed for statistical purpose.

Rectification u/s 154 - Denial of tax credit - CPC, while processing the return of income u/s 143(1), allowed only proportionate credit on the ground that gross receipts on which TDS was deducted was not fully offered to Tax - assessee has acted as a Kaccha Arhtia only

HELD THAT:- The assessee receives payment on behalf of the others and offer commission from such activity. Thus, the full gross receipts as reflected in Form 26AS may not be offered to tax since only commission income would constitute revenue for the assessee.

The differential receipts would never be offered to tax as revenue receipts. TDS has been deducted against assessee’s payment and it is the assessee’s money which has been deducted by the payers.

Therefore, the credit of the same would certainly be available to the assessee. The turnover or other financial results are not in dispute. The provisions under which TDS has been deducted would not hold much relevance in such a case. Therefore, CPC is directed to grant full TDS credit to the assessee as available in Form 26AS. Assessee appeal allowed.

Entitlement to MEIS benefits despite non-EDI/manual bills of export - Prohibition on rejection solely for non-submission through prescribed online process - Duty to consider export incentive claims on merits notwithstanding procedural deficiencies - Parity with prior judicial decisions permitting manual transmission of bills - Setting aside administrative minutes which bar consideration on procedural grounds - HELD THAT:- The Court finds that the petitioner is also entitled for consideration of his case for entitlement of MEIS benefit with respect to certain shipping bills under the foreign trade policy. The aforesaid direction is necessary in order to maintain the parity as in various cases – relied upon by the petitioner, the Courts have allowed the transmission of the manual bills instead of online.

Entitlement of the petitioner for the benefit of the MEIS - The same can be considered by the concerned Department. However, the petitioner’s claim shall not be rejected solely on the ground of non-submission of the application through the online process. Accordingly, the minutes dated 09.06.2020 are hereby set aside.

The petitioner is permitted to submit the manual application along with all supporting documents. The Respondent shall consider the same on merits in accordance with the extant policy.

Since the petitioner is diligently pursuing is remedy, and therefore, that the last date for taking the benefit under the MEIS may have expired should not come in the way of the petitioner, and the respondent(s) are directed to consider the case of the petitioner in accordance with extant policy.

With the aforesaid, the petition, along with pending application(s), if any, stands disposed.

Classification of goods- thermal printers - Specific adaptation test for classification under CTH 9018 - Burden of proof for re classification on Revenue - Thermal printers as instruments "used in medical sciences" - Invocation of extended period u/s 28(4) - Confiscation and penalties -

Whether the thermal printers imported by the appellant are classifiable under CTI 9018 90 99 as claimed by the appellant or under CTI 8443 32 90 as claimed by the department. - HELD THAT:- It needs to be noted that while CTH 8443 covers printers using thermal print process, but thermal printers specially designed for use in medical science are classifiable under CTH 9018. Parameters like spatial resolution and contrast resolution are necessary to determine whether a printer can print diagnostic quality images. Every thermal printer of CTH 8443 is not used in medical sciences. For instance, thermal printing technology is used for printing labels, tickets and barcodes in industries like retail, shipping, pharmacy, manufacturing and warehousing, automotive, banking and aviation. Thus, thermal printers which are specially designed for use in medical science cannot be classified under CTH 8443 merely because it employs thermal print process.

Such being the position, the thermal printers imported by the appellant would fall under CTH 9018 since they are instruments used in medical sciences.

In terms of Section Note (1) (m) to section XVI of the Customs Tariff, articles of Chapter 90 are excluded. The thermal printers imported by the appellant are, therefore, outside the scope of CTH 8443.

The discussion leads to the inevitable conclusion that the thermal printers imported by the appellant are used in medical diagnosis and are classifiable under CTH 9018. They are different from ordinary thermal printers which fall under CTH 8443.

The Additional Director General has failed to notice this distinction in the impugned order and, therefore, committed an error in holding that the thermal printers imported by the appellant would be classifiable under CTI 8443 32 90. This finding cannot be sustained.

The demand of duty with interest and penalty upon the appellant cannot, therefore, be sustained and is set aside.

As the impugned order confirming the demand of differential duty and imposing penalties under section 112(a) and section 114AA of the Customs Act upon the appellant has been set aside, the penalty imposed upon Yogesh More under section 112(a) of the Customs Act also deserves to be set aside and is set aside.

Penalty u/s 112(a) - Goods liable to confiscation u/s 111(d) and 111(o) - Liability of a Chartered Accountant for issuance of certificates - Mere issuance of certificates without collusion does not attract Section 112(a) - Due diligence in issuing professional certificates - HELD THAT:- It is observed that the Appellant has issued the certificates in question at the behest of his friend Hiral K. Patwa, Advocate in whose case the proposal to import penalty under Section 112(a) of Customs Act, 1962 has been dropped by the AA in the impugned orders. The Appellant has neither dealt with the goods nor dealt with anyone other than Shri Hiral K. Patwa for issuing the certificates. Hence neither the allegation of abetment nor that of knowingly dealing with offending goods is borne out by any evidence. Therefore, the requirements of Section 112(a) of Customs Act, 1962 are not met in Appellant’s case.

We are of the view that the appellant has acted negligently in discharge of his professional duties. It is hoped that adequate caution is exercised in issuing any certificate in future. Taking a lenient view and in pursuance of the judgement of the Hon’ble Bombay High Court in the case of Mahesh P. Patel Versus The Commissioner of Customs (EP) [2018 (12) TMI 883 - BOMBAY HIGH COURT], both the appeals filed by the Appellant Dipal J Shah are allowed. Consequently, the penalties imposed on the Appellant Dipal J Shah in the impugned orders are set aside.

Limitation of appeal to be reckoned from date of communication u/s 128 - importability of second-hand capital goods under Para 2.17 of FTP - prospective operation of trade policy amendments - confiscation u/s 111(d) and Section 111(m) requiring evidence of undervaluation or culpable conduct - chartered engineer's valuation not conclusive proof of mis-declaration - consequential failure of redemption fine and penalty where confiscation is unsustainable -

Limitation of appeal to be reckoned from date of communication u/s 128 - HELD THAT:- We find that Section 128 of the Customs Act, 1962 mandates that the period of limitation is to be reckoned from the date of communication of the order and not from the date of its dispatch. In the present case, the endorsement on the Order-in-Original itself clearly records the date of receipt as 03.11.2009, whereas the appeal was filed on 29.01.2010, which is well within the condonable period prescribed under the law.

The Commissioner (Appeals), having admittedly entertained the appeal and heard it on merits earlier, could not have rejected the same after a lapse of six years solely on the ground of limitation, and that too without putting the Appellant to notice. Such rejection is contrary to law and violative of the principles of natural justice.

We also find support for this view from the judgment of the Hon’ble Supreme Court in CCE v. Krishna Carbon Paper Co. [1988 (9) TMI 50 - SUPREME COURT], wherein it was held that once an appeal is admitted and heard on merits, it cannot subsequently be dismissed on a technical ground of limitation without affording the appellant an opportunity of hearing. The action of the Commissioner (Appeals) in rejecting the appeal after several years, despite having entertained and heard it earlier, is therefore contrary to settled law.

Importability under Foreign Trade Policy - HELD THAT:- We find that Para 2.17 of FTP prior to 05.06.2012 allowed second-hand capital goods freely, except certain specified items. Digital multifunction print and copying machines were not specifically restricted during the relevant period.

The Notification dated 05.06.2012 is prospective, as held by the Supreme Court in Asian Food Industries [2006 (11) TMI 10 - SUPREME COURT]

Since the present import took place in September 2009, the goods were freely importable, and confiscation under Section 111(d) is unsustainable.

In such circumstances, no useful purpose would be served by remanding the matter back to the Commissioner (Appeals), particularly when the issue stands concluded on facts and law and only the Appellant has been denied relief on a technical ground.

Valuation and Section 111(m) - HELD THAT:- We find that the value was enhanced solely based on Chartered Engineer’s estimation of residual value. There is no evidence of extra consideration, forged invoices, or suppression except the Chartered Engineer’s Certificate there was no evidence produced for enhancement of the value of the imported goods. As the imported goods are second hand digital multifunctional machines, the valuation is peculiar to each consignment.

Further, we also find that The Tribunal in Sri Nakoda Impex [2004 (2) TMI 254 - CESTAT, BANGALORE] and Best Mega International [2013 (6) TMI 492 - CESTAT NEW DELHI] has held that mere enhancement of value is not a mis-declaration. Hence, confiscation under Section 111(m) is also not attracted.

Redemption Fine and Penalty - HELD THAT:- When goods are not liable for confiscation, redemption fine under Section 125 and penalty under Section 112(a) automatically fail.

The import was made under a bona fide belief, supported by prevailing policy and judicial pronouncements. There is no mens rea or contumacious conduct.

Accordingly, we hold that the redemption fine imposed under Section 125 and the penalty imposed under Section 112(a) of the Customs Act, 1962 are without authority of law and are hereby set aside.

Accordingly, the appeal is allowed with consequential relief, if any, as per law.

Penalty u/s 114A - Willful mis-statement or suppression of facts - Statutory mandatory penalty - Duty determined u/s 28(8) - Misuse of Advance Authorisation / Advance Licence Scheme - Diversion of imported goods to domestic market - HELD THAT:- The issue of whether non-imposition of penalty under Section 114A of Customs Act, 1962 on M/s. N.S. Textiles and M/s. Minerva Tex Fab, Surat is correct or not is no longer res integra as similar issue came up for consideration before this Tribunal in the case of Commissioner of Customs, Chennai Vs. M/s. Kalp Impex, Surat [2025 (7) TMI 498 - CESTAT CHENNAI], where the facts are similar and similar order was passed by the original adjudicating authority as in the instant case.

The facts clearly indicate the deliberate fraud committed by the importers through a well-designed fake addresses and created documents with an intention to avail duty exemption under Advanced Authorization Scheme. Addresses were found to be fictitious and no manufacturing facilities exist and imported goods were diverted and sold without utilizing in the manufacture of export goods.

Thus, the Respondents had indulged in wilful misstatement and suppression of material facts with an intent to evade payment of duty. Accordingly, the essential ingredients for invocation of Section 114A of the Customs Act, 1962 stand satisfied, and therefore, penalty under the said provision is clearly imposable.

As such, the impugned Orders-in-Original Nos. 24494 & 24497/2014 dated 26.03.2014 and 27.03.2014 are modified to the extent of imposition of penalty equivalent to differential duty demanded plus interest payable under Section 114A of the Customs Act, 1962 but simultaneously dropping the penalties imposed under Section 112 of the Customs Act, 1962 on both these importers viz., M/s. N.S. Textiles, Surat and M/s. Minerva Tax Fab, Surat.

Accordingly, the appeals filed by the Department are allowed.

Import of professional Audio Equipment - eligibility for benefit of Notification No. 21/2002-Cus. based on diaphragm shape - examination report accepted and undisputed examination findings - invocation of extended period of limitation under proviso to Section 28(1) only where suppression or wilful mis-statement is found - penalty provisions not sustainable in absence of suppression or wilful mis-statement - sampling procedure and expert determination for physical classification -

Whether the goods imported by the Appellants during period 2002-2007 are speaker "cone type" as being claimed by the Appellants and whether benefit of exemption has been rightly claimed by them under Notification No.21/2002 against Sl.No.244, List 26, Item No.23? - HELD THAT:- It is evident from the records that the Examination order/report referred supra, wherein it has been mentioned that the goods examined are "SPEAKER CONE TYPE" and the same has been admitted by department, as the same has not been disputed anywhere in the impugned proceedings. Accordingly, it cannot be classified as a speaker of the "dome" type. Consequently, the impugned de novo Order-in-Original No. 9924/2009 dated 31.10.2009 classifying the product as "dome" type is unsustainable in law and is therefore set aside. Whether what was imported is cone type speaker or not should have been left to be decided by an expert strictly following the sampling procedure which is absent in this appeal. Being third round of litigation, it is not pragmatic to keep the issue pending or remanding for fresh examination when the examination report of the imported goods was clearly found to be cone type, there was no challenge for examination or assessment. In the peculiar circumstances of this case where the dispute could not be resolved for over 17 years and considering the minutes of CC’s Conference as referred to supra and as the Diaphragm shape is undisputedly in parabolic shape, the importer is eligible for the benefit of Notification No. 21/2002-Cus. dated 01.03.2002.

Invocation of the extended period of limitation and the imposition of penalty - HELD THAT:- We find that the dispute pertains to technical interpretation and classification, as is evident from the facts that the issue itself required deliberation at the Chief Commissioner's Conference. In such circumstances, allegations of suppression of facts, wilful misstatement or misdeclaration cannot be invoked. Accordingly, the extended period of limitation is not invocable, and so imposition of penalty is unsustainable in law.

Benefit of an exemption notification - HELD THAT:- We find that, in respect of the goods in question, Bills of Entry were filed, the benefit of lower rate of duty was claimed and extended by the Department, and it was only thereafter that the DRI conducted a detailed investigation, culminating in the issuance of the show cause notice and the passing of the impugned order. This sequence of events further negates any allegation of suppression or wilful misstatement on the part of the Appellant. It is well-settled that mere availment or claim of the benefit of an exemption notification cannot, by itself, be equated with suppression of facts or wilful misstatement

We, therefore, hold that the imported speaker are eligible for the benefit of the said Notification No. 21/2002-Cus., dated 10-09-2004. We are of the view that there is no ground for invoking the extended period in this appeal and the impugned Order-in-Original No. 9924/2009 dated 31.10.2009 is liable to be set aside.

Consequently, in view of the above, the appeal filed by the main appellant and the appeal filed by the partner of the main appellant company are allowed with consequential relief, if any, as per the law.

Assessable value - inclusion of payments to foreign supplier's local agent as part of transaction value - Transaction value and arm's length principle under the Customs valuation regime - Application of Section 14(1) and Section 14(1A) of the Customs Act read with the Customs Valuation Rules - Product support/service payments linked to import and Rule 9(1)(e) of the Customs Valuation Rules - Penalty u/s 114A - imposition and discretionary reduction - HELD THAT:- Appellant was contesting the issue till Supreme Court. Therefore, the submission that no malafides can be attributed to them, being a reputed Public Sector Undertaking also has weighed in our minds. However, we find that setting aside of the penalty imposed under Section 114A of the Customs Act 1962, may indirectly give rise to a conclusion that we have accepted the submissions that the extended period provisions are not applicable even for the Customs Duty. We are not privy to the full details of the period involved in the earlier proceedings. We also have considered the fact that just because the appellant importer is a PSU, their omissions and commissions cannot go unpunished.

Considering all the aspects, particularly, the submission of the appellant that they are not pleading for setting aside of the confirmed Customs Duty and Interest portion in view of the Supreme Court’s order dated 1st May 2025, we take a slightly sympathetic view and reduce the Penalty to Rs.5,00,000 as against Rs.67,59,545 imposed by the Adjudicating authority.

Thus the appellant importer’s appeal is partly allowed.

In the present appeal, the Revenue has not brought in any specifics as to how such fact finding order of the Adjudicating authority is being viewed as erroneous. No fresh evidence has been brought in to show that the existing facts and evidence have not been considered by the Adjudicating authority while setting aside part of the demand. Therefore, we do not find any necessity to interfere with the order passed by the Adjudicating authority by setting aside part of the demand. Accordingly, the Appeal filed by the Revenue stands dismissed.

The Appeal filed by Revenue is dismissed.

Confiscation of smuggled goods - confiscation of conveyance used in illegal importation - penalty u/s 112 - statements recorded u/s 108 - seizure u/s 110 - illicit importation through unauthorized routes - auction and appropriation of sale proceeds u/s 126 -

Confiscation of smuggled goods - HELD THAT:- Claim made by the appellant towards the seized goods which has been made after lapse of more nearly an year is badly hit by the delay and latches in making the claim and cannot be entertained.

In absence of any challenge by any other person who was involved in the handling and transportation of the illicitly imported peas, I am not in position to admit the challenge made by the appellant in respect of the confiscation of peas. It would lead to situation where the vehicles used for transporting the illicitly sized peas are held liable for confiscation, and the impugned peas are contrarily held not liable for confiscation.

Thus in absence of any appeal filed by any other person, involved in the case I uphold the order of confiscation of peas and apportioning of the sale proceeds to the government exchequer.

Imposition of Penalty u/s 112 - HELD THAT:- Appellant was neither intercepted nor was named by any one during the course of investigations. It was only during the adjudication proceedings at time of personal hearing that counsel made claim on the behalf of appellant towards the seized peas. No specific role has been assigned to the appellant in the entire act of illicit transportation of these goods from Nepal to India. However for making a delayed claim in respect of the seized goods I uphold the penalty imposed upon the appellant under section 112 but reduce the penalty imposed upon the appellant to Rs.2,500/-.

Appeal is partly allowed.

Classification of goods - Optical Sheet-Complex (BN61-20395A) and Optical Sheet-High Color (BN61-20400A) -mounted optical elements - unmounted optical elements - parts suitable for use solely or principally with the apparatus - Note 3 to Chapter 90 and Note 3 to Section XVI - classification by principal function - HSN Explanatory Notes on permanent mounting - Rule 1 of General Rules for Interpretation (GRI) -

Classification of Optical Sheet-Complex (BN61-20395A) and Optical Sheet-High Color (BN61-20400A) under CTH 9002 9000 as mounted optical elements - HELD THAT:-There is no dispute that the prisms and the DBEF layer are optical elements. The prism internally reflects the light before letting it pass through the layer. The prism layers also control the light direction and concentrate it forward, thus enhancing front luminance and visibility. The DBEF layer polarises and also enhances the light passing through it. Therefore, these prisms and DBEF layers can be regarded as optical elements for purposes of CTH 9001.As the DBEF layer is a polarising layer, the relevant HSN Explanatory Notes under CTH 9001 describe a polarising material in sheets or plates.

Thus, it is clear that prism layer reflects and refract the light but does not polarise therefore, prism layer cannot be labelled as sheet and plates of polarising material under heading 9001.20 but it is still an optical element whereas the DBEF layer reflects S-polarised light before it is absorbed by the LCD panel. Through repeated reflections, it allows approximately 40% of the S-polarised light to be reused, thus serves as a sheet of polarising material classifiable under heading 9001.20.

Classification of the Optical Sheet-Complex (BN61-20395A) - HELD THAT:-It is an admitted position that the subject goods are meant for use in LED televisions. In order to examine whether the impugned goods classify under CTH 8529 as identifiable parts of LED television reference to the HSN ENs under CTH 8529 would be relevant.

It is clear that subject goods are to be used solely and principally in TV which is covered under heading 8528. The subject goods are specifically designed for brightness enhancement in TV. The subject goods cannot be used independently or in any other apparatus except TV.

Therefore, it is clearly evident that the optical sheet complex is a part of television. On the basis of Note 2(b) of Section XVI, parts, suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. Thus, the subject goods "Optical Sheet Complex" is classifiable under heading 8529.

Classification of the Optical Sheet-High Color (BN61- 20400A) - HELD THAT:-It can be implied that "mounted" means, devices must have electric connection points/terminals (e.g. pins, leads, balls, lands etc) or pads (connection point) mounted on a carrier. In the instant case, no such terminals/connection points are present. Therefore, in terms of the above, it is clear that quantum dots are not mounted but embedded.

As the applicant itself submitted that in optical sheet high color quantum dots are embedded in polymer sheet and then encapsulated between barrier film therefore it is clear that quantum dots cannot be said as mounted. Therefore, optical sheet high color cannot be classified under CTH 9002.

It is apparent that subject goods are solely and principally to be used in TV which is covered under heading 8528. The subject goods are specifically designed for better color quality in TV. The subject goods cannot be used independently or in any other apparatus except TV.

Therefore, it is clearly evident that the optical sheet high color is a part of television. On the basis of Note 2(b) of Section XVI, parts, suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. Thus, the subject goods "Optical Sheet High Color" is classifiable under heading 8529.

Classification of goods - RAIL Frame Left Hand ("RAIL FR LH") i.e. a window regulator guide rail - scope and ambit of the Section Notes -General Rules for Interpretation (GIR) - Machines and mechanical appliances having individual functions - Parts and accessories of motor vehicles - Principal use / suitability solely or principally for motor vehicles - HSN Explanatory Notes to Section XVII - HELD THAT:- As per the description of the subject goods i.e. RAIL FR LH to car window confirms that this part is specifically designed to perform a function within that subsystem of the car's body. Motor vehicles are covered under headings 87.01 to 87.05 of Chapter 87 of the First Schedule to the Customs Tariff Act, 1975. Thus, the second condition is satisfied. Further, the product is not specified particularly anywhere else in the Tariff, therefore, the third condition, i.e., they must not he specifically included elsewhere in the Nomenclature is also satisfied. Since all the three conditions have been satisfied, it can be concluded that the 'RAIL FR LH' is covered under the heading 8708 only and is in accordance with classification in terms of Rule 1 of G1R, Section XVII and Chapter Notes of Customs Tariff Act, 1975.

It is pertinent to mentioned that CTH 8708 includes parts and accessories that form part of the vehicle's body structure. This is significant because parts that are directly related to the construction or functionality of the vehicle's bodywork (such as the framework; panels, roof, doors, and related components) are classified under this heading. I find that CTI 87082900 under heading 8708 is used for other parts and accessories that are components of the vehicle's body but are not specifically categorized elsewhere in the heading. The RAIL FR LH is an essential component of the vehicle's body structure, specifically related to the car window. Since it is a vital part of the window assembly, contributing to the integrity and functionality of the bodywork, it will come under the scope of "other parts and accessories of the body of motor vehicles" and accordingly merit classification under CTI 87082900 of the First Schedule of Customs Tariff Act, 1975.

It is observed that in the referred case the subject goods were Assy Guide Rail' i.e. a sunroof assembly - a long, narrow track that provides support and guidance for the sunroof panel as it slides open and closed. Guide rail ensures safe, controlled movement, prevent damage and contributes to a pleasant sunroof experience. At the other hand, in the instant case RAIL Frame Left Hand i.e. the subject goods are used in the same manner for manufacture of car window regulator assembly and it provides a guided part for the window glass (in place of sunroof) support the regulator mechanism and ensures smooth stable and quiet operation of window system on the front left side of the vehicle. Thus, provisions of Note 2 and Note 3 of Section XVII of Customs Tariff, General HSN Note to Section XVII, the RAIL FR LH as a part of the automobile's window is rightly classifiable under CT1 87082900 (Other Parts and accessories of bodies of motor vehicles of headings 8701 to 8705).

To conclusion that the product i.e. RAIL Frame Left Hand (RAIL FR LH) described as Window Regulator Guide Rail merits classification under CTH 8708 (Parts and accessories of motor vehicles of headings 8701 to 8705), more specifically under CTI 87082900 (other parts and accessories of bodies of motor vehicle-other; as discussed above of the First Schedule of Customs Tariff Act, 1975.

Proceeds of crime - value thereof - property equivalent in value - provisional attachment u/s 5 of PMLA - ancestral or inherited property not immune from attachment - offence of money laundering not dependent on date of predicate offence - Word “value thereof” - HELD THAT:- This Court, in the case of PrakashIndustries Ltd. Vs. Directorate of Enforcement [2022 (7) TMI 877 - DELHI HIGH COURT], held that the properties which were acquired prior to enforcement of the Act, may not be completely immune from action under the Act. In Prakash Industries (supra), this Court reiterated the observations made in Deputy Director, Directorate of Enforcement of Delhi Vs. Axis Bank & Ors.[2019 (4) TMI 250 - DELHI HIGH COURT] that the expression “proceeds of crime” envisages both tainted property as well as untainted property with it being permissible to proceed against latter provided it is being attached as equivalent to the “value of any such property” or “property equivalent in value held within the country or abroad”, provided the actual tainted property cannot be traced or found. Thus, where the respondent is unable to discover the tainted property, it may proceed to attach even an untainted property equivalent in value.

The Adjudicating Authority, upon appreciation of evidence, recorded a finding that the property represents value equivalent to proceeds of crime generated from scheduled offences. The plea of the property being ancestral does not ipso facto grants immunity from attachment under the PMLA. The statute does not carve out an exception for ancestral or inherited properties, and thus, they are not immune from attachment. The argument that ancestral property cannot be attached unless purchased from illicit funds, is misconceived and contrary to the scheme of PMLA.

Hence, we find no perversity or illegality in the findings of the Adjudicating Authority. The Appellate Tribunal, while upholding the attachment, has exercised jurisdiction vested in it under the statute and the impugned order reflects due application of mind, adherence to statutory requirements and consideration of the material on record.

Thus, the present appeal is dismissed along with the pending application(s), if any.

Discharge under Section 227 CrPC - scope of Section 197 CrPC - continuing nature of offence under PMLA - definition of "proceeds of crime" - prima facie standard / grave suspicion test - Whether the impugned order rejecting the application preferred by the petitioners for their discharge from the offence alleged is legally sustainable. - HELD THAT:- Upon a cumulative reading of the record, it becomes abundantly clear that protection under Section 197 Cr.P.C. is neither automatic nor absolute. The decisive test is the “quality of the act” and its reasonable nexus with official duty. The Supreme Court in the case of Directorate of Enforcement vs. Bibhu Prasad Acharya, Etc. [2024 (11) TMI 296 - SUPREME COURT]has categorically clarified that the requirement of sanction is not to be mechanically invoked at the threshold, nor does its absence necessarily render proceedings void ab initio. The question may arise at any stage and is often dependent upon evidence.

The contention of the Petitioners regarding non-compliance of Section 197 Cr.P.C. does not, at this stage, demolish the prosecution case. The issue, if pressed, can very well be examined during trial in light of the evidence that may emerge.

The Court has further underscored the grave nature of economic offences, observing that such crimes undermine public confidence and disrupt financial integrity, and therefore discharge at a nascent stage should not be granted lightly in cases involving complex financial transactions. In view of these authoritative pronouncements, the Petitioners’ contention that the PMLA is inapplicable on temporal grounds cannot be accepted at the stage of discharge. In view of the above, the matter having been dealt with in a lucid manner as above, this Court finds that further reference to the decision in the matter of Niket Kansal vs. Union of India through Enforcement Directorate, Jammu [2025 (6) TMI 1183 - JAMMU AND KASHMIR AND LADAKH HIGH COURT] would only be an academical one.

Definition of "proceeds of crime" - HELD THAT:- The definition under Section 2(1)(u) is intentionally expansive. It includes not only direct tainted property but also transformed forms and equivalent value. The legislative design is to prevent laundering through layering, conversion, and camouflage. The existence of “proceeds of crime” is indeed a jurisdictional fact. However, its determination is evidentiary in character. Unless the materials on record clearly exclude any possible nexus between the property and the scheduled offence, the matter must proceed to trial. The presumption under the statute operates in favour of the prosecution at the threshold stage, subject to rebuttal by the accused during trial. Therefore, detailed evaluation of whether the properties are legitimately acquired or ancestral cannot be conclusively undertaken at the stage of Section 227 Cr.P.C.

Prima facie standard / grave suspicion test - HELD THAT:- The test is of “grave suspicion,” not proof beyond reasonable doubt. In the present case, the charge-sheet reflects material alleging disproportionate assets and their alleged projection/possession within the meaning of Section 3 of the PMLA. Whether such material ultimately results in conviction is a matter for trial. At this stage, it suffices that the materials disclose ingredients of the alleged offence.

There being material on record to constitute the offence alleged against the Petitioners, as reflected in the Charge Sheet, there is no necessity to further assess whether such material would be sufficient to sustain a conviction. The materials on record are sufficient to bring the matter to trial for adjudication as to whether the Petitioners have amassed property disproportionate to their known sources of income and whether the allegations and materials produced constitute proceeds of crime within the meaning and scope of the PMLA. These are matters to be determined during trial.

Accordingly, this Court finds that the learned Addl. Sessions Judge-cum-Special Judge, C.B.I.-I, Bhubaneswar in Crl. Misc. (PMLA) Case No.06 of 2015 order dated 02.09.2023 did not travel beyond the scope of the provision enumerated under Section 227 Cr.P.C., and the materials before it being sufficient to frame charge, rightly declined to entertain the prayer of the Petitioners. This Court finds no illegality or impropriety in the impugned order warranting interference.

As a result, the present CRLREV, being devoid of merit, stands dismissed.

Money-laundering as a continuing offence - application of PMLA to proceeds derived from prior scheduled offences - proceeds of crime used in construction amounting to offence of money-laundering - statutory presumption placing burden on accused in money laundering prosecutions - distinctness of offence under PMLA vis-a -vis predicate/scheduled offences (no double jeopardy) - concurrent running of sentences for distinct offences - retrospective and overriding effect of the PMLA - HELD THAT:- Before proceeding further, it may be necessary to understand the object of PMLA. The Prevention of Money-Laundering Act, 2002 was introduced, as its Statement of Objects and Reasons mentions, to make money laundering an offence, and to attach property involved in money laundering, so that this serious threat to the financial system of India is adequately dealt with.

Keeping in view the object behind PMLA and the scope of Section 3 of PMLA as explained by the Supreme Court in Vijay Madanlal Chaudary's case [2022 (7) TMI 1316 - SUPREME COURT (LB)] and on applying the same to the instant case, we are of the view that appellants were convicted for predicate offence under Section 3 and 4 of PMLA read with Section 13(2) and 13(1)(e) of PCA and Section 120B of IPC.

From the records, it is discernible that appellants were convicted for predicate offence under Section 3 and 4 of PMLA read with Section 13(2) and 13(1)(e) of PCA and Section 120B of IPC. The proceeds of such crime was used in construction of multi-storied building, which clearly establishes that the appellants were directly involved in possession, acquisition and use of the entire building thereby attracting the wrath of Section 3 of Prevention of Money Laundering Act punishable under Section 4 of the said Act.

We find that the Trial Court has in fact found that the prosecution has established and proved through oral and documentary evidence that accused have committed the offence u/s 3 of PML Act, punishable u/s 4 of PML Act, and therefore, the accused are found guilty of the offence under Section 4 of Prevention of Money Laundering Act, 2002 only on considering the above material on record. We agree with the findings of the Trial Court and are of the view that the impugned order does not warrant interference.

Condonation Of Delay -Non-payment of service tax - jurisdiction of Assistant Commissioner of CGST to issue the SCN and pass orders relating to service tax liability under the repealed Finance Act, 1994 - HELD THAT:- Delay condoned.

We do not find any error in the impugned order [2025 (6) TMI 446 - CESTAT NEW DELHI] passed by the Customs, Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi.

Consequently, the appeal is dismissed.

Eligibility of Cenvat credit - Input Service Distributor registration - procedural irregularity and substantial benefit - Rule 6(3) of the Cenvat Credit Rules, 2004 - treatment of exempted services and reversal of credit - extended period of limitation - penalty u/s 77 and 78 of the Act -

Eligibility of Cenvat credit - Input Service Distributor registration - HELD THAT:- Admittedly the zonal office was not registered as an input service distributor. However, while the cenvat credit availed on the input services are sought to be denied on this ground, equally it is pertinent to note that there is no dispute regarding the payment of the service tax in respect of which the credit has been availed nor is the eligibility of such services as input services being disputed.

In such circumstances, when it also remains an uncontroverted fact that both the zonal office and the appellant main branch are located in the same building, and administratively when the entire financial requirements of the said zonal office, was being borne by the appellant main branch with the zonal office stated to be having no separate financial transactions or books of accounts, in accordance with the well settled position in law that substantial benefit cannot be denied for technical or venial breaches, this Tribunal is of the firm opinion that the substantial benefit of cenvat credit cannot be denied for the procedural infraction of non-registration of the zonal office as ISD, all the more when the appellant was not taken up on its claim in its reply that they were in possession of the invoices raised by the respective service providers duly indicating their branch address and which had all the requisite details for availing cenvat credit in conformity with the provisions of the Cenvat Credit Rules, and the said claim remained uncontroverted.

Thus, the impugned order upholding the denial of cenvat credit on the ground of non-registration of the zonal office as ISD and for having passed on the credit, is wholly unsustainable.

Treatment of exempted services and reversal of credit - HELD THAT:- The exemption of a service from the charge of service tax under Section 66 of the Finance Act 1994, even though the rate of tax levied is specified as the stipulated percentage of the value of such taxable service, is inherently and materially distinct from the exclusion of an element from the gross amount charged by the service provider for such service under Section 67 that provides for valuation of taxable services; an aspect which clearly has escaped the notice of the Ld. Appellate Authority. In any event, as observed supra, the SCN apart from the allegation of availment of the notification 13/2004-ST ibid does not specify any other exempted services that the appellant is alleged to have provided. Given the above, as well as the fact that the allegation in the SCN regarding availment of the exemption itself has remained unsubstantiated, the question of invoking provisions of Rule 6 of the Cenvat Credit Rules, 2004 to demand the alleged wrongly availed credit amount is wholly unsustainable and the findings in the impugned order on this aspect also is untenable.

No evidence of any deliberate or positive act with an intent to evade payment of duty on the part of the Appellant, a public sector bank, no malafide is attributable to the Appellant and hence, the invoking of extended period is also unsustainable.

Detailing such distinctions would needlessly make this order voluminous but it is to be stated that these decisions would not in any manner persuade this Tribunal to conclude contrary to the findings stated above.

Thus, this Tribunal is of the considered view that the demands are unsustainable. Resultantly there does not arise any question of payment of interest or imposition of penalties. It is therefore held that the impugned order is liable to be set aside. Ordered accordingly.

Taxability of sale of space or time for advertisement on internet - extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 - benefit of cum-tax price u/s 67(2) of the Finance Act, 1994 - penalty u/s 77(1)(d) and 78 of the Finance Act, 1994 - bona fide belief and suppression of facts - reliance on third party data supplied by CBDT -HELD THAT:- It is evident that appellant was providing certain advertisement services through internet also known as Aerial advertising or selling space for advertisement on internet & sell I.T. goods on their website namely COUPONSCULTURE.COM, PINKNET.IN. Appellant was under a belief that their services fall under the negative list as per Section 66 D(g) of the Finance Act, 1994. As such they were in relation to sale of space for advertisement on internet for this reason they had not taken registration during the period of 2015-16 and have not paid the service tax. The said claim has been rejected by the Original Authority only by stating that appellant have provided only electronic copies of invoices and not actual invoices in support of their claim made. I express my ignorance in understanding what Adjudicating Authority intends to say by that? Electronic invoices are accepted invoice for all purposes and would not require even a signature on it if issued from secure server as per the Information Technology Act, 2000. I find that Adjudicating Authority has completely ignored the provisions of the said Act while making such an observation and for rejecting the claim of the appellant.

Also observe that when appellant had come seeking registration in the year 2016-17 in respect of similar/ same services provided they had disclosed the entire nature of their activities to the revenue authorities and it was incumbent upon the authorities to make further enquiries as required to assess the tax liability if any for the past period. Once appellant had disclosed the nature of his activities to the revenue authorities while seeking the registration and concerned authorities failed to make enquiries at that time, then I do not find any reason for making this demand by alleging suppression etc., for invoking the extended period of limitation as per proviso to Section 73 (1) for making this demand.

Having noted, appellant was entertained a bonafide belief that his services were falling under Negative List of services and was not required to pay any service tax. In view of the above bonafide belief he entertained the demand made by alleging suppression etc. to invoke extended period of limitation could not have been made.

Thus, demand made by invoking extended period cannot be upheld. Thus, do not find any merits in the impugned order and the same is set aside.

Appeal is allowed.

Applicability of Section 11B to service tax refund claims - Relevant date - date of payment of tax for computation of limitation - Subordinate legislation cannot override parent statute - Crystallisation of right to claim refund upon payment under Reverse Charge Mechanism - Procedural non-compliance - non mention of commission in shipping bill is venial/condonable -

Applicability of Section 11B to service tax refund claims - HELD THAT:- It is pertinent to note that the notification No.17/2009 dated 07.07.2009 which superseded the Notification No.41/2007-ST, has prescribed a time limit of one year. It appears therefore that the legislature has consciously taken steps to remedy the incongruity between the notification provisions and the statutory time limit prescribed under Section 11B.

The Ld. Counsel has rightly placed reliance on the decisions in JVS Export v Commissioner of GST & Central Excise,[2023 (7) TMI 207 - CESTAT CHENNAI] and Balakrishna Textiles Pvt Ltd v. CCE, [2022 (6) TMI 613 - CESTAT AHMEDABAD] in this regard. Therefore, this Tribunal has no hesitation to hold that the relevant date for calculation of the time limit would be the date on which the service tax was deposited and the time limit from such date within which the claim has to be filed would be one year as has been prescribed under Section 11B as made applicable to the Finance Act 1994 by virtue of Section 83 of the Finance Act ibid.

Procedural non compliance - non mention of commission in shipping bill is venial/condonable - HELD THAT:-The same has been settled in the Appellant’s favour as can be seen from the decision of a coordinate bench of this Tribunal in Faizan Shoes P Ltd v CST, Chennai [2012 (9) TMI 702 - CESTAT, CHENNAI] held that “6. As regards the non-mention of the commission amounts in the shipping bill, this is a mere procedural condition and the refund claims can be considered if there is documentary evidence regarding the amount of service tax paid on the actual amounts of commission disbursed.”

Indisputably, there is no finding rendered by the Ld. Appellate Authority or the Ld. Adjudicating Authority that the date of payment of service tax is different from that as contended by the Appellant. That the appellant has received the specified services and used the same for export of the goods is undisputed. That the appellant has actually paid the service tax on the services used in the export of the goods and had also not availed cenvat credit, too remain undisputed facts. Thereby it is evident that the appellant has satisfied the substantial conditions of para 1 of the Notification 41/2007-ST ibid. Therefore, this Tribunal concurs with the view expressed in the judicial decisions cited above and hereby holds that the non-mentioning of the commission amount in the shipping bills is only a venial technical breach that is condonable, when the other substantial conditions of the notification stood complied with.

Thus, this tribunal holds that the rejection of the refund claim preferred by the appellant is incorrect and resultantly the impugned order is untenable and liable to be set aside. Ordered accordingly.

Invocation of extended period of limitation under proviso to Section 73 - requirement of specific averment of fraud, collusion or wilful misstatement or suppression in the show cause notice - effect of payment of tax and interest before issuance of show cause notice u/s 73(3) - liability for interest and penalties where extended period is wrongly invoked - HELD THAT:- In the instant case, it is seen that the SCN issued does not allege that service tax has been intentionally evaded or that fraud or collusion has been noticed or that the appellant was guilty of wilful misstatement or suppression of fact with intent to evade payment of duty. Thus, it is evident that the Department without even arriving at an objective determination of existence of an intent to evade payment of duty has invoked the extended period of limitation.

Thus, the incontrovertible fact is that the appellant had remitted the entire tax dues along with interest before even the issuance of show cause notice. The Revenue has not brought anything on record to evidence that the plausible explanation of the appellant was found to be incorrect or ought to be disbelieved. It is evident that instead of giving a quietus to the issue as specified in Section 73(3) of the Finance Act, 1994, needlessly the SCN has invoked the extended period of limitation sans any evidence of ingredients necessary to invoke the same as is required under section 73(4), thereby leading to this pending litigation over a decade.

This Tribunal is of the firm opinion that the Ld. Adjudicating Authority has erred in passing an unsustainable order and the demand invoking the extended period of limitation and the attendant demand of interest and penalties imposed are wholly untenable.

Resultantly, this Tribunal is of the considered view that the Ld. Appellate Authority has further egregiously erred in upholding the same and therefore the impugned order is wholly untenable and merits to be set aside. Ordered accordingly.

Retrospective exemption - reinsurance service under the Weather Based Crop Insurance Scheme and Modified National Agricultural Insurance Scheme - applicability of exemption notification to reinsurance - proviso to Section 73(1) of the Finance Act, 1994 (extended period for recovery) - refund of service tax in consequence of retrospective exemption -

Eligibility for the said exemption on "reinsurance service" - HELD THAT:- The issue had been raised before the Government, pursuant to which the Finance Act, 2025, under Section 135, incorporated specific provisions granting exemption to such services for the period from 01.04.2011 to 30.06.2017 (both days inclusive). By virtue of this statutory provisions, which received the assent of the Hon'ble President on 29.03.2025, the Appellants are entitled to the said exemption, as the period under dispute, i.e., 2014-15 to 2016-17, squarely falls within the exempted period.

Reinsurance services - HELD THAT:- Levy of Service Tax on reinsurance services provided by the appellant to Agricultural Insurance Corporation of India (AICIL) under Weather Based Crop Insurance or Modified National Agricultural Insurance Scheme becomes untenable due to retrospective exemption provided by Section 135 of the Finance Act, 2025. So, the impugned Order-in-Original No. 96/2018 CH.N.GST(Commr.) dated 08.10.2018 is liable to be set aside.

Appeal is allowed.

Proceeds of crime used in construction amounting to offence of money-laundering - Whether in the absence of applicability of demanded rate, even the standard rate of rebate cannot be given to the appellant under Notification No/. 41/2012-ST dated 29.06.2012. - HELD THAT:- Appellant relies on the decision in the matter of Nirma Limited Vs. C.C.E & S.T [2024 (1) TMI 181 - CESTAT AHMEDABAD], in which under the same circumstances, remanded back the matter for reconsideration. The Court was of the view that that in the absence of actual rebate not being available in the claim to standard rate was still required to be considered.

Even in this matter the issue is remanded back to the adjudicating authority to consider statutory requirements under law to the extent and consider admissibility afresh of rebate.

Appeal allowed by way of remand.

Cargo Handling Service - shifting and transportation within factory premises - composite service and essential character - reverse charge mechanism - Goods Transportation Agency services by road - HELD THAT:- We hold that the shifting of materials from one place to another place within the factory premises, does not fall under the category of “Cargo Handling Service”. Accordingly, on the said activity, no service tax is payable by the appellant under the category of “Cargo Handling Service”.

Further, the service recipient has already paid the service tax under the category of “Goods Agency Service” under reverse charge mechanism, therefore, no service tax is sustainable against the appellant. Accordingly, we set aside the impugned order and allow the appeal with consequential relief, if any.

Refund claim of Cenvat Credit filed under Rule 5 of Cenvat Credit Rules 2004 - Receipt in convertible foreign exchange - deemed repatriation of realized foreign exchange - Rule 3(2)(b) of the Export of Service Rules, 2005 - Foreign Inward Remittance Certificate (FIRC) as evidentiary proof - realization through authorised banking channels / Vostro account - HELD THAT:- Appellant explained as to receipt of export proceeds and foreign exchange. He has drawn attention to the ratio of the decisions rendered in the cases of Sun Area Real Estate Pvt. Ltd. Vs. CST [2015 (5) TMI 885 - CESTAT MUMBAI] and Mutsubishi Heavy Industries India Pvt. Ltd. Vs. CCE [2017 (9) TMI 358 - CESTAT NEW DELHI]

The issue at hand regarding the rejection of refund claim of Cenvat Credit filed under Rule 5 of Cenvat Credit Rules 2004, availed on the input services used for export stands contrary to the orders of Tribunals in various cases mentioned.

We find that from the above orders of the tribunals one of which being Sun Real Estate Pvt Ltd Vs. Commissioner of Service Tax Mumbai-I [2015 (5) TMI 885 - CESTAT MUMBAI] Tribunal observed: “When a person receives in India payment in rupees from the account of a bank situated in any country outside India maintained with an authorised dealer, the payment in rupees shall be deemed to have repatriated the realized foreign exchange to India. In the present case, the payment in Indian rupees was received from foreign country through Deutsche Bank. Therefore, the said Indian rupee is nothing but foreign exchange repatriated from foreign country to India. Therefore, such payment in rupees is equal to the foreign exchange."

Respectfully following the Tribunal’s ruling, which has also been followed in other rulings, hold that the appellant has satisfied the condition prescribed under Rule 3(2)(b) of Export of Service Rules, 2005 and accordingly the impugned orders contrary to the same are set aside with consequential reliefs, if any, as per the law.

Exclusion of value of goods separately invoiced from taxable service value - single composite service versus separate supply of goods and services - works contract service - abatement under the Service Tax (Determination of Value) Rules, 2006 - incorporation of goods in execution of works contract and transfer of property - service tax demand and classification of service - HELD THAT:- We find that in an identical situation, the Co-ordinate Bench of the Tribunal in the case of Infinium Motors Guj. Pvt. Ltd. vs. Commissioner of Service Tax, Ahmedabad [2022 (11) TMI 948 - CESTAT AHMEDABAD]] has held that when price breakup is available in the invoices, the entire price cannot be considered towards provision of the taxable service and the value of material supplied for execution of the assigned task, should be excluded from the total price for the purpose of payment of service tax.

Thus, we are of the considered opinion that the cost of spare parts supplied for execution of assigned tasks on repair and maintenance and after-sales services should not form part of the value of taxable service, for the purpose of payment of service tax thereon.

It is an admitted fact on record that for paining the body of the vehicle, the appellant had purchased paints on payment of VAT and also used their own work force for carrying out the job of painting. Since paints are used for carrying out the service of painting of vehicle, such service should appropriately be classifiable as ‘works contract service’ and the benefit of abatement provided under the Rules of 2006 should be available to the appellant.

Since the original authority had changed the classification to hold that such painting services are only related to repair and reconditioning, we are of the view that such finding recorded in the impugned order cannot be sustained inasmuch as for providing the repair and reconditioning service, paints were used by the appellant, which were purchased by them on payment of appropriate VAT/sales tax.

Therefore, the impugned order denying the benefit of abatement provided under the Rules of 2006, in our considered view, is not legal and proper. We find that in the context of usage of ink in the process of printing of lottery tickets and its taxability under Section 3F(1)(b) of the Uttar Pradesh Sales Tax Act, 1948, was the subject matter of dispute in the case of Aristo Printers Pvt. Ltd. vs. Commissioner of Trade Tax, Lucknow [2025 (10) TMI 387 - SUPREME COURT]

Thus, we are of the view that the adjudged demands confirmed by the original authority in the impugned order cannot be sustained. Therefore, the impugned order is set aside and the appeal is allowed in favour of the appellant.

Works contract service - maintenance and repair service - Composition Scheme (Works Contract Composition Scheme) - option to avail composition scheme - substantial benefit cannot be denied for procedural irregularity - verification of payment - appropriation of payment - penalty u/s 77 and 78 -

Demand under the category of ‘works contract service’- HELD THAT:- We take note of the fact that the appellant has already discharged Service Tax at the rate of 4% for the period from October, 2007 to November, 2008 and at the rate of 2% for March, 2008 under the said scheme. Thus, we do not find any short payment of Service by the appellant on this count. Accordingly, we hold that the appellant has rightly discharged their Service Tax liability in respect of the works contract services rendered under the Composition Scheme during the said period. Thus, we do not find any reason to sustain the demand confirmed in the impugned order on this score. Hence, the said demand is set aside.

Verification of payment - appropriation of payment - HELD THAT:- There shall be no short payment of Service Tax for the period 2011-12 on the part of the appellant, subject to verification of the above claim of additional payment by the appellant. The appellant is directed to produce evidence to substantiate their above claim before the adjudicating authority. Upon verification, if it is found that the said amount has already been paid by the assessee, then the same shall be appropriated towards their tax liability for the period 2011-12 and no further demand can be raised against the appellant on this count.

Maintenance and repair service - HELD THAT:- There is no short payment of Service Tax under the category of ‘maintenance and repair service’ for the period 2007-08. However, the appellant has failed to produce any evidence in support of their above claim. Considering the above, we hold that the appellant has rightly paid Service Tax in respect of ‘maintenance and repair services’ for the period 2007-08 and no short payment of Service Tax can be alleged in this regard, subject to verification of payment of Service Tax on Rs.3,55,671/- as claimed by the appellant.

Imposition of penalty under Section 78 of the Finance Act, 1994 - HELD THAT:- We note that appellant has already paid a substantial amount of Service Tax towards their tax liability, along with interest, for the period under dispute. Further, as already observed in the preceding paragraphs of this Order, the demand raised under the category of ‘works contract service’ for the period 2007-08 does not survive. Therefore, taking a lenient view, we set aside the penalty imposed on the appellant under Section 78 ibid. However, considering the fact that the appellant failed to take registration during 2007-08 and/or submit their ST-3 Returns, we do not interfere with the penalty imposed under Section 77 of the Act.

Appeal is allowed on the above terms.

Consideration received for providing service - business auxiliary service - show cause notice must specify sub-clause of definition - reimbursement of expenses not part of taxable value (pre 14 May 2015) - extended period of limitation - requirement of suppression with intent to evade - assessments based on assumptions and presumptions without verification -

Demand of Service Tax on Target Incentives - HELD THAT:- We find that the appellant has received commission from the foreign airlines on air freight and also got performance incentives from the airlines by way of extra benefits when the appellant achieves the business target set by the airlines. It has been submitted by the appellant that this performance incentive is being given by all the foreign airlines to their agents over and above the 5% commission being paid in the normal course of business when the agent achieves the business target in a particular period. Thus, we are of the view that the said commission cannot be said to be a consideration received on account of rendering any ‘service’.

Thus, we hold that the demand of Service Tax on the Target Incentives received by the appellant, as confirmed in the impugned order, is not sustainable. Accordingly, we set aside the same.

Demand on account of freight brokerage - HELD THAT:- We observe that the appellant did not receive any commission from the exporters in this regard, except for negotiating on the rate of the freight with the shipping lines; that the appellant does not involve themselves in any other activities.

In the argument raised by the appellant that the impugned Show Cause Notice has neither specified the nature of taxable service nor the category of taxable service under which such receipt is proposed to be taxed. The Ld. adjudicating authority, in the impugned order, has classified the said activity under the clause (vii) of Section 65(19) of the said Act as ‘business auxiliary service’.

Therefore, we are of the view that the amount of commission / brokerage received by the appellant on such freight is not liable to Service Tax under the category of ‘business auxiliary service’, as the said activity cannot be classified under the clause (vii) of Section 65(19) of the said Act as ‘business auxiliary service’.

It is also pertinent to refer to the decision in the matter of M/s. Yes Yem Enterprises Pvt. Ltd. [2024 (4) TMI 964 - CESTAT CHENNAI] wherein the issue of taxability of freight brokerage has been analysed by the Tribunal.

Thus, we hold that the demand raised in respect of the freight brokerage received by the appellant cannot be sustained.

Reimbursement of expenses not part of taxable value - HELD THAT:- Admittedly, the appellant gets such amounts reimbursed after making the payments in advance. The agency commission received by the appellant is the actual consideration towards provision of the CHA service, for which the appellant has already paid Service Tax. Therefore, the issue involved in this case is related to the reimbursement of expenses which have been incurred by the appellant for its clients.

As per the Instructions referred, a CHA is permitted to avail abatement of 85% of the lump sum amount towards reimbursement of expenses only. Therefore, we agree with the stand taken by the appellant that during the impugned period, the appellant was liable to pay Service Tax on the taxable value at the rate of 15% of the lump sum amount, which the appellant has already paid.

We also find that the demand to the extent of the remaining 85% of the amount has been made by relying on the Instruction No. B1/4/2006 – TRU, dated 19.04.2006.

Thus, we hold that the demand confirmed on this count is not sustainable. The same is thus set aside.

Demand on ‘labour charges’ - HELD THAT:- The entire demand has been raised only on the basis of the assumption that the appellant had raised 502 bills every year and the labour charges raised on each bill were Rs. 500/-. However, apart from such assumptions, no verification has been conducted by the Revenue to ascertain as to whether any taxable service has actually been rendered by the appellant in this regard or not.

We take note of the fact that the appellant has quantified their Service Tax liability on the basis of actual invoices for the labour charges raised, which amounts to Rs.43,538/-, which the appellant stated to have already paid, along with interest of Rs. 22,901/- on 24.08.2011.

Thus, in the absence of any verification in respect of the actual nature service rendered, we are of the view that the demand confirmed on the basis of mere assumptions is not sustainable in law. Consequently, the demand raised against the appellant on this score is set aside.

Limitation - HELD THAT:- It is a fact that the entire demand has been raised on the basis of the information obtained from the ST-3 Returns, Balance Sheet and Profit & Loss Account of the appellant. Thus, it is evident that there is no suppression of fact with intent to evade payment of Service Tax on the part of the appellant existing in this case. Accordingly, we are of the view that the conditions precedent for invoking the extended period of limitation have not been satisfied and therefore, we hold that the demand confirmed in the impugned order by invoking the extended period of limitation is not sustainable.

As the demand of Service Tax against the appellant itself does not survive, the question of demanding interest or imposing penalty thereon does not arise. Accordingly, the said demands are also set aside.

Invocation of the proviso to Section 73(1) of the Finance Act, 1994 - extended period of limitation - time-barred show cause notice - suppression of facts and deliberate omission - requirement of positive act to invoke extended limitation - shifting of burden of proof once department produces material - HELD THAT:- It is a fact on record that appellant was registered with the department and was paying service tax due which was self assessed and duly indicated in the ST-3 return filed by them. Just because certain information has been received from the Income Tax Department cannot be a ground for invoking the extended period of limitation as has been held in the impugned order for invoking extended period need to be established something i.e. act of suppression etc. Revenue authorities have failed to bring out any positive evidence with regard to act of suppression for invoking extended period of limitation.

In the present case, it seems that impugned order proceeds with pre-determined mind that there is suppression and just finds the reason to say so. The approach should have been condemnable. This has been view of Hon’ble Supreme Court in the case of M/s Stemcyte India Therapeutics Pvt. Ltd [2025 (7) TMI 1007 - SUPREME COURT]

Thus, the entire demand made by invoking extended period of limitation is barred and cannot be upheld. Accordingly, impugned order lacks merit.

Appeal is allowed.

Refund of unutilised CENVAT credit under Rule 5 - definition of input services and "used in or in relation to" - nexus between input services and exported services - Rule 14 recovery procedure vis-a -vis refund under Rule 5 - relevant date and limitation for refund u/s 11B - acceptance of FIRC or certified bank statement as proof of receipt of foreign exchange - procedural defects in invoices/debit notes not ipso facto fatal to refund claim - HELD THAT:- As per Rule 14, it clearly mandates that in case of irregular availment of credit or its utilization, such credit can be recovered from the assessee and for effecting the recoveries, provisions of Section 11A of the Central Excise Act, 1944/Section 73 of the Finance Act, 1944 shall apply and not while considering the refund claim under Rule 5 of the proceedings. The issue is squarely covered by the Tribunal in the matter of Qualcomm India Pvt Ltd Vs. Commr. of Cus. [2019 (8) TMI 1645 - CESTAT HYDERABAD].

As regarding rejection of refund claim alleging non submission of invoice, we find that on perusal of the debit note submitted by the appellant, and details being available in the invoices refund cannot be rejected on such procedural issues.

As regarding the finding limitation we find that no such contention made by the adjudication authority or in the show cause notice, further as per the finding in the impugned order it is specifically stated that refund claim was submitted on 30.11.2009 for the period for April 2009 to September 2009 and adjudication authority specifically held that the claim is filed within the time limit in terms of the section 11B of the Central Excise Act, 1944 made applicable to service tax under Section 83 of the Finance Act, 1944.

As regarding the finding related to improper of address in some documents, the issue was considered by this Tribunal in the matter of M/s Nexus Engineers vs CCE & GST, Lucknow [2024 (2) TMI 562 - CESTAT ALLAHABAD], where the refund was denied on the ground that the invoices against which the Appellant taken the credit was not addressed to the registered premises of the Appellant and it was held that the issue is no more res integra as it was decided that for claiming the benefit of inputs services it is not necessary that the invoices being addressed to the registered premises of the Appellant.

Thus, the appellant is eligible for the refund as claimed by them, however, it is necessary to prove that the refund claimed by the appellant on the input services are utilized in the output services which are being exported for which foreign inward remittances are received.

We, therefore, find that the matter needs to be remanded to verify the same.

It is also to be noted that vide letter dated 12.03.2009 the Board has clarified that in cases were bank do not issue FIRCs, refund may be allowed on the basis of duly certified bank statement. Accordingly, the bank statements in lieu of FIRCs can also be accepted for the purpose of sanctioning the refund claims.

Appeal is allowed by way of remand only for the limited purpose of verifying the FIRCs.

Business auxiliary service - production or processing of goods for, or on behalf of, the client - job work - two party transaction versus service on behalf of client (three party test) - Notification No. 8/2005 - exemption for production or processing using raw materials or semi finished goods supplied by the client - service tax not leviable where activity amounts to manufacture within Central Excise law - penalty consequent on setting aside of confirmed demand - HELD THAT:- We find that the said issue came up before this Tribunal in the case of Ferro Scrap Nigam Limited. [2021 (1) TMI 711 - CESTAT KOLKATA]

Relying on the above decision this Bench, in the appellant’s on case has allowed the appeal vide Final order No. 76648/2023 dated 11.09.2023 [2023 (9) TMI 808 - CESTAT KOLKATA].

Therefore, following the ratio of the above decisions, we set aside the impugned order and allow the Appeal filed by the appellant company.

As the confirmed demand against the appellant company has been set aside the penalty imposed on the second appellant (General Manager of the Company) also does not survive. We set aside the penalty imposed on him and allow his Appeal.

This the Appeals stand allowed.

Entitlement to interest on delayed refund of excise duty - interest on delayed refund u/s 11BB of the Central Excise Act, 1944 - commencement of interest liability w.e.f. three months from 26.05.1995 - rate of interest as notified by the Government prevailing during the period in question - HELD THAT:- It is evident that petitioner deposited Central Excise Duty under protest. The Adjudicating Authority confirmed the demand and petitioner preferred appeals which came to allowed by Commissioner (Appeals). The petitioner filed multiple applications seeking refund.

From petitioner’s letter dated 11.02.1999, it is evident beyond the pale of doubt that refund was sought by letters dated 17.07.1989, 07.08.1989, 05.09.1989, 20.10.1989, 14.02.1990, 19.07.1990 and 06.09.1990. The respondent never disputed receipt of aforesaid letters and vide letter dated 18.03.1999 directed the petitioner to file application in prescribed proforma and submit show cause notices, orders in original, T.R. 6 Challans evidencing payment of duty etc. The petitioner in its letter dated 18.04.1999 specifically clarified that refund application was filed in prescribed proforma. It appears that respondents did not refund deposited amount because it was pursuing its remedies before Tribunal by way of appeal followed by reference application. This fact is evident from respondent’s letter dated 26.04.1999.

The petitioner was entitled to interest after the expiry of three months from the date of introduction of Finance Bill, 1995. Section 11BB of 1944 Act came into force w.e.f. 26.05.1995. The petitioner was entitled to interest on the expiry of three months from 26.05.1995. The minimum and maximum limit of rate of interest has been prescribed under Section 11BB, however, actual rate is notified by Government by way of notification. The petitioner is entitled to interest at the rate as notified by Government and prevailing during the period in question.

Thus, we are of the considered opinion that the instant petition deserves to be allowed and accordingly allowed. The respondents are hereby directed to pay interest to petitioner on the aforesaid amount at the applicable rate from the date as noticed hereinabove.

Pending application(s), if any, stands disposed of.

Evidentiary value of third-party bank records - requirement of independent corroboration for diary and loose-sheet entries - proof of clandestine removal - inadequacy of investigation as fatal to enforcement case - setting aside penalty where foundational charge is not proved - HELD THAT:- The learned counsel points out that a catena of decisions were considered and evidence appreciated which is similar in their case also as the books of accounts i.e. cash transactions were involved and the case was based upon the same. That appellant was also part of the same search as was done against 186 tile manufacturers of Morbi District by the Central Excise Officers of DGCEI. Being part of the same investigation, the facts and evidences is strikingly similar and the decision cited above deserves to be followed. This court has gone through the decision of Famous Ceramics Industries & Others vs CCE & ST-Rajkot [2025 (11) TMI 1541 - CESTAT AHMEDABAD] striking similarities in the evidence which was appreciated in that bunch and also, in this case. This court is therefore, of the view that the evidence as has been pointed out in para 8.2 of that case, para 8.3 and 8.4 is also either lacking or is part of the evidentiary edifice, which has been demolished in that Case.

Thus, the orders in this case are also liable to be set aside. Penalty imposed is also set aside. Appeals are allowed.

Reprocessing within factory - repacking as part of manufacture to make goods marketable - removal from DSA without payment of duty - marketability test for levy of excise duty - exemption under Notification No. 67/95-CE - remission under Rule 21 of the Central Excise Rules, 2002 - invoice requirement and duty payment on removal from factory - Board Circular No. 22/71-CX.6 dated 30-10-1971 - requirement of proper accounting/entries in RG-1/DSA records - HELD THAT:- We find that the dispute in the present appeal relates to the goods taken out of DSA for the purpose of re-packing, which has been considered by the Revenue as marketable goods for the purpose of levy of central excise duty.

Admittedly, the ld. adjudicating authority accepted the appellant’s explanation in respect of part of the goods, namely, the defective/slow/non-moving goods taken out of DSA for re-pulping/re-processing and manufacture afresh and held that such paper was not marketable. However, the explanation offered by the appellant in respect of paper taken out of DSA for the purpose of re-packing was not accepted by the authorities below on the ground that packed paper was marketable goods and not entitled to the same treatment. The case of the appellant is that they had taken the goods out of DSA for repacking, for reasons such as customised packing desired by the customer or rectification of the packing which wrongly mentioned the name of a party other than the actual buyer and till the goods were packed in a manner acceptable to the customers, they cannot be regarded as marketable; that although the Department was fully aware of all the facts and the practice followed by the appellant in relation to such reprocessing/repacking/rectification, no objections were raised as to the same.

We find that the very same issue has been examined by this Tribunal in the appellant’s own case in ITC Ltd. v. Commissioner of C.Ex., Kolkata-IV [2025 (11) TMI 1877 - CESTAT KOLKATA].

The decision cited supra is squarely applicable to the present case. Accordingly, by following the above decision, we hold that the impugned demand, along with interest and penalty thereon, confirmed against the appellant vide the impugned order, is not sustainable in the eyes of law and therefore, the same is set aside.

Substantive right to CENVAT credit - non-retrospective operation of procedural amendments - proviso to Rule 4(7) - six-month limitation on availment of credit - amendment extending time-limit to one year - saving of accrued rights u/s 38A - consequences of admissibility of credit on recovery, interest and penalty -

Applicability of six-month limitation to pre-01.09.2014 invoices - HELD THAT:- The legal position is well settled that the right to avail CENVAT credit is a substantive right under the CENVAT scheme which accrues to the assessee when the inputs/input services are received and duty or service tax thereon is paid, subject only to fulfillment of the conditions prescribed under the statute. Once such a right accrues, it cannot be taken away or curtailed by a subsequent procedural amendment unless the amending provision is expressly retrospective or contains a clear legislative intent to that effect. The proviso to Rule 4(7), as inserted w.e.f. 01.09.2014, does not contain any language indicating retrospective application.

The proviso to Rule 4(7), as introduced w.e.f. 01.09.2014, merely regulates the timing of availment of credit prospectively and does not extinguish or impair the right that had already accrued prior to its insertion. In the absence of any express language conferring retrospective operation, the proviso cannot be construed so as to divest the appellant of a vested right that had crystallised when no limitation existed.

Thus, we hold that the six-month limitation prescribed under the proviso to Rule 4(7) of the CENVAT Credit Rules, 2004, inserted w.e.f. 01.09.2014, cannot be applied to invoices/bills of entry issued prior to that date, as such application would amount to impermissible retrospective curtailment of an accrued right. Accordingly, denial of credit on this ground is legally unsustainable.

Effect of amendment extending the time limit to one year - HELD THAT:- It is an admitted position on record that the impugned CENVAT credit was availed by the appellant within one year from the date of issue of all the four invoices/bills of entry. Therefore, even assuming without admitting that the limitation provision introduced in 2014 was applicable, the availment of credit would still fall within the enlarged time limit prescribed under the amended proviso effective from 01.03.2015.

Section 38A of the Central Excise Act, 1944, which saves accrued rights upon amendment or repeal of rules or notifications, squarely applies to the present case. The amendment dated 01.03.2015 does not express any intention to nullify credits availed within one year merely because a shorter period earlier existed. On the contrary, it enlarges the permissible time window, thereby validating credits taken within one year from the date of invoice.

Thus, we hold that the amendment to Rule 4(7) vide Notification No. 6/2015-CE (NT) extending the time limit to one year ensures to the benefit of the appellant, and the CENVAT credit availed within one year from the date of issue of the invoices/bills of entry is legally admissible.

Sustainability of interest and penalty - HELD THAT:- Once the CENVAT credit itself is held to be admissible, the very foundation for recovery under Rule 14 of the CENVAT Credit Rules, 2004 disappears. Consequently, the demand for interest and imposition of penalty under Rule 15(1) are also unsustainable and liable to be set aside.

Admissibility of CENVAT credit - interpretation of Rule 2(l) of the CENVAT Credit Rules, 2004 - exclusion of travel-related services - commissioning and installation as part of composite supply - rent-a-cab services not qualifying as input service - business travel nexus for air travel/tour expenses - Rule 6 proportionate reversal for common services - remand for limited factual verification - interest and penalty consequential on fresh adjudication -

Admissibility of CENVAT Credit on Commissioning and Installation Services - HELD THAT:- We note that Rule 2(l), even after amendment, continues to cover all services used directly or indirectly in or in relation to manufacture and business operations, unless specifically excluded. Commissioning and installation services are not expressly mentioned in the exclusion clause.

In the present appeal, however, the relevant purchase orders, customer contracts and documents showing whether installation charges formed part of the composite contract value have not been produced. In the absence of such material, we are unable to conclusively determine whether the services were intrinsically linked to manufacture and clearance or were independent post-removal activities beyond Rule 2(l).

Though the legal position stands settled in favour of the Appellant, factual verification of the contracts and related documents is necessary. Accordingly, this issue is remanded to the adjudicating authority for the limited purpose of examining the relevant contracts/purchase orders and then to decide about admissibility of credit after due opportunity to the Appellant, in accordance with law duly considering the above precedents.

Admissibility of CENVAT Credit on Air Travel, Rent-a-Cab and Tour Expenses - HELD THAT:- We note at the outset that the amended Rule 2(l) introduced specific exclusions, and clause (B) expressly excludes certain travel-related services, including rent-a-cab, when such services are primarily for personal use or consumption of employees. Thus, post-amendment, credit on such services has to be tested strictly within the exclusion framework.

Insofar as rent-a-cab services are concerned, we find that the legal position after 01.04.2011 stands settled against the assessee. The Hon’ble Supreme Court in Solar Industries India Ltd. [2022 (9) TMI 1155 - SC ORDER] has categorically held that transportation of employees through rent-a-cab service has no direct nexus with manufacture of final products and cannot qualify as “input service” under Rule 2(l). In view of the statutory exclusion and the authoritative pronouncement of the Hon’ble Supreme Court, we hold that CENVAT credit on rent-a-cab services is not admissible for the period in dispute.

As regards air travel and tour expenses, we note that the exclusion clause introduced from 01.04.2011 is confined to “travel benefits extended to employees on vacation such as Leave Travel Concession/Home Travel Concession” and does not automatically cover business travel undertaken for sales, customer coordination, supervision of installation or business operations.

Nevertheless, since the records in the present appeals do not contain adequate documentary evidence to conclusively verify whether the air travel/tour expenses were incurred wholly for business purposes, issue requires factual verification. Accordingly, while rent-a-cab credit is to be rejected outright, the matter relating to air travel/tour expenses is remanded to the adjudicating authority only for the limited purpose of verifying business nexus and allowing credit in accordance with law and the binding precedent in Godrej & Boyce [2016 (9) TMI 538 - CESTAT CHENNAI]

Purchases Sub-contract, Loading/Unloading and Manpower Hiring Services (Common Services vis-à-vis Trading) - In the present case, while the Revenue has not established that the impugned services were used exclusively for trading, the extent of common usage and proportionate reversal, if any, has also not been quantified in the impugned orders. Therefore, the matter requires re-computation strictly in terms of Rule 6, limited only to quantification of proportionate reversal attributable to exempt trading activity, without denying the entire credit. Accordingly, this issue is remanded to the adjudicating authority solely for the purpose of quantifying such proportionate credit reversal, if required, in accordance with the law.

Interest and Penalty - Since the substantive issues are being remanded for verification and quantification, the question of interest and penalty cannot be sustained at this stage. Accordingly, interest and penalty, if any, shall be re-determined only after the adjudicating authority passes a fresh order pursuant to the remand proceedings in accordance with law.

Manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 - valuation u/s 4 read with Rule 10A of the Central Excise Valuation Rules, 2000 (job work valuation) - extended period of limitation u/s 11A(4) - suppression of facts with intent to evade duty - penalty u/s 11AC - tariff/classification shift as indicium of commercial identity -

Whether the Activity Undertaken by the Appellant Amounts to Manufacture - HELD THAT:- In the present case, we find that the adjudicating authority, in paragraphs 7 to 7.3 of the Orderin-Original, has recorded detailed and cogent findings. It stands established that colour-coated steel sheets in coil form were supplied to the Appellant, received directly at its factory, and subjected to a series of processes including decoiling, roll-forming/profiling, crimping and cutting, after which the goods were cleared as profiled roofing sheets on payment of agreed job charges. These facts are not in dispute. Manufacture is not confined to a single act but is the cumulative effect of a series of operations leading to the emergence of the final product.

It is also settled that the test of manufacture does not require the input product to become unusable for its original purpose; what is required is acquisition of a distinct commercial identity. In the present case, profiled roofing sheets are marketed, priced and demanded as a separate class of goods in the construction industry.

Thus, we hold that the activity undertaken by the Appellant results in a substantial and irreversible transformation of flat steel sheets into profiled roofing sheets possessing enhanced structural strength, functional utility and a distinct commercial identity.

Applying the ratio of the Hon’ble Punjab & Haryana High Court in Hansa Metallics Ltd. v. Union of India [2001 (2) TMI 138 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH] which was carried in appeal and affirmed by the Hon’ble Supreme Court as reported [2003 (1) TMI 770 - SC ORDER] and the consistent line of Tribunal decisions following the said ratio, and having distinguished the judgments relied upon by the Appellant on facts, we unhesitatingly hold that the impugned activity amounts to “manufacture” within the meaning of Section 2(f) of the Central Excise Act, 1944.

Applicability of Valuation under Section 4 of the Central Excise Act, 1944 read with Rule 10A of the Central Excise Valuation Rules, 2000 - HELD THAT:- The principle that excise duty must attach to the full intrinsic value of goods manufactured on job-work basis is firmly settled by the Hon’ble Supreme Court in Ujagar Prints v. Union of India [1989 (1) TMI 124 - SUPREME COURT] wherein it was held that assessable value must include the value of raw materials supplied by the customer in addition to job charges. Rule 10A merely codifies this principle and provides a clear statutory mechanism for valuation.

We note that the Appellant’s plea that valuation should be confined only to job charges is therefore contrary to both statutory provisions and settled law. Acceptance of such a plea would defeat the very object of Rule 10A and lead to systematic undervaluation of excisable goods manufactured on job-work basis. The Department has rightly adopted the value at which the goods were sold by the traders to independent buyers, which represents the true assessable value under Section 4 read with Rule 10A.

Thus, we hold that once manufacture is established, valuation of the goods cleared by the Appellant on job-work basis is correctly governed by Section 4 of the Central Excise Act, 1944 read with Rule 10A of the Central Excise Valuation Rules, 2000. The valuation methodology adopted by the Department, based on the sale price of the goods by the suppliers in the open market, is legally sound and sustainable in principle.

Whether the Extended Period of Limitation under Section 11A(4) of the Central Excise Act, 1944 is Invokable - HELD THAT:- We find that invocation of the extended period under Section 11A(4) and imposition of penalty under Section 11AC are fully justified on the peculiar and admitted facts of the present case. The Appellant was admittedly manufacturing identical profiled roofing sheets on its own account and clearing the same on payment of Central Excise duty, while simultaneously undertaking the very same manufacturing activity on job-work basis for traders, but discharging duty only on job-charges. This dual mode of operation clearly establishes that the Appellant was fully aware of the excisability of the product and the manufacturing nature of the process.

Having accepted duty liability on identical goods manufactured on its own account, the Appellant could not, with bona fide belief, treat the same activity as non-manufacture or undervalue the goods when undertaken for others. Non-disclosure of the full assessable value in respect of job-work clearances, coupled with payment of duty only on job-charges, amounts to suppression of material facts with intent to evade duty. The fact that such differential practice came to light only during audit further reinforces the element of deliberate noncompliance. In such circumstances, the extended period of limitation is squarely invokable, and once the ingredients of suppression and intent to evade are established, penalty under Section 11AC follows as a statutory consequence. Accordingly, both the invocation of extended period and imposition of penalty are upheld.

Thus, we hold that the Appellant suppressed material facts relating to valuation with intent to evade payment of duty. Accordingly, invocation of the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 is legally sustainable.

Limitation - HELD THAT:- The Tribunal in Premier Roofing and Building Systems Pvt. Ltd. [2024 (8) TMI 1328 - CESTAT CHENNAI] sustained invocation of the extended period under Section 11A(4), observing that payment of duty only on job charges, without proper disclosure of the true assessable value of the goods cleared, amounted to suppression of material facts, notwithstanding the filing of ER-1 returns. Consequentially, the Tribunal also upheld imposition of penalty under Section 11AC, holding that once suppression with intent to evade duty is established, penalty follows as a statutory consequence. The ratio laid down in Premier Roofing and Building Systems Pvt. Ltd. [2024 (8) TMI 1328 - CESTAT CHENNAI] fully supports the Department’s case on manufacture, valuation, limitation and penalty in the present appeal and lends further reinforcement to the conclusions arrived at hereinabove.

Whether Penalty under Section 11AC of the Central Excise Act, 1944 is Sustainable - HELD THAT:- In the present case, we have already recorded a clear finding that the Appellant suppressed material facts relating to valuation and adopted a valuation method contrary to law, resulting in short-payment of duty. The same facts and evidence which justify invocation of the extended period equally satisfy the statutory requirements for imposition of penalty under Section 11AC.

The Hon’ble Supreme Court in Union of India v. Rajasthan Spinning & Weaving Mills [2009 (5) TMI 15 - SUPREME COURT] has held that penalty under Section 11AC is not automatic for every demand but becomes mandatory once the conditions stipulated therein namely fraud, suppression or wilful misstatement with intent to evade are established. In the present case, these conditions stand clearly fulfilled.

Thus, we hold that the imposition of penalty under Section 11AC of the Central Excise Act, 1944 is fully justified and sustainable. The penalty imposed by the adjudicating authority, as upheld by the Commissioner (Appeals), calls for no interference.

Trading not an exempted service prior to 1-4-2011 - prospective effect of Explanation to rule 2(e) - applicability of rule 6 of CENVAT Credit Rules, 2004 - distribution of CENVAT credit by input service distributor - remand for ascertainment of enforceable recovery - HELD THAT:- On perusal of the order final order of Tribunal disposing off appeal excise appeal against order-in-original PIDILITE INDUSTRIES LTD [2024 (9) TMI 1874 - CESTAT MUMBAI] the legality of the order was decided in the context of framework of CENVAT Credit Rules, 2004 and precedent judicial decisions

In view of resolution of that dispute arising from identical circumstances, we deem it appropriate to set aside the impugned order and remand the dispute herein also to the original authority for fresh determination in accordance with the provisions of law and judicial decisions.

Appeals are allowed by way of remand.

Provisional assessment - interpretation of Rule 7(4) of the Central Excise Rules, 2002 regarding interest on provisional assessment - liability to pay interest on differential duty - effect of payment of differential duty prior to finalisation of assessment - binding precedent and application of settled ratio - HELD THAT:- We find that the issue is covered by the decision in M/s. CEAT Limited, held that; " 33 It is not the argument of the Revenue that what was paid by the Assessee as differential duty and prior to finalizing of the assessment, is not correct, accurate or proper computation of the liability. Having found that the final assessment resulted in nothing due and payable to the Government, we do not find any justification then to recover interest. If the interest was to be recovered and was indeed payable on the date on which the Assessee made payment of differential duty and prior to finalization of the assessment, then, the Rule would have specifically said so”

Also in Appellant’s own case as per Final Order No. 20022/2018 dated 04.01.2018 of this Tribunal in Appeal No. 20556/2017-SM, hence the appellant is not liable to pay interest as confirmed by the Adjudication / Appellate authority and the impugned order is liable to be set aside.

Accordingly, the impugned order is set aside, and the appeal is allowed with consequential relief, if any, in accordance with law.

SIM Cards are not goods but part of taxable service - Activation/processing charges include value of SIM Card - Dominant character of transaction determines taxability (service v. sale) - Whether the SIM Card which is showed by the petitioner establishment would be leviable to tax under the provisions of the VAT Act. - HELD THAT:- The said issue, no longer is res integra as it has been in very categorical terms held by the Hon’ble Supreme Court in the case of Idea Mobile Communication Ltd. v. Commissioner of Central Excise and Customs [2011 (8) TMI 3 - SUPREME COURT]

The aforesaid judgment clearly lays down the issue that the issuance of SIM Cards would therefore be not amenable to sales tax as it does not amount to sale of good but only amounts to providing services. The same view earlier was also reiterated by the Hon’ble Supreme Court in the case of Bharat Sanchar Nigam Limited v. State of Andhra Pradesh [2006 (3) TMI 1 - SUPREME COURT] which has been further followed by the Unified High Court of Andhra Pradesh (DB) [2011 (9) TMI 216 - ANDHRA PRADESH HIGH COURT] This Bench also had an occasion of taking up one similar writ petition i.e., W.P., which stood decided [2024 (1) TMI 1530 - TELANGANA HIGH COURT] wherein the aforesaid judgments were taken note of and in the light of the aforesaid judgments, we had allowed the writ petition holding that the allotment of SIM Cards to the subscribers would not attract sales tax under the VAT Act.

In view of the aforesaid legal precedents of the Hon’ble Supreme Court as also of this High Court, the facts in the instant case also being of similar nature, we do not find any good reason why the instant writ petition also should not be allowed in similar terms.

Accordingly, we allow the writ petition setting aside the impugned order holding that SIM Cards are not be leviable to tax under the provisions of the VAT Act.