CESTAT issues rulings on customs and service tax disputes

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has issued two significant rulings regarding tax classification and procedural requirements in India.

In Kolkata, the Tribunal dismissed appeals from the Commissioner of Customs concerning the reclassification of ice-making and ice-cream-making machinery imported by J. B. Pen Mart. The Customs Department had attempted to reclassify the goods and increase their assessed value, leading to a duty demand of over ₹12 lakh. The Tribunal ruled the Department's action unsustainable because it failed to issue a speaking order as required by Section 17(5) of the Customs Act, 1962. The Tribunal noted that the importer's payment of the additional duty under protest did not constitute a written acceptance of the reassessment.

In New Delhi, CESTAT struck down an extended period of limitation and a penalty under Section 78 of the Finance Act, 1994, in a case involving Mec Shot Blasting Equipment Private Limited. The dispute centered on service tax payments made for manpower recruitment services between 2012 and 2014. The Tribunal found that the extended limitation period was inapplicable because the company was entitled to avail CENVAT credit of the service tax paid under the Reverse Charge Mechanism, rendering the matter revenue neutral.