Service Tax Appeal NO. 50539 OF 2022 (M/s Mitsui Prime Advanced Composites India Pvt Ltd Vs. CCE Jaipur)
Table of Contents
CESTAT New Delhi Principal Bench, in Final Order No. 50085/2026 dated January 20, 2026, allowed the appeal of Ms Mitsui Prime Advanced Composites India Pvt Ltd (Neemrana, Rajasthan) against service tax on ocean freight under reverse charge in CIF imports. The tribunal set aside the Commissioner (Appeals), Jaipur’s order confirming tax, interest, and penalty.
Background
The appellant manufactures Polypropylene Compound (CETA 39029000) and imports raw materials like Bag Polypropylene via CIF contracts from non-taxable territories. No separate freight payment was made to foreign shippers; payment was a single inclusive amount to exporters, with Basic Customs Duty discharged.
Tribunal’s Reasoning
Relying on Gujarat HC in SAL Steel Ltd. vs. UOI (2020 37 GSTL 1), the service is extraterritorial, beyond Parliament’s levy under Finance Act, 1994 Sections 64, 66B. Followed Delhi HC (Tavrur Oils, 2024), Bombay HC (Sanathan Textiles, 2025), Madras HC (Chennai Ennore Ports, 2023), and CESTAT cases like Kiri Dyes (upheld by SC) and Adani Power. Importers are not service recipients.
Outcome
Impugned Order-in-Appeal No. 346/SMSTJPR/2021 quashed; no service tax liability on ocean freight.