Burden of proof on credit availment and extended limitation fails absent suppression with intent to evade duty.

The commentary states that, where duty is demanded on waste and scrap said to arise from inputs or capital goods on which credit was allegedly taken, the Revenue must prove actual availment of credit; in the absence of records or other evidence, liability on clearance of scrap cannot be presumed. It also notes that mere non-intimation does not by itself establish suppression or misstatement with intent to evade duty, so the extended limitation period is unavailable without material showing mala fide conduct. On that reasoning, the demand was set aside and consequential relief followed.

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Issues: (i) whether the Revenue had discharged the burden of proving that the waste and scrap arose from inputs and capital goods on which credit had been taken, and duty was therefore payable on clearance of the scrap; (ii) whether the demand was barred by limitation.

Issue (i): whether the Revenue had discharged the burden of proving that the waste and scrap arose from inputs and capital goods on which credit had been taken, and duty was therefore payable on clearance of the scrap.

Analysis: The dispute turned on a factual question, but the legal burden lay on the Revenue to establish that credit had been availed on the relevant inputs and capital goods. The record, including the statement of the appellant's representative, indicated that no such credit had been taken. The show cause notice and the orders below did not refer to any evidence such as RG 23A records showing availment of credit. In the absence of proof, no presumption could be drawn against the appellant.

Conclusion: The issue was answered in favour of the assessee and against the Revenue.

Issue (ii): whether the demand was barred by limitation.

Analysis: The demand related to clearances during 1997-1999, while the notice was issued in 2002 by invoking the extended period. Mere non-intimation, by itself, was insufficient to establish suppression or misstatement with intent to evade duty. There was no material showing mala fide conduct, and the appellant's status as a public sector undertaking further negatived the allegation of intent to evade.

Conclusion: The demand was held to be barred by limitation, in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where the Department alleges liability on the footing that credit was availed, the burden lies on the Revenue to prove such availment; in the absence of evidence, and absent proof of suppression with intent to evade, the demand cannot be sustained, including under the extended period.

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