Tribunal allows appeal, emphasizing intent and eligibility for duty credit.

M/s Borana Pumps Versus Commissioner of Central Goods And Service Tax, Customs & Central Excise, Jodhpur-I

M/s Borana Pumps Versus Commissioner of Central Goods And Service Tax, Customs & Central Excise, Jodhpur-I - 2021 (378) E.L.T. 189 (Tri. - Del.) Issues:
- Appellant's eligibility for exemption under Notification No. 8/2003-CE
- Applicability of extended period of limitation for demand
- Allegation of intention to evade payment of duty

Analysis:

Issue 1: Appellant's eligibility for exemption under Notification No. 8/2003-CE
The appellant manufactured products falling under Chapter Heading 8413 and 8501 of the Central Excise Tariff and availed exemption under Notification No. 8/2003-CE. However, the exemption was subject to goods conforming to BIS standards, which the appellant lacked during the disputed period. The absence of BIS certification for the relevant period was a crucial factor in determining the appellant's eligibility for the exemption. The appellant's argument of subsequent certification was not deemed sufficient as it did not apply during the disputed period. The absence of certification during the relevant period led to the conclusion that the appellant was not entitled to the exemption notification.

Issue 2: Applicability of extended period of limitation for demand
The Department raised a demand beyond the normal limitation period, invoking the extended period due to alleged suppression of facts by the appellant. The Department contended that the appellant failed to disclose crucial information regarding BIS certification, indicating an intent to evade duty payment. However, the appellant argued that the demand was time-barred as there was no evidence of fraud or suppression of facts. The appellant's assertion that the demand was based on their own records and not due to any intentional evasion supported the argument against invoking the extended period of limitation.

Issue 3: Allegation of intention to evade payment of duty
The Department claimed that the appellant's non-disclosure of BIS certification status and availing the exemption without eligibility demonstrated an intention to evade duty payment. The Department highlighted the appellant's failure to disclose this information until audit, indicating suppression of facts. However, the appellant countered this by presenting the inverted duty structure scenario, where paying duty would have resulted in Cenvat credit exceeding the duty liability. This argument, supported by the recording of transactions and invoicing, suggested the appellant's lack of intention to evade duty payment. The absence of intent to evade payment of duty was a key factor in setting aside the impugned order.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order dated 31.01.2008, based on the lack of established intention to evade payment of duty and the appellant's eligibility for Cenvat credit exceeding the duty liability. The judgment emphasized the importance of factual circumstances and intent in determining liability for duty payment and exemption eligibility.