Case Law Details
Prithvi Pumps Vs C.C.E. & S.T. (CESTAT Ahmedabad)
Introduction: The case of Prithvi Pumps Vs C.C.E. & S.T. (CESTAT Ahmedabad) revolves around the eligibility of Small Scale Industries (SSI) exemption for the final product, Submersible Pumps, categorized under CETH 8413 7010. The primary dispute is whether the appellant qualifies for SSI Exemption, given that their product, while conforming to Bureau of Indian Standards (BIS) specifications, lacked a certificate initially. This article delves into the details of this case, the arguments put forth, and the final judgment.
Detailed Analysis:
1. Appellant’s Argument: Shri P.P. Jadeja, the consultant representing the appellant, contended that there is no evidence provided by the department to prove that the appellant’s pumps did not meet BIS standards. The appellant asserted that even without an initial certificate, their product adhered to BIS specifications. Furthermore, they argued that the absence of a certificate does not invalidate their claim since the Notification does not necessitate it.
2. BIS Certificate: It was highlighted by the appellant that for the same product, the BIS subsequently issued a certificate affirming that it conformed to BIS standards. This strengthened the appellant’s belief in the legitimacy of their product’s compliance with BIS norms.
3. Bonafide Belief: The appellant argued that they maintained a bona fide belief that their pumps adhered to BIS standards, which was supported by the later certificate from BIS. They emphasized that there was no intent to suppress any facts on their part.
4. Legal Precedent: To support their claims, Shri P.P. Jadeja cited several legal judgments, including Nanya Imports and Exports Enterprises (2006), Hemraj Gordhandas (1968), Inter Continental (India) (2002), Citric India Ltd. (1992), Aruna Sugars Limited (1985), and CCe vs Chemphar Drugs & Liniments (1989).
5. Revenue’s Stand: Shri P. Ganesan, the authorized representative for the Revenue, reiterated the findings of the impugned order, maintaining that the demand for payment of duty was justified.
6. Limitation Issue: The CESTAT Ahmedabad observed that the case could be disposed of primarily based on the issue of limitation, without delving into the merits of the case. They noted that the appellant’s claim of conformity to BIS standards was supported by the subsequent issuance of a BIS certificate for the same product.
7. Time Barred Demand: The demand was raised under the extended period for the period from 01.01.2007 to 18.03.2009. However, the show cause notice was issued on 04.04.2012, which exceeded the normal period of one year. Since the appellant’s intentions were deemed bona fide, the entire demand raised during the extended period was found to be time-barred.
Conclusion: The CESTAT Ahmedabad concluded that the appellant was entitled to SSI Exemption for their Submersible Pumps as their claim of conformity to BIS standards was reinforced by the subsequent BIS certificate. The absence of an initial certificate did not negate their legitimate belief. The demand for payment of duty, raised during the extended period, was considered time-barred due to the absence of any malafide intent on the appellant’s part. Consequently, the impugned order was set aside, and the appeal was allowed. This case highlights the importance of a bona fide belief and conformity to standards in claiming SSI Exemption.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that whether the appellant is entitled for SSI Exemption in respect of their final product i.e. Submersible Pumps falling under CETH 8413 7010 on the fact that though the product of the appellant was claimed in confirmation to the standards of Bureau of Indian Standards (BIS) but the Certificate was obtained subsequently and whether the demand is hit by limitation in the facts of the present case.
2. Shri P.P. Jadeja, learned Consultant appearing on behalf of the appellant submits that there is no evidence adduced by the department that the appellant’s pump was not in conformation to the standards of BIS, on the contrary, the appellant have claimed that though the Certificate was not obtained but the appellant’s product i.e. pump had been manufactured as per the standards of Bureau of Indian Standard. He submits that for the same product without any modification either in the manufacturing process or in the manufacturing plant, the BIS has given certificate subsequently holding that the product in question is as per the standard of BIS. He submits that as per the Notification also there is no requirement of the certificate. The only need is the product manufactured by the assessee should be in conformation to the standards specified under BIS which is not in dispute. In the present case, only for te reason that the certificate could not be obtained, the Exemption cannot be denied so long the product is having the standard of BIS. He submits that since the appellant had a bonafide belief that the pump manufactured by them is in conformation to the standard of BIS no suppression of fact can be attributed to the appellant. He submits that the bonafide of the appellant was proved on the basis of the certificate issued by BIS subsequently for the same product hence the demand is also time barred. In support of his submission, he placed reliance on the following judgments:
- 2006 (04) LCX002 Nanya Imports and Exports Enterprises
- 1968 (09) LCX0001 Hemraj Gordhandas
- 2002 (02) LCX 0021 Inter Continental (India)
- 1992 (10) LCX 0011 Citric India Ltd.
- 1985 (08) LCX 0027 Aruna Sugars Limited
- 1989 (02) LCX 0024 CCe vs Chemphar Drugs & Liniments
3. On the other hand, Shri P. Ganesan, Learned (Superintendent) authorized representative appearing on behalf of the Revenue reiterates the findings of the impugned order.
4. On careful consideration of the submission made by both the sides and perusal of records, we find that the present appeal can be disposed of only on limitation without going into merit of the case.
5. We find that it is the appellant’s claim that the goods manufactured by them is in conformation to standards of BIS. This claim of the appellant gets reinforced on the basis that for the same product subsequently, the appellant were issued certificate by the BIS certifying that the product manufactured by the appellant is as per the standards prescribed under BIS. On this basis the bonafide belief of the appellant is found factually correct. As per the claim of the appellant, the same product which was subsequently certified by BIS was in conformation to the standards of BIS, therefore, the appellant have rightly entertained the belief that their product is exempted under Notification No. 8/2003. We also note that the submission of the appellant that the Notification does not prescribe the issuance of certificate to prove that the specifications of the product or the standards of the product is in conformation to BIS found force and prima facie strongly support to them. On all these facts and circumstances of the case, we are of the view that there is no malafide on the part of the appellant with intent to evade payment of duty. For the demand under extended period in the present case for the period 01.01.2007 to 18.03.2009, the show cause notice was issued on 04.04.2012 which is much after the normal period of one year. As we discussed above, since the appellant had no malafide intention the entire demand raised by invoking the extended period will not sustain on the ground of time bar itself. Therefore, without going merit of the case, we are of the view that the demand is hit by limitation. Accordingly, the impugned order is set aside. Appeal is allowed with consequential relief, if any, in accordance with law.
(Pronounced in the open court on 20.10.2023)
