Reliance in this connection can be placed on the decision of Hon’ble Apex Court in case of M/s Asahi India Safety Glass Ltd reported in 2015-TIOL-129-SC-CX wherein the company was manufacturer and was registered under Central Excise. The department raised SCN on the company alleging that the CENVAT Credit availed were inherently defective and was not used ‘in or in relation to manufacture of final product’.

The company approached Settlement Commission and agreed that the inputs on which it had availed CENVAT Credit were inherently defective and agreed to reverse back the same. Basically the inputs were glass material which were broken during the receipt in the factory premises. Hon’ble Commission went into the issue and found additional glasses which were used in the manufacturing process but were broken during the process and became defective and disallowed the CENVAT Credit thereon also. The company pleaded that once the float glass was used for manufacture and manufacturing process had started thereby, thereafter, if some latent defect was found on a portion of the long sheet of glass and the said portion thereof had to be discarded it was not a case where the entire sheet of glass was not used as input as remaining part of the glass was in fact used.

Aggrieved by the order of Hon’ble Commission, the company filed a writ petition under Article 226 for quashing the afore-said order. Hon’ble High Court relying on various judicial pronouncements arrived at the conclusion that the Commission has applied the wrong principle of law and thereby directing the commission to allow the credit on the glass used in manufacture process. The revenue preferred an appeal on the ground that can high court change the admitted facts recorded by the Settlement Commission.

On this, Hon’ble Apex Court held that the High Court has not interfered with the admitted facts by the commission but corrected the principle of law applied by the commission and the same is well within the powers of the High Court under Article 226. The Hon’ble Court held that the appeal is bereft of any merit and is accordingly dismissed.

 Author – Aditya Singhania and Nischal Agarwal

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