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TMI Blog2015 (5) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... for Automobiles falling under Chapter Heading 7004.10 and 7004.20 respectively of the First Schedule to the Central excise Tariff Act, 1985. For the manufacture of the glass of aforesaid nature, the respondent has been supplying float glass which is the main raw material of the respondent's product. On this the respondent has also been availing claim of modvat credit of duty paid on the aforesaid raw material, under Rule 57A of the Central Excise Rules, 1944 (hereinafter referred to as 'Rules'). Show cause notices dated 1.9.2002, 4.12.2000 nd 29.6.2001 were issued by the Department to the respondent alleging therein that the respondent had availed Modvat credit of inputs that were inherently defective and were neither used nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent to the authorities. In this manner, the Settlement Commission arrived at a figure of Rs. 4,03,77,695 /- and directed the respondent to pay the balance amount of Rs. 3,47,38,325 /- towards the settlement of the said show cause notice. It may be significant to note here that the respondent had objected to the aforesaid approach adopted by the Settlement Commission during the hearings before the said Commission by pleading 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 remaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. 2011 (4) SCC 635 where the powers of the Settlement Commission are delineated in the following manner: "An order passed by the Settlement Commission could be interfered with only if the said order is found to be contrary to any provisions of the Act. So far as the findings of fact recorded by the Commission or question of facts are concerned, the same is not open for examination either by the High Court or by the Supreme Court. In the present case the order of the Settlement Commission clearly indicates that the said order, particularly, with regard to the imposition of simple interest @ 10% per annum was passed in accordance with the provisions of Rule 14 but the High Court wrongly interpreted the said Rule and thereby arrived at an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding and washing are defects arising at the end of the suppliers of the said float glass and such defects have not been brought about during any of the processes to which the float glass is subjected to in the applicant's factory. (iii) The applicant filed a claim for such defective glass on the respective suppliers and the suppliers reimbursed the applicant for the cost of such defective glass. The cost reimbursed does not include the element of duty suffered on such float glass. (iv) The demand of duty made by Revenue is confined to the credit taken defective float glass for which the applicant has been reimbursed by the suppliers of such defective glass. The demand of duty does not include breakages or defects notice during the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e widely construed as held by the Apex Court. Surprisingly, the Commission proceeded by saying "however, the main question to be decided in this case is whether the float glass (input) can be said to be an eligible input of the applicant when it was defective at the supplier's end itself and accordingly could not have been used in the manufacture of the finished goods. As observed by us earlier, it is not in dispute that the defects may be in the float glass at the suppliers' end and that is the reason why the suppliers agreed to reimburse the applicant for the value of such defective inputs. This being the case, in our view, the applicant identified such defect at the stage of inspection after subjecting the float glass to certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manufacturing process starts. Final portion from the said judgment which is quoted by the High Court, is reproduced for proper understanding of the matter: "Manufacture thus involves series of processes. Process in manufacture or in relation to manufacture implies not only the production but the various stages through which the raw material is subjected to change by different operations. It is the cumulative effect of the various processes to which the raw material is subjected to, manufactured product emerges. Therefore, each step towards such production would be a process in relation to the manufacture. Where any particular process is so integrally connected with the ultimate production of goods that but for that process manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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