THE UNION OF INDIA & ORS. versus M/S.ASAHI INDIASAFETYGLASS LTD.

Citation: [2015] 7 S.C.R. 122 · Decided: 07-05-2015 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Dismissed
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Judgment (excerpt)

A 
B 
[2015] 7 S.C.R. 122 
THE UNION OF INDIA & ORS. 
v. 
MIS.ASAHI INDIASAFETYGLASS LTD. 
(Civil Appeal No. 2381 of 2005) 
MAYO?, 2015 
[A. K. SIKRI AND R. F. NARIMAN, JJ.] 
Central Excise Rules, 1944 - r. 57 A - Modvat credit 
c on inputs- Denial of, when defect in input-raw material found 
- Assessee, manufacturer of glass for Automobiles, used 
floating glass as raw material - Assessee availing ctaim of 
modvat credit of duty paid on raw material - Denial by 
Department since inputs inherently defective and not used 
D for manufacture of the final product - Demand of duty back 
by the Department - Settlement Commission holding that 
apart from float glasses found to be broken/defective, parts 
of the glass also found to be defective and not used for final 
production - Issuance of direction to assessee to pay back 
E the modvat credit availed to the Authorities - However, High 
Court remanded back the matter to Settlement Commission 
to consider the matter afresh - On appeal, held: High Court 
did not interfere with the factual aspects recorded by 
Settlement Commission - High Court held that the 
F Commission erred in applying wrong principle in law, by 
treating even the float glass used for manufacture, that is, 
after the manufacturing process had commenced, to be a 
wasted input and came to an erroneous conclusion that the 
modvat could not be claimed in respect of that part of a 
G particular float glass sheet - High Court stated the correct 
legal position where the Settlement Commission had gone 
wrong in law- High Court acted within its jurisdiction ul Art. 226 
of the Constitution and remanded the matter - Settlement 
H Commission to decide the application of assessee, in terms 
122 
THE UNION OF INDIA v. M/S. ASAHI INDIA SAFETY 
GLASS LTD. 
of the judgment passed by High Court. 
Union of India and other vs. IND. Swift Laboratories Ltd. 
2011 (2) SCR 1087: 2011 (4) SCC 635; Collector of 
Central Excise vs. Rajasthan State Chemical Works 
1991 (55) E.L.T. 444 S.C.; J.K. Cotton Mills vs. S. T. 
Officer1965 (1) SCR 900; standard Fireworks Industries 
vs. 
Collector 1987 (28) E.L.T. 56 (S.C.); 
Jyotendrasinghji vs. S.I. Tripathi and Others (201 ITR 
611) - referred to. 
Case Law Reference 
2011 (2) SCR 1087 
Referred to. 
Para 7 
1991 (55) E.L.T. 444 S.C. Referred to. 
Para 10 
1965 (1) SCR 900 
Referred to. 
.,·:Para 11 
1987 (28) E.L. T. 56 (S.C.) Referred to. 
Para 11 
(201 ITR 611) 
Referred to. 
Para 13 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 
2381 of 2005. 
,, 
From the Judgment and Order dated 10.09.2004 of the 
Division Bench of the High Court of Delhi, in C.W.P. No. 6692 
of2002. 
' ,, 
YashankAdhyaru, B. Sunita Rani, Ritesh Kumar, Shweta 
Garg, B. Krishna Prasad for the Appellants. 
-· 
V. Lakshmi Kumaran, M.P. Devanath, Vivek Sharma, L. 
123 
A 
B 
c 
D 
E 
F 
Charanaya, Aditya Bhattacharya, R. Ramachandran, Kemant G 
Bajaj,Anandh K. for the Respondent. 
The Judgment of the Court was delivered by 
A. K. SIKRI, J. 1. The respondent herein is engaged in H 
124 
SUPREME COURT REPORTS 
[2015] 7 S.C.R. 
A the manufacture of Toughened (Tempered) and Laminated 
Safety Glass 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 
B 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 57 A of the Central Excise Rules, 1944 (hereinafter 
referred to as 'Rules'). 
c 
2. Show cause notices dated 1.9.2002, 14.12.2000 and 
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 
D nor usable 'in or in relation to the manufacture of the final 
products'. In these show cause notices, on the aforesaid basis 
the Department demanded back the duty in a sum of 
Rs.3,63,79,483, Rs.2257353 and Rs.28,53,875/- respectively. 
The respondent gave reply to the said show cause notices. 
E 
3. At the same time the respondent also approached the 
Settlement Commission under Section 32E of the Act for 
settlement of the case in respect of the show cause notices. 
In the application for settlement filed by the respondent, the 
F respondent made an admission to the extent tha
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