TaxTMI 
TaxTMI 
TaxTMI 
2026 (2) TMI 962
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....m the nearby washeries and fed into the boilers through a feeder pipe. 2.1 During the process of generating electricity, coal with low Gross Calorific Value (GCV) is separated by the Mill Reject System from that having optimum GCV in the segregation plant, based on differential density. Such separated coal rejects are used within the factory premises in the coal yard for creating coal beds for storage of coal thereby protecting such coal from ground moisture. Further, during shortages, sometimes the separated coal rejects are blended in small proportion, time to time, with high GCV coal and used in electricity generation, which is further used for manufacture of electricity. 2.2 For accurate accounting, the Appellant recorded monthly coal consumption under two distinct heads-(i) "consumption for the month" and (ii) "handling loss booked in consumption". During audit verification conducted by the department for the period 2014-15 to 2016-17, certain objections in audit report dated 11.12.2017, were raised which inter alia encompassed the issue pertaining to availment of credit on such coal rejects which were allegedly not used in the manufacturing process, by the Appellant. Fu....
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....ng coal with low Gross Calorific Value (GCV), is fed into the feeder pipe of the captive power plant for the purpose of electricity generation. The segregation of low GCV coal occurs only after such coal is introduced into the Mill Reject System and subjected to centrifugal force within the system. Without feeding the coal into the process of manufacturing, there is no scope to ascertain the GCV of the coal. This segregation is the first step of the manufacturing process itself,and therefore, the use of such coal constitutes use "in or in relation to" the manufacture of final products. 3.3 Further, he submits that the various Courts and Tribunals have categorically held that the activity of segregation is the first step of manufacturing process and that carrying out such activity results into manufacture. In support of his contention, he relies on the following decisions : • Commissioner of Customs (Preventive) vs. Monarch Overseas, 2019 (368) ELT 379 (Guj.). • Meridian Impex v. CCE & ST, 2018 (7) TMI 865-CESTAT Ahmedabad • Unitech International Ltd. v. Commissioner of C. Ex., VAPI 2012 (281) E.L.T. 109 (Tri. - Ahmd.) • Monika ....
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....lowing decisions : • Commissioner of C. Ex., Raigad v. Vikram Ispat Ltd., 2007 (211) E.L.T. 60 (Tri.-Mumbai) • Seven Stars Steels Ltd. v. CCE, 2013 (30) STR 532 (Tri- Kol), Thus, he submits that the process of manufacture involves a number of processes, and it is the cumulative effect of various processes to which the raw material is subjected to, for a manufactured product to emerge. Further, it is to be mentioned here that the finding of the Ld. Commissioner (Appeals) in the impugned order that the credit availed inputs were removed from the factory of the Appellant is wholly erroneous as the coal rejects are not removed from the factory but are instead used in coal bedding within the coal factory. 3.9 Finally, it is submitted that coal, including that with low GCV, clearly falls within the scope of "input" under Rule 2(k) of the Cenvat Credit Rules, 2004. Therefore, denial of credit on such coal is ex facie untenable, and the impugned order to the extent it disallows, the same is liable to be set aside. 4. Ld.A.R. for the Revenue has justified the impugned order. 5. After hearing both the parties, we find that the issue involved in this matt....
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....tance in the submission made by the learned Counsel for the revenue that it is not open for the Court to examine the matter. The Apex Court has pointed out in Jyotendrasinhji v. S.I. Tripathi, (1993) 201 ITR 611 that finality clause contained in Section 245-I of the Income-tax Act, 1961 in relation to orders of the Settlement Commission under Section 245D(4), does not and cannot bar the jurisdiction of High Courts under Article 226 of the Constitution of India or the jurisdiction of the Supreme Court under Article 32 or under Article 136 and it remains the same i.e. to consider whether the order of Settlement Commission is contrary to the provision of the Income-tax Act and if so and whether it has prejudiced the petitioner. This of course, apart from the ground of bias or malice which constitute an independent and separate category. At page 622 the Court after examining the scheme in detail has pointed out that "it is true that finality clause contained in Section 245-I does not and cannot bar the jurisdiction of the High Court under Article 226 or the jurisdiction of this Court under Article 32 or Article 136 as the case may be". The Court also examined that the order of Commissi....
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.... - 1987 (28) E.L.T. 56 (S.C.) laying down the same proposition as noted in the case of Rajasthan State Chemical Works (supra). 14. In the process, the High Court has also interpreted Rule 57D and Rule 57A (4) of the Rules. It would be pertinent to mention here that the aforesaid legal position, as stated by the High Court, could not be dislodged by the learned senior counsel for the appellant. 15. From the aforesaid it becomes clear that the High Court has not interfered with the facts which were recorded by the Settlement Commission. On the contrary, the facts noted above remained undisputed. On those facts the High Court has simply stated the correct legal position where the Settlement Commission had gone wrong in law. Thus, the High Court has simply applied the correct principle of law on the admitted facts. This, according to us, was well within the powers of the High Court while exercising its jurisdiction under Art. 226 of the Constitution. Such remand of the High Court has been held permissible in Jyotendrasinghji v. S.I. Tripathi and Others (201 ITR 611) which was also concerning the powers of the Settlement Commission, albeit under Section 245(D) (4) of t....
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....n respect of the inputs which were rejected on line. I find that the issue in this case is squarely covered by the decision of the Hon'ble High Court in Delhi in the case of Asahi India Safety Glass Limited (supra). Their lordships in their order at paragraph 30-33 has held as under :- "30. If a sheet is rejected or a piece of sheet is rejected, it does not mean that the sheet was not used in the manufacture of safety glass. It is at this juncture again we emphasis that sub-rule (4) of Rule 57A points out that credit is to be allowed on inputs used in the final product and all inputs used in or in relation to the manufacture of the final products, whether directly or indirectly and whether contained in the final product or not the department cannot deny credit of specified duty or even can vary on the ground that part of the inputs contained in any waste, refuse or by-product arising during the manufacture of final product or when the inputs have become waste during the course of manufacture of the final product whether or not such waste or refuse or by-product is exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty or not specifie....