2009 (6) TMI 13 - HC - Central Excise

Cenvat / Modvat Re-sale - Eligible Document - Gate passed issued prior to 1.4.94 but endorsed after that date - Prior to Notification no.16/1994-CE(N.T.) dated 30th March, 1994 under Rule 57G of the Central Excise Rules, 1944, credit of modvat was given. As per the position prevailing prior to 30th March, 1994 when the purchaser re-sold input to third party, he would make an endorsement on the gate passes issued by the manufacturer of the input. Procedure was changed and in stead of endorsement on the gate passes, invoice was required to be produced as per the above referred Notification. Held that when the gate-passes were issued prior to 1.4.1994 and endorsed on or before 30th June, 1994, such document would be eligible for taking credit under the modvat scheme.

Summary

Issues:
Interpretation of Notification No.16/94-CE(NT) dated 30.3.94 for Modvat credit eligibility based on gate passes issued and endorsed before specific dates.

Analysis:
The High Court was tasked with considering whether gate passes issued before 1.4.94 but endorsed after that date would qualify under entry no.10 in Notification No.16/94-CE(NT) for Modvat credit eligibility. Prior to the mentioned Notification, credit of Modvat was granted under Rule 57G of the Central Excise Rules, 1944, by endorsing gate passes upon resale of inputs to a third party. However, the procedure was altered post-30th March 1994, requiring the production of invoices instead of endorsements on gate passes for credit eligibility under the Modvat Scheme. The Notification specified that documents should be issued before 1st April 1994, and credit must be taken on or before 30th June 1994.

The relevant Entry No.10 in the Notification prescribed endorsed gate passes/subsidiary gate-passes/certificates as eligible documents. The language of the Notification indicated that gate passes could be issued before 1st April 1994, and credit could be availed on or before 30th June 1994. The Tribunal rejected the Revenue's argument that endorsements on gate passes should also be made before 1.4.1994, emphasizing that the requirement was for the issuance of gate passes before the specified date, not the endorsement. The High Court referred to a similar judgment by the Gujarat High Court, affirming that endorsements made after 1.4.1994 but before 30.6.1994 on gate passes issued prior to 1.4.1994 were valid for credit availment.

Furthermore, the High Court noted that other High Courts, including Punjab & Haryana and Himachal Pradesh, had followed the Gujarat High Court's interpretation. The Central Board of Excise & Customs had issued a circular accepting the Gujarat High Court's judgment on the validity of gate passes endorsed post-1.4.1994 for credit availment until 30.6.1994. Considering the consistent interpretation by various High Courts and the circular, the High Court ruled in favor of allowing credit for gate passes endorsed after 1.4.1994 but issued before that date, in alignment with the Notification's language and previous judicial decisions.

In conclusion, the High Court answered the reference affirmatively based on the Notification's language, interpretations by different High Courts, and the circular issued by the Central Board of Excise & Customs, establishing the validity of gate passes endorsed post-1.4.1994 for Modvat credit eligibility until 30.6.1994.