2009 (6) TMI 14 - 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 Involved:
1. Interpretation of Notification No.16/94 CE (NT) regarding eligibility for MODVAT credit on gate passes issued before 1.4.1994.
2. Validity of MODVAT credit taken on gate passes endorsed after 1.4.1994 under the invoice system introduced.
3. Assessment of the validity of duty paying documents for MODVAT credit when gate passes were endorsed after 1.4.1994.

Issue 1 - Interpretation of Notification No.16/94 CE (NT):
The High Court considered the appeal by the Revenue regarding the eligibility of gate passes issued before 1.4.1994 for MODVAT credit under Entry No.10 of the Notification. The Court framed the first substantial question of law to determine if gate passes endorsed after 1.4.1994 could fall under the coverage of the said Entry. The judgment referenced a similar case where it was decided that gate passes issued before 1.4.1994 and endorsed by 30th June, 1994, were eligible for MODVAT credit under the modvat scheme. Consequently, the Court held that such gate passes were valid for taking credit under the scheme.

Issue 2 - Validity of MODVAT credit under the invoice system:
The second question addressed the correctness of taking MODVAT credit on gate passes endorsed after 1.4.1994, following the introduction of the invoice system for excisable goods removal. The Notification No. 16/94-CE(NT) specified conditions for the validity of endorsed gate passes for MODVAT credit, emphasizing that endorsement should be done before 1.4.1994. The Court's decision in a related case supported the view that endorsed gate passes meeting the stipulated timeline were acceptable for credit. Therefore, the Court dismissed the appeal, affirming the validity of MODVAT credit on such gate passes.

Issue 3 - Assessment of duty paying documents for MODVAT credit:
The final issue revolved around the validity of duty paying documents for availing MODVAT credit when gate passes were endorsed after 1.4.1994. The Court examined whether such gate passes could be considered valid for MODVAT credit under Notification No. 16/94-CE (NT). Given the precedent set in a prior case and the specific timeline requirements outlined in the notification, the Court concluded that the endorsed gate passes, even if endorsed after 1.4.1994, were indeed valid duty paying documents for availing MODVAT credit. Consequently, the Tribunal's decision to dismiss the Revenue Department's appeal was upheld by the Court.