1999 (7) TMI 186 - AT - Central Excise

Summary

Issues: Modvat credit denial based on subsidiary gate passes, interpretation of Board circular, validity of Commissioner's decision

In this case, the issue revolved around the denial of Modvat credit by the Department based on the issuance of subsidiary gate passes by suppliers, leading to a part of the quantity being diverted to other users. The assessees had cited Board Circular No. 14/89 in their defense, which was not accepted by the Department. The Additional Collector held that Modvat credit was not admissible in such cases, leading to an appeal by the assessees.

The Commissioner (Appeals) interpreted the phrase "such supply" in favor of the assessee, allowing the appeal. The Revenue then appealed against this decision, challenging the interpretation of the circular and the validity of the Commissioner's decision.

The crux of the matter was whether the situation of part supplies with subsidiary gate passes was covered under the Board circular cited by the assessees. The Tribunal observed that the circular could be interpreted differently and noted that the Revenue overlooked the possibility of two options for the last balance quantity: issuance of a subsidiary gate pass or endorsement of the original gate pass for the remaining quantity.

Ultimately, the Tribunal upheld the Commissioner's interpretation of the Board Circular, finding it to be correct. Therefore, the appeal from the Revenue was dismissed, affirming the decision in favor of the assessee.