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TMI Blog2010 (9) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... R R M SAVANT, J] 1 By the above Petition filed under Article 226 of the Constitution of India, the Petitioners take exception to the Notification dated 30.3.1994 in so far as it purports to prevent the Petitioners from taking Modvat Credit after 30.6.1994 on the basis of a gate pass issued prior to 1.4.1994. The Petitioners also challenge orders/letters dated 20.12.1994 and 6.1.1995 and the communication dated 8.7.1998. 2 The facts necessary to be cited for adjudication of the above Petition can be stated thus :A scheme popularly known as Modvat was introduced on 1.3.1986. In terms of the said scheme, the manufacturers were entitled to take credit of duty paid on excisable goods used as inputs. The same was inserted in Chapter V of the Central Excise Rules by which the manufacturers were allowed to take the credit of duty paid on excisable goods used as inputs in or in relation to the manufacture of designated final products. In terms of the requirement the Petitioner company filed a declaration under Rule 57G of the Central Excise Rules in respect of Caustic Soda (final product) and Metal Anodes (inputs). The Petitioners placed an order on 30.09.1992 on Titanor Components ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Modvat Credit ought not to be denied on the ground that the gate pass had been issued prior to 01.04.1994. The said submission of the Petitioner was not accepted and the 3rd Respondent reiterated that the gate pass issued prior to 1.4.1994 was valid only for the purpose of availing Modvat Credit up to 30.06.1994. It appears that 3rd Respondent did not even refer to the Notification dated 29.06.1994 relied upon by the Petitioners. The 3rd Respondent directed the Petitioners to get the credit reversed with immediate effect. The Petitioners accordingly carried out the directives of the Respondents by reversing the credit under protest. 3 A circular came to be issued by the Central Government being No. 76/76/94CX dated 8th November 1994 by which circular the Central Board of Excise and Customs (CBEC) forwarded a copy of Notification No.64CE (NT) dated 7.11.1994 amending Rule 57H of the said Rules. It was inter alia stated in the said circular that amendment was necessitated to remove the difficulties arising out of the budgetary changes in the year 199495 relating to acceptance of an invoice as the proper document for the purposes of Modvat Credit and on account of the issuanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which invoice co-related the details mentioned in the gate pass issued by the manufacturer. The Apex Court vacated the said interim order, however, declined to consider whether the subsequently obtained invoice complied with the requirements of the notifications as according to the Apex Court, that was not the basis on which interim order was passed by this Court and this Court had not even considered the said subsequent invoice. The Apex Court clarified that in view of the fact that the above Petition was still pending in this Court, it did not consider it appropriate to say anything on the merits of the case. It appears that the Petitioners have carried out the amendments to the above Petition by incorporating the aforesaid developments which have taken place post filing of the Petition and have also amended the prayer clause accordingly by laying a challenge to the letter dated 8.7.1998. Aggrieved by the said Notification dated 30.3.1994 and the orders/letters dated 20.12.1994 and 6.1.1995 that the Petitioners have filed the present Petition. 5 On behalf of the Respondents affidavit has been on 14.8.1995 wherein, as mentioned earlier in this Judgment, in Paras 6 and 11 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e given our anxious consideration to the rival contentions addressed by the learned counsel for the parties. 10 The issue, as can be seen, that arises for consideration is, the Petitioners' entitlement for Modvat Credit. The said Excise Rules and especially Rule 57G thereof entitles an assessee to avail of Modvat Credit. The assessee is required to file a declaration under Rule 57G and was entitled to avail of the credit on the basis of the 8 Writ Petition No.3495 OF 1995 gate pass issued by the manufacturer of the duty paid inputs. The said regime of gate pass was replaced by an invoice containing prescribed information from 1.4.1994. However, it is required to be noted that though the procedure was changed for availing of Modvat Credit, substantive provision remained the same. It is an undisputed position that the Metal Anodes which were the inputs were cleared from the factory of the manufacturer on 28.3.1993 under a statutory gate pass after payment of excise duty. It is the case of the Petitioners that they could not receive the goods on account of the fact that there was a lockout in the Petitioners' factory and that the goods could be received only on 3.12.1994 and the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent Petition and are reproduced herein under :" Clause-4 :Now therefore by virtue of powers conferred by rule 57H of the Central Excise Rules, 1944, the Central Board of excise and Customs hereby prescribes the invoice/document issued by (i) a manufacturer from his factory; (ii) a manufacturer from his depot; (iii) a wholesaler distributor/dealer of the manufacturer; or (iv) an importer from his godown; as valid document for the purpose of allowing Modvat credit. Clause 6 :It is further clarified that the document prescribed above by the Central Board of Excise and Customs should be accepted by the Assistant Collector only upto 31st December, 1994. In other words, any document issued by registered person prior to such registration would be acceptable if he is eligible to issue invoice/document under Notification No.15/94C. E. (N.T.) and Notification No.21/94C. E. (N.T.,)" 10 Writ Petition No.3495 OF 1995 Therefore as can be seen from the said circular the CBEC prescribed the invoice/document issued by the Manufacturer from his factory and that such invoice should contained details as regards to in Notification No.15/94C. E (NT) and Notification No.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Modvat credit only on the ground that the Petitioners have not submitted the invoice prior to 31.12.1994. In our view, considering the material that is on record, merely because the Petitioners have not produced the invoice prior to 31.12.1994 would be taking a highly technical view of the matter and such view, would be unwarranted considering the fact that the circular dated 8.11.1994 has been issued to mitigate the difficulties arising out of budgetary changes taking place in the year 1994-95. The matter can be looked at from another angle also inasmuch as by the said circular, what is prescribed is a invoice/document and the same has to be submitted to the Assistant Collector prior to 31.12.1994. In the instant case, there is no doubt that the said gate passes were submitted to the Assistant Collector prior to 31.12.1994 and since the gate passes can be said to be "a document" covered by the circular dated 8.11.1994, the Petitioners, in our view, would be entitled to the said Modvat credit on the said basis also. 12 In the light of the aforesaid it is not necessary for us to go into the legality of the said Notification No.16/94 as we are of the view that the Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h had been issued by the CBEC which placed a different interpretation upon the pharase, that interpretation would be binding on the Revenue. This view has been reaffirmed in Collector of Central Excise, Vadodara v. Dhiren Chemical Industries, 2002 (143) E.L.T. 19. Therefore the circulars in question issued by the Revenue as long as they were not withdrawn which they were but only in 2002. For the period in question the circulars were operative. The appeals are, accordingly, dismissed albeit for reasons which are different from those expressed by the Tribunal. We make it clear that this decision will not operate to reopen any assessment order nor will any duty already paid become refundable by reason of this Judgment. There will be no order as to costs. Para 12 :The principles laid down by all these decisions are : (1) Although a circular is not binding on a Court or an assessee, it is not open to the Revenue to raise the contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute. (2) Despite the dec ..... 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