ORDER
K.D. Mankar, Member (T)
1. The appellants were denied modvat credit vide order-in-appeal passed by the Commissioner (Appeals), on the ground that the appellants had taken modvat credit against the gate passes which have been endorsed three times by different consignees. The Assistant Collector, while deciding the show cause notice proposing the denial of credit held that there was no irregularity in taking the credit and he dropped the proceedings. The revenue challenged the said order and the Commissioner of Central Excise (Appeals) reversed the findings of the Assistant Collector and set aside the said order.
2. The appellants are in appeal challenging the findings of the Commissioner (Appeals). The short issue involved in this case is as to whether or not the modvat credit can be permitted on the basis of the gate passes which have been endorsed more than two times. Admittedly in this case, the gate passes in question have been endorsed thrice, before the consignment reached the appellant’s premises. There is no other ineligibility or dispute regarding payment of duty on inputs or non-utilisation of inputs in the manufacture of final products.
3. Heard both sides.
4. In this case, on perusal of the impugned order-in-appeal. I note that the denial of credit has been based on the Board’s Circular No.263/19/89-CZ-8 dated 17/04/1989 which is further re-iterated by Circular No.22/90 dated 09/04/90 stating that, the credit on gate passes which have been endorsed more than two times is not to be granted. The said order also refers to the judgment of CEGAT in the case of CCE, Coimbatore v. Shree Gopalakrishna Polly Industries reported in 1997 (84) ELT 235 (Tri.) wherein it has been held that gate passes endorsed is not an authorised document for the purpose of taking modvat credit.
5. I have carefully considered the submissions. It is to be noted that the Rule 57G, under which a list of duty paying document is prescribed, does not contain any bar as to the number of endorsements to be made on the gate passes. Tribunal in the case of S.B.S. Organics Pvt Ltd. v. CCE &C reported in 1990 (45) ELT 701 (Tri) has held that the credit can not be denied on the ground of more than two endorsements. The said judgment has not been reversed by the judgment of any other competent judicial authority.
6. The judgments of CEGAT reported in 1996 (84) ELT 235 (Tri) in the case of CCE, Coimbatore v. Sree Gopalakrishna Polly Industries cited by the Commissioner (Appeals) in support of his findings does not lay down the legal position that, document such as gate passes which has been prescribed under Rule 57G as an authorised document can be subjected to further conditions of validity, based on the number of endorsements. The Bench in the said case had understood the instructions of the Board to be the instructions issued to authorise modvat credit on the basis of documents prescribed by the Board. Even if one were to concede that the board can prescribe a document for the purpose of taking modvat, the said document has to be an additional document over and above the documents prescribed under the rules (subjected to its prescribed condition) and the said authorisation cannot impose any additional restriction on the document such as gate passes which have already been declared as valid duty paying document under Rule 57G without any restrictions relating to number of endorsements. Since under the Rule 57G the gate passes and any other documents happen to be prescribed documents, notwithstanding the number of endorsements made thereon, the said documents continue to be valid documents for the purpose of taking duty credit and to that extent the circular issued by the Board being contrary provisions of Rule 57G, cannot come in the way of permitting the credit. In other words, restriction imposed by the Board can only be confined to documents, which have been authorised by the Board to be duty paying documents and can not apply to documents specifically listed under the Rule without prescribing any such restrictions, in the rule itself.
7. In view of the above discussion, the appeal succeeds, the same is allowed with consequential relief, if any, in accordance with the law.
(Operative part pronounced in Court)