ORDER
J.H. Joglekar, Member (T)
1. This appeal from Revenue was argued by Shri K.L. Ramteke. The Respondents were represented by Shri R.J. Parekh the ld. Advocate.
2. The assessees took Modvat credit on the basis of certain gate passes. The inputs received under these gate passes were for a part of the quantity cleared by the manufacturer, since part of the quantity had been diverted to other users by way of subsidiary gate passes. This credit was objected to by the Department. The assessees cited Board’s Circular No. 14/89, dated 17-4-1989 (F.No. 263/19/89/CX) in their favour. The Additional Collector made the following observations in denying the Modvat credit taken.
“On going through the concerned Gate Passes, it is seen that the concerned suppliers have issued subsidiary Gate Passes and the documents referred to such particulars, viz. SGP passes No. Quantity issued etc. which are endorsed on concerned Gate Passes, under signature of the Superintendent having jurisdiction over said suppliers. No Gate Pass is an exception to this observation where WIL has availed credit. Substance is that WIL have taken Modvat Credit on these Gate Passes where subsidiary Gate Passes have already been issued.
Board’s Circular, as referred to by WIL, does not accept such cases for allowing Modvat Credit.
I, therefore, hold that Modvat credit of Rs. 73,216/- so taken against these Gate Passes is not admissible.”
3. Against this order the assessees filed an appeal. The Commissioner (Appeals) interpreted the phase “such supply” in the favour of the assessee and allowed the appeal. The present appeal from the Revenue is against this decision.
4. For ease of appreciation, the relevant portion from the circular is reproduced below :-
“It has also been decided by the Board that in case part supplies are made from consignment covered under a GP1 and no subsidiary gate pass has been issued for such supplied, then the said GP1 can be endorsed to the buyer of rest of the consignment covered by the said GP1 specifying the quantity of material sold and duty involved on such part supply to modvat buyer.”
5. The system of issue of subsidiary gate passes had its origin, in the situation where the first buyer was a trader, who sold goods received under one gate pass in small parcels to several users. In such a situation he would take the gate pass to the Jurisdictional Superintendent. The Superintendent would issue a subsidiary gate pass which was itself a Modvatable document and show the details thereof on the face of the parent gate pass. Where the total quantity of goods covered under the subsidiary gate passes matched the quantity in the parent gate pass, the parent gate pass ceased to be a usable document. But where the left over quantity (after issue of some subsidiary gate passes) was required by a user, the trader could either seek a subsidiary gate pass for the left over quantity or in the alternative could get endorsed the gate pass for the remaining quantity to the user. This is what happened in this case.
6. The limited issue is whether this situation is covered in the citation made by the assessees of the Board circular.
7. The circular is capable of being interpreted differently. The claim made in the appeal memorandum is that once a subsidiary gate passes is issued for balance quantity, there will be no quantity left for endorsing GP1. In making the submission, the Revenue have lost sight of the possibly that for the last balance quantity, there could be two options (i) issue of subsidiary gate pass and (ii) endorsement of the original gate pass for the last balance. In the latter situation the endorsement is possible.
8. I find that the Commissioner’s interpretation of the Board Circular was not wrong. Consequently his order is upheld and the appeal from Revenue is dismissed.