Modvat credit cannot be denied for multiple gate pass endorsements when the rule itself imposes no such limit.

Modvat credit could not be denied merely because gate passes had been endorsed more than two times before receipt of inputs. Rule 57G identified the class of duty-paying documents but imposed no limit on the number of endorsements, so Board circulars could not add a substantive restriction not found in the rule. The Tribunal relied on its earlier view that multiple endorsements did not by itself defeat credit, and treated the contrary decision as incapable of validating a condition inconsistent with the statutory rule. The operative principle is that administrative circulars cannot curtail a benefit where the governing rule contains no such disqualification.

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Issues: Whether Modvat credit could be denied merely because the gate passes were endorsed more than two times before receipt of the inputs.

Analysis: Rule 57G prescribed the class of duty-paying documents and did not impose any restriction on the number of endorsements on gate passes. The denial of credit was founded on Board circulars stating that gate passes endorsed more than two times were not to be accepted, but such circulars could not add a condition not found in the rule. The earlier Tribunal view holding that credit could not be denied on the ground of multiple endorsements supported the assessee's case, and the cited contrary decision was held not to lay down a rule that could validate an additional restriction inconsistent with the statutory rule.

Conclusion: Modvat credit could not be denied solely because the gate passes had been endorsed more than two times, and the issue was decided in favour of the assessee.

Ratio Decidendi: A circular cannot impose a substantive restriction on a duty-paying document expressly recognised by the rule when the rule itself contains no such restriction.

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