Modvat credit on pre-1-4-1994 gate passes remained admissible despite later endorsement within the stipulated time.

Gate passes issued before 1-4-1994 and endorsed after that date remained valid duty-paying documents for Modvat credit where the credit was taken on or before 30-6-1994. The governing notification and accepted High Court view supported admissibility of credit, and departmental instructions had directed pending matters to be decided on that basis. Denial of credit solely because endorsement occurred after 1-4-1994 was not sustainable, and the assessee was entitled to Modvat credit.

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Issues: Whether gate passes issued before 1-4-1994 but endorsed after that date remained valid duty paying documents for availing Modvat credit, where the credit was taken on or before 30-6-1994.

Analysis: The dispute was governed by Notification No. 16/94-C.E. (N.T.) dated 30-3-94 and by the accepted view of the Gujarat High Court that gate passes issued prior to 1-4-94 but endorsed thereafter could still support credit, provided the credit was taken on or before 30-6-94. The Board had also issued instructions accepting that decision and directing pending cases to be decided on that basis. In view of that settled position, denial of credit on the sole ground that endorsement occurred after 1-4-94 was not sustainable.

Conclusion: Such gate passes were held to be valid duty paying documents, and the assessee was entitled to Modvat credit.

Ratio Decidendi: Where a gate pass issued before the cut-off date is endorsed later, Modvat credit remains admissible if the governing notification and accepted departmental instructions recognise the document as valid and the credit is taken within the stipulated time.

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