MODVAT credit on pre-01.04.1994 gate passes endorsed later remains valid where departmental circular accepts the judicial view.

Gate passes issued before 01.04.1994 and endorsed after that date remained valid for MODVAT credit under Rule 57G of the Central Excise Rules, 1944. The court relied on the settled view taken by other High Courts and on CBEC Circular No. 600/37/2001-CX, which accepted such documents as eligible for credit subject to the prescribed time limit. On that basis, the Revenue could not deny credit merely because the endorsement occurred after the cut-off date.

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Issues: Whether gate passes issued before 01.04.1994 but endorsed after that date could be treated as valid documents for availing MODVAT credit under the applicable excise rules.

Analysis: The reference turned on the effect of the change introduced by Notification No. 16/1994-CE and the operation of Rule 57G of the Central Excise Rules, 1944. The Court noted that identical questions had already been answered by other High Courts in favour of the assessee and that the Central Board of Excise and Customs had issued Circular No. 600/37/2001-CX accepting that gate passes issued prior to 01.04.1994 but endorsed thereafter remained valid for credit, subject to the prescribed time limit. In view of the accepted judicial position and the binding departmental circular, the Revenue was not entitled to take a contrary view.

Conclusion: Endorsed gate passes issued prior to 01.04.1994 were valid documents for availing MODVAT credit, and the reference was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Where the departmental circular accepts the judicial view that pre-01.04.1994 gate passes endorsed thereafter remain valid for MODVAT credit, such gate passes cannot be rejected as invalid documents merely because endorsement occurred after the cut-off date.

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