1996 (11) TMI 153 - AT - Central Excise

Tribunal allows Modvat credit for gate passes, clarifies Rule 57G eligibility

The Tribunal held that gate passes endorsed more than twice are eligible for Modvat credit under Rule 57G, provided no double credit is claimed. The Board ... Reference to High Court - Modvat Issues:1. Eligibility of gate pass endorsed more than twice for Modvat credit under Rule 57G of Central Excise Rules, 1944.2. Authority of Tribunal to allow Modvat credit on a document not prescribed under Rule 57G(2) of Central Excise Rules, 1944.Issue 1: Eligibility of gate pass for Modvat credit:The Tribunal's Final Order stated that a gate pass endorsed more than twice could be considered an eligible document for Modvat credit under Rule 57G, subject to the jurisdictional officer's satisfaction that double credit had not been taken. The Collector raised concerns regarding the eligibility of such gate passes for credit, questioning if documents not prescribed under Rule 57G(2) could allow credit. The Board had the authority to prescribe 'any other document' as eligible for Modvat credit. Gate passes were defined under Rule 52A, allowing for endorsements to facilitate trade movements. Endorsed gate passes and subsidiary gate passes were administrative conveniences by the Board to aid small manufacturers, with measures in place to prevent misuse. A previous Tribunal judgment and a High Court ruling highlighted the Board's administrative powers in facilitating credit on endorsed gate passes. The Tribunal emphasized that gate passes, even when endorsed, retained their eligibility as documents under Rule 57G, dismissing the Collector's challenge and application due to a misinterpretation of the law.Issue 2: Authority of Tribunal to allow credit on non-prescribed documents:The Tribunal's decision in the S.B.S. Organics case supported the extension of administrative facilitation for gate passes beyond prescribed limits, as long as revenue security was maintained. The Tribunal clarified that administrative instructions on endorsements did not derive authority from Rule 57G, as gate passes remained eligible documents irrespective of endorsements. The Tribunal rejected the Collector's claim, stating it was based on a misinterpretation of the law and failed to present any legal questions. Consequently, the application challenging the Tribunal's decision was dismissed for lack of merit.---