Modvat recredit on cancelled gate passes allowed where intimation was given and no express bar existed.

On cancellation of gate passes with intimation to the proper officer, recredit in RG 23A Part II was treated as permissible even without an express rule specifically authorising it. The duty had been debited partly through PLA and partly through RG 23A Part II, and the credit scheme was read as allowing adjustment where no prohibition existed. Reading Rule 173G, Rule 173K and the analogous adjustment mechanism under Rule 57E together, the absence of a specific provision against such recredit could not justify denial of the benefit. The assessee was therefore entitled to recredit the disputed amount in RG 23A Part II.

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Issues: Whether, on cancellation of gate passes and intimation to the proper officer, the assessee was entitled to take recredit in RG 23A Part II in the absence of an express provision specifically providing for such recredit.

Analysis: The duty on the goods had been debited partly in PLA and partly in RG 23A Part II. The statutory scheme specifically covered recredit in PLA on cancellation of gate passes under Rule 173G(2)(vii) of the Central Excise Rules, while the rules governing proforma credit and Modvat credit also contemplated adjustments in credit accounts, including situations of variation in credit. Reading Rule 173G(1), Rule 173K and the analogous adjustment mechanism under Rule 57E together, the absence of a specific prohibition against recredit in RG 23A Part II could not be used to deny the assessee the benefit where intimation of cancellation had been given and the adjustment was otherwise consistent with the credit scheme.

Conclusion: The assessee was entitled to take credit of the disputed amount in RG 23A Part II.

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