Modvat credit and endorsed gate passes: a circular was read to permit either subsidiary gate passes or original endorsement.

Modvat credit was treated as admissible where a consignment covered by a GP1 was partly cleared through subsidiary gate passes and the remaining quantity was covered by endorsement of the original gate pass. The circular was read as permitting either of two alternatives in such a situation: the balance could be supported by a subsidiary gate pass or the original gate pass could be endorsed for the remaining quantity. That interpretation was accepted as a permissible construction of the circular, and the departmental view that endorsement was excluded once a subsidiary gate pass had been issued was rejected.

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Issues: Whether Modvat credit was admissible where subsidiary gate passes had been issued for part of the consignment and the original gate pass was endorsed for the remaining quantity.

Analysis: The relevant Board circular contemplated two possible courses where only part supplies were made from a consignment covered by a GP1 and no subsidiary gate pass had been issued for the supplied portion: the balance could either be covered by a subsidiary gate pass or the original gate pass could be endorsed for the remaining quantity. The circular was capable of more than one interpretation, but the construction that allowed endorsement of the original gate pass for the last balance quantity was a permissible reading. The departmental view proceeded on the mistaken assumption that issue of a subsidiary gate pass for the balance exhausted the possibility of endorsement, whereas the circular recognized both alternatives in the relevant situation.

Conclusion: The assessee's interpretation of the circular was accepted and Modvat credit was held admissible.

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