Commissioner of Central Excise vs Tayal Strips (P). Ltd.

The present reference under Section 34H(4) of the Central Excise Act, seeks judgment on the following questions of law:

"Whether endorsed gate passes were valid documents in terms of Rule 57G of the Central Excise Rules, 1944?"

The assessee respondent manufacture excisable goods falling in Chapter Head 85.44 of the Central Excise Tariff Act, 1985. They claimed and were granted Modvat credit for April-May 1994 in respect of duty to the extent of Rs. 2,12,635.05/- paid on inputs by their manufacturers. This was claimed and granted under Rules 57G and 57E of the Central Excise Rules on the basis of gate passes issued prior to 1-4-1994 by the manufacturers of inputs in terms of Rule 52A and endorsed after 1-4-1994 in favour of the assessee. The Excise authorities asked the manufacturer assessee to show cause why the credit so granted ought not to be reversed; the assessee relied upon the Notification No. 16/1994-C.E., dated 30-3-1994. The Department''s position was that the change brought about by this notification with effect from 1-4-1994 was that such gate passes had to be endorsed. Contending that gate passes in this case were endorsed later even though they were for a prior period, the credit was reversed. The Commissioner (Appeals) accepted the assessee''s contention by the order in appeal dated 15-12-1998. The Revenue approached the Tribunal which followed its previous decision in Moosa Haji Patrawala Pvt. Ltd. vs. Commissioner of,1996 (64) ECR 1 25 and confirmed the order of the Commissioner (Appeals). In the circumstances, the present reference is made to the Court under Section 35H(4).

It transpired during the hearing that identical questions had been framed and answered by the other High Courts, especially the Gujarat High Court, the Himachal Pradesh and the Bombay High Court (Commissioner of Central Excise, Ahmedabad-I v. Gujarat Medicraft Pvt. Ltd. - 2001 (75) ECC 256; CCE, Commissionerate-I, Chandigarh Vs. Suraj Udyog, ; Commissioner of Central Excise v. Saras Poly Pack - 2008 (232) E.L.T. 418 and The Commissioner of Central Excise Vs. Moosa Haji Patrawala P. Ltd., . In the last of the decisions, - Patrawala (supra) which affirmed the Tribunal''s first judgment on this aspect, the Bombay High Court noticed the current position in respect of identical questions in the following terms:

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2....................The learned Counsel also pointed out that the Central Board of Excise and Customs has issued Circular No. 600/37/2001-CX., dated 19th November, 2001 wherein it is specifically stated that judgment of Gujarat High Court in the reference of M/s. Krishna Chemicals, Ahmedabad passed on 22-11-2000 wherein it was held that gate passes issued prior to 1-4-1994 but endorsed thereafter would be valid documents for availment of credit, subject to credit being taken on or before 30th June, 1994 has been accepted by the Board and instructions were issued that all the pending cases be decided by following the ratio of judgment. It appears that reference in Krishna Chemicals was decided by the Gujarat High Court along with the reference in case of Gujarat Medicraft Pvt. Ltd. In view of the above authorities and the circular issued by the Central Board of Excise and Customs, Revenue cannot take a different view. xxxxxx

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It is evident from the above that the Central Board of Excise and Customs has issued Circular No. 600/37/2001-CX on 19-11-2001 accepting the decisions of Krishna Chemicals (supra) which in turn was decided along with Gujarat Medicraft Pvt. Ltd. In view of this development, the reference is answered in favour of the assessee and against the Revenue.