Full Judgment
Various questions of law, as posed by the appellant Collector, are as under : "(i) Whether the credit can be allowed on the gate passes endorsed more than twice i.e. a document which is neither prescribed under Rule 57G(2) of the Central Excise Rules, 1944, nor prescribed by the Board in terms of powers conferred under Rule 57G(2) ibid.
(ii) Whether Tribunal can allow Modvat credit on document not prescribed under Rule 57G(2) of the Central Excise Rules, 1944".
2. I have heard Shri Y.R. Kilania, ld. DR for Revenue and Shri S.P.Bhatnagar, ld. Advocate for the respondents.
3. The first proviso to Sub-rule (2) of Rule 57G has prescribed the eligible documents as - (i) gate pass; (ii) AR 1 and (iii.) Bill of Entry.
4. The CBEC were specifically authorised to prescribe "any other document" as document eligible for taking of Modvat credit. The definition of a gate pass was given under Rule 52A as it then stood. It defined gate pass as "gate pass in the proper form". The form of the gate pass was specifically prescribed. The scheme of the Central Excise Act and Rules provides for movement of goods from manufacturers to traders and also from manufacturers to manufacturers where the output of the first is the input for the second. During the course of trade, especially in the case of a small manufacturers, the purchase is made through a trader and not direct from a manufacturer. In order to facilitate such movement, without jeopardising the advantage to the buyer manufacturer, by way of executive instructions, gate passes were permitted to be endorsed either in entirety or in part. There was also a system whereby a consignment cleared from a factory under a gate pass could be split into smaller consignments each covered by a subsidiary gate pass issued by the jurisdictional range officer. The endorsed passes and subsidiary gate passes were not creations of this statute but were conveniences created by the Board to facilitate the small manufacturers. The Board was, however, conscious of the possibility of misuse of such a facility. There was also a probability of multiple use of the same gate pass. The Board, therefore, prescribed measures in these situations and also where a gate pass was lost in transit and credit was allowed to be taken on the basis of duplicate gate pass. All these facilitation measures were prescribed by the Board under their administrative powers and not under any legislative powers vested in them. The Board's letter F. No. 263/19/89-CX 8, dated 17-4-1989 under which endorsed gate passes are declared as eligible documents clearly states that it is a facilitative measure. When the Tribunal in their order in the case of S.B.S. Organics Pvt. Ltd. v. C.C.E. Customs - 1990 (45) E.L.T. 701 (Tribunal), which was referred to and relied upon in the impugned order, held that credit could be taken on a gate pass endorsed more than once, the Board did not challenge the decision but vide another Circular No. 22/90, dated 9-4-1990, cautioned the officers against universal application of the ratio of that judgment. In this connection, ld. Advocate referred us to the judgment of the High Court in the case of Kisan Chemicals v. U.O.I. and Ors. reported in 64 (1996) Delhi Law Times 73 in which the High Court had ruled the Board could not issue a circular which would render a decision of the Tribunal as irrelevant and negatory.
5. In their judgment in the case of S.B.S. Organics (supra), the Tribunal had held that the instructions as to the permissible number of endorsements were purely administrative in nature and the facilitation could be extended further as long as there was no danger to the revenue. The text of the two instructions, itself, shows that the instructions do not receive their power from the provisions of Rule 57G. The Rule specifies a gate pass as an eligible document. A gate pass would remain a gate pass whether or not it is endorsed subsequently. An endorsed a gate pass does not become a separate document which has to be declared to be an eligible documents in terms of the residual power conferred on the Board under the said Rule.
Therefore, the claim made in the reference application is based on wrong appreciation of the law. I, thus, find that the applicant has failed to bring out any question law in the application. The same is, accordingly, dismissed.