Deemed Modvat credit requires fair consideration of fresh evidence and proof that the input manufacturer discharged duty liability.

Deemed Modvat credit could not be granted on the basis of fresh material taken for the first time at the lower appellate stage without giving the department an opportunity to respond. Where there was a factual dispute on whether the input manufacturer had discharged the duty liability, the appellate authority could not rely on the jurisdictional Range Officer's certificate without further examination. The impugned order was set aside and the matter remanded for fresh adjudication by the original authority on entitlement to deemed Modvat credit, including whether the input manufacturer had duly discharged the duty liability.

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Issues: Whether deemed Modvat credit could be allowed when the duty liability of the input manufacturer was disputed, and whether the lower appellate authority could rely on fresh evidence without calling for the department's comments.

Analysis: The certificate from the jurisdictional Range Officer was taken into account by the lower appellate authority for the first time, although it had not been before the original authority. The record showed a factual dispute between the departmental authorities on whether the input manufacturer had discharged the duty liability. In such circumstances, the fresh material could not be relied upon without giving the department an opportunity to meet it, and the dispute required fresh examination by the original authority.

Conclusion: The impugned appellate order was set aside and the matter was remanded for fresh adjudication on the entitlement to deemed Modvat credit after examining whether the input manufacturer had duly discharged the duty liability.

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