Deemed Modvat credit cannot be denied for unpaid interest alone when duty on inputs was paid and certified.

Deemed Modvat credit under Notification No. 58/97-Central Excise is stated to be available for specified inputs received under invoice declaring payment of duty under Section 3A, where the duty payment is certified by the Range Officer. The note says eligibility turns on payment of duty on the inputs, not on whether the supplier later deposited interest for delayed payment of that duty. On that basis, non-payment of interest is described as outside the notification's denial conditions, so refusal of deemed credit is said to be unsustainable and the appeal allowed.

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Issues: Whether deemed Modvat credit under Notification No. 58/97-Central Excise dated 30-08-1997 could be denied merely because the supplier had not deposited interest on delayed payment of central excise duty, although the duty on the inputs had been paid under Section 3A of the Central Excise Act.

Analysis: The notification extended deemed duty credit to specified inputs received under cover of an invoice declaring payment of appropriate excise duty under Section 3A. The condition for eligibility concerned payment of duty on the inputs. The record showed that the appropriate duty had been paid and certified by the Range Officer. The only default was non-payment of interest for delayed payment of duty by the supplier, which was not a condition specified in the notification for denying credit.

Conclusion: The benefit of the notification could not be denied on account of non-deposit of interest when the duty itself had been paid. The denial of deemed Modvat credit was unsustainable and the appeal was allowed.

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