Deemed Modvat credit upheld where later inquiry could not displace an appellate order based on then-existing records.

Deemed Modvat credit on inputs supplied by manufacturers under the Compounded Levy Scheme remained admissible where the Commissioner (Appeals) allowed credit on the then-existing record and certificates issued by jurisdictional Range Officers. Later investigation showing possible irregularities could not by itself invalidate that appellate order unless perversity in the original order was established. The notification did not make credit eligibility dependent on the Range Officer's certificate, and the deeming provision treating duty as paid supported the assessee's claim. The Revenue's challenge therefore failed, and the credit was upheld.

---

---

Issues: Whether deemed Modvat credit was admissible on inputs supplied by manufacturers operating under the Compounded Levy Scheme where the department, on subsequent inquiry, alleged that the duty certificates issued by the jurisdictional Range Officers were incorrect.

Analysis: The credit had been allowed by the Commissioner (Appeals) on the basis of the record then available, including certificates issued by the jurisdictional Central Excise Range Officers showing that duty liability on the inputs had been discharged. The Revenue's challenge rested only on later investigation. An order cannot be assailed on the basis of facts unearthed after its passage unless the order is shown to be perverse. The subsequent inquiry could at best support action against the defaulting manufacturers or the officers concerned, but it could not invalidate the appellate order. In any event, the notification itself did not make admissibility of deemed Modvat credit dependent upon the Range Officer's certificate, and the deeming provision treating the duty as paid on inputs supplied by manufacturers under the Compounded Levy Scheme supported the assessee's claim.

Conclusion: The deemed Modvat credit was admissible, and the Revenue's challenge failed.

Ratio Decidendi: A lawful appellate order allowing deemed credit on the basis of then-existing record cannot be disturbed merely because later investigation reveals possible irregularities, in the absence of perversity in the original order, and the deeming provision under the notification prevails over a subsequent challenge to the factual basis of certification.

---