Modvat credit on actual duty paid inputs prevails where statutory conditions are met, despite deemed credit facility.

Rule 57A(1) of the Central Excise Rules, 1944 permits Modvat credit of the actual duty paid on inputs when the statutory conditions are met, and the deemed credit notification operates only as an additional facility where duty-paying documents are unavailable. The existence of a deemed-credit scheme does not displace the right to actual credit if the assessee satisfies the requirements for such credit. The Tribunal's earlier view in favour of the assessee was followed again, and no higher-forum reversal or unsettled position was shown.

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Issues: Whether the assessee was entitled to Modvat credit on the actual duty paid on inputs under Rule 57A(1) and Notification No. 24/94-C.E. (N.T.), or was confined to deemed credit at the rate prescribed under Notification No. 29/96-C.E. (N.T.).

Analysis: The issue had already been decided by the Tribunal in the assessee's favour. It was held that Rule 57A(1) of the Central Excise Rules, 1944 enables Modvat credit of duty actually paid on inputs where the statutory conditions are satisfied, and the deemed credit notification only extends an additional facility where duty-paying documents are unavailable. The presence of a deemed-credit notification does not take away the assessee's right to claim actual credit when the conditions for such credit are fulfilled. The earlier view had also been followed in a subsequent matter involving the same respondents, and the Revenue did not show that the decision had been overturned or unsettled by a higher forum.

Conclusion: The assessee was entitled to Modvat credit on actual duty paid on the inputs, and the Revenue's challenge to that entitlement failed.

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