Deemed Modvat credit cannot be denied for invoice declaration compliance or for non-payment of interest on delayed duty.

Deemed Modvat credit could not be denied where the invoices stated that the goods were cleared under Rule 96ZP, because that declaration was treated as sufficient compliance with Notification No. 58/97-C.E. and no further formality was required. Credit also could not be refused on the ground that the manufacturer had not paid interest on delayed duty, because interest was held not to form part of duty. On both grounds, denial of deemed Modvat credit was unjustified and the assessee was entitled to the credit.

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Issues: Whether deemed Modvat credit could be denied under Notification No. 58/97-C.E. dated 30-08-1997 on the ground that the invoices carried the declaration of clearance under Rule 96ZP and, separately, on the ground that the manufacturer had not paid interest on delayed duty payment.

Analysis: The invoice declaration that the goods were cleared under Rule 96ZP was treated as sufficient compliance with the notification requirement, and the credit could not be denied merely for want of any further formality. As to the second ground, interest was held not to form part of duty, so non-payment of interest by the manufacturer did not disentitle the buyer from deemed credit on duty-paid inputs.

Conclusion: The denial of deemed Modvat credit was unjustified on both grounds and the assessee was entitled to the credit.

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