Deemed Modvat credit requires proof of duty payment and compliance with notification conditions; insufficient invoices led to remand.

Deemed Modvat credit was considered dependent on strict compliance with the notification conditions and proof that the inputs had actually suffered duty. The invoices for the relevant period referred only to discharge of duty liability under Rule 96ZP(3) and did not contain a clear declaration that duty had been paid, nor was there evidence of actual duty discharge by the supplier. The precedent relied on was treated as distinguishable because that case had both a declaration and supporting proof of payment. On this basis, the existing record was found insufficient to sustain the credit, and the matter was remanded for fresh decision after further verification or an opportunity to the respondents.

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Issues: Whether deemed Modvat credit could be denied where the invoices issued under the compounded levy scheme did not contain a proper declaration and there was no evidence that the supplier had discharged the duty liability.

Analysis: The entitlement to deemed Modvat credit depended on compliance with the notification conditions and on proof that the inputs had in fact suffered duty. The invoices for the relevant period stated only that duty liability under Rule 96ZP(3) was to be discharged, but there was neither a declaration that duty had been paid nor evidence showing actual discharge of duty by the manufacturer or supplier. The earlier precedent relied upon by the appellate authority was distinguishable because, in that case, both declaration and supporting evidence of duty payment were available. On these facts, the appellate authority's reliance on that precedent was held to be misplaced, and a fresh examination was considered necessary after giving an opportunity to the respondents or obtaining a report from the concerned authority.

Conclusion: Deemed Modvat credit could not be upheld on the existing record, and the matter was remanded for fresh decision.

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