Modvat credit on duty actually paid upheld where invoice duty was accepted and not refunded, despite lower tariff duty claim.

Modvat credit was allowable on the duty actually paid under duty-paid invoices, and the recipient could not be denied credit merely because the tariff duty was said to be lower. Since the duty had in fact been discharged at the higher rate and the excess was retained by the revenue without refund to the supplier, the assessee was entitled to take credit of the amount reflected in the invoices. The revenue's objection was rejected and the impugned order was sustained.

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Issues: Whether the assessee was entitled to Modvat credit on the actual duty paid amount shown in the duty paid invoices, even if the revenue contended that the duty actually payable under the tariff was lower.

Analysis: The credit had been taken on goods received under duty paid invoices, and the duty had in fact been discharged at the higher rate. The revenue had retained the duty amount and had not refunded the excess to the supplier unit. In these circumstances, the revenue could not deny credit to the recipient merely on the ground that a lower duty was actually payable under the tariff. The assessee was entitled to credit of the duty actually paid.

Conclusion: The assessee's entitlement to credit on the actual duty paid amount was upheld and the revenue's objection was rejected.

Final Conclusion: The impugned order was sustained and the revenue's appeal failed.

Ratio Decidendi: Modvat credit is allowable on the duty actually paid and not on a notional amount that the revenue contends ought to have been paid, where the duty charged has been accepted and not refunded.

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