Deemed Modvat credit under Notification No. 58/97-C.E. referred to Larger Bench amid conflicting tribunal views

Conflicting tribunal views on deemed Modvat credit under Notification No. 58/97-C.E. led to reference for authoritative resolution. The notification was read as containing both an enabling provision and a restrictive condition requiring direct receipt of inputs under an invoice declaring payment of excise duty. Earlier decisions differed on whether credit could be denied where the invoice stated duty would be discharged under Rule 96-ZP(3), or where departmental reports suggested duty was not discharged. In light of that conflict, the matter was placed before the President for constitution of a Larger Bench, and no substantive eligibility ruling was made.

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Issues: Whether the conflicting views on eligibility to deemed Modvat credit under Notification No. 58/97-C.E. warranted reference of the matter for constitution of a Larger Bench.

Analysis: The notification was considered to contain both an enabling provision and a restrictive condition requiring direct receipt of inputs under invoice declaring payment of excise duty. Earlier decisions had taken divergent views on whether credit could be denied where the invoice stated that duty was to be discharged under Rule 96-ZP(3), or where departmental reports suggested non-discharge of duty. In view of the apparent conflict in tribunal decisions, finality on the issue required consideration by a Larger Bench.

Conclusion: The matter was directed to be placed before the Hon'ble President for constitution of a Larger Bench.

Final Conclusion: No substantive determination on eligibility to deemed Modvat credit was made in this order, and the issue was referred for authoritative resolution.

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