Deemed Modvat credit turns on duty discharge under compounded levy, not on technical wording defects in the supplier invoice certificate.

Deemed Modvat credit under Notification No. 58/97 depends on the substantive fact that the supplier was discharging duty under section 3A of the Central Excise Act. Where the record, including TR challans, show cause notice, and related proceedings, established operation under the compounded levy scheme, credit could not be denied for a mere technical defect in the wording of the invoice certificate. A dispute between the supplier and the revenue over annual capacity or the quantum of duty did not defeat the purchaser's entitlement. On that basis, the denial of deemed credit was unsustainable and the credit was allowable.

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Issues: Whether deemed Modvat credit under Notification No. 58/97 could be denied merely because the supplier's invoice certificate did not use the exact wording of the notification, when the supplier was otherwise shown to be operating under section 3A and discharging duty under the compounded levy scheme.

Analysis: The decisive factor for deemed Modvat credit was whether the supplier discharged duty under section 3A of the Central Excise Act. The record showed that the supplier was functioning under the compounded levy scheme, and the certificate, TR challans, show cause notice, and related proceedings all indicated duty payment under section 3A. A dispute between the supplier and the revenue regarding annual capacity and the quantum of duty did not affect the availability of deemed credit to the purchaser. The benefit could not be denied on a purely technical objection to the wording of the invoice certificate, since the notification required the substantive fact of duty discharge under section 3A and not proof of full duty payment beyond that scheme.

Conclusion: The denial of deemed Modvat credit was unsustainable, and the credit was allowable to the appellant.

Ratio Decidendi: For deemed Modvat credit, the relevant inquiry is whether the supplier was discharging duty under section 3A of the Central Excise Act, and a dispute over the quantum of duty or technical variation in invoice language does not defeat the benefit.

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