Deemed Modvat credit requires proof that duty was already discharged; a declaration that duty was "to be discharged" is insufficient.

Notification No. 58/97 required an invoice declaration that duty liability had already been discharged by the manufacturer or supplier before deemed Modvat credit could be claimed. A declaration stating that duty was merely "to be discharged" did not satisfy that condition, because it was materially different from a statement of actual payment. The earlier High Court ruling was distinguishable as it concerned a case where duty had in fact been discharged and only further proof was in issue. On the facts stated, the statutory prerequisite for deemed credit was not met, so the credit claim failed.

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Issues: Whether deemed Modvat credit under Notification No. 58/97 was admissible on the basis of invoice declarations stating that duty was "to be discharged" under Rule 96-ZP(3), when duty had not actually been discharged by the manufacturer or supplier.

Analysis: The condition in the notification required a declaration that the duty liability had already been discharged by the manufacturer or supplier of the goods. A declaration that duty was merely "to be discharged" was materially different and did not satisfy that requirement. The reference to the earlier High Court decision did not assist the respondents because that decision proceeded on a situation where duty had in fact been discharged and the issue was only about further proof of payment. On the facts here, the statutory condition for availing deemed credit was not met.

Conclusion: The respondents were not entitled to deemed Modvat credit on the basis of the impugned invoice declaration, and the Revenue's appeals succeeded.

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