Deemed Modvat credit cannot be denied for supplier default where invoices certify duty payment under the notification.

Deemed Modvat credit under Notification No. 58/97-C.E. could not be denied merely because the input supplier had not discharged excise duty or had made a delayed payment, where the invoices carried the required certification that the inputs had suffered duty. The notification did not impose any further obligation on the assessee to prove actual payment by the supplier, so the supplier's default could not be fastened on the assessee. The assessee's own discharge of duty liability also supported entitlement to the benefit. The denial of deemed credit was therefore unsustainable and the claim was allowed.

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Issues: Whether the assessee could be denied deemed Modvat credit under Notification No. 58/97-C.E. on the ground that the input supplier had not discharged the excise duty liability or had failed to make the prescribed declaration on the invoices.

Analysis: The notification required the supplier's invoices to certify that the inputs had suffered excise duty, but it did not impose any further obligation on the assessee to establish actual discharge of duty by the supplier. The Court followed its earlier view that, where deemed credit is claimed under the notification and the relevant invoices carry the required certification, the assessee cannot be made liable for the supplier's default or belated payment of duty. The fact that the appellant had itself discharged the duty liability also supported the claim to the benefit.

Conclusion: The denial of deemed credit was unsustainable and the issue was answered in favour of the assessee.

Ratio Decidendi: Deemed Modvat credit under Notification No. 58/97-C.E. cannot be denied to the assessee merely because the supplier failed to discharge excise duty or made a delayed payment, where the notification does not require the assessee to prove the supplier's actual payment of duty.

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