Deemed Modvat credit cannot be denied where invoices declare duty payment and the notification adds no extra proof burden.

Where a deemed Modvat credit notification required inputs to be received under invoices declaring payment of appropriate duty, the recipient was not burdened with proving actual duty discharge by the supplier unless the notification expressly imposed that requirement. The High Court followed its earlier view that receipt of inputs with the requisite invoice declaration satisfied the condition for credit, and a later allegation that the supplier had not paid duty or had made an incorrect declaration did not by itself justify denial. The Revenue's challenge therefore failed, and deemed Modvat credit was upheld.

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Issues: Whether the manufacturer of final products was entitled to deemed Modvat credit under Notification No. 58/97-Central Excise dated 30.08.1997 when the supplier of inputs had allegedly not paid the excise duty or had given a wrong or no declaration on the invoices regarding discharge of duty under Rule 96ZP of the erstwhile Central Excise Rules, 1944.

Analysis: The appeal turned on the scope of the notification governing deemed credit on inputs received from manufacturers operating under Section 3A of the Central Excise Act, 1944. The Court relied on its earlier view that the notification required receipt of inputs directly from the factory under invoices declaring payment of appropriate duty, and did not impose an additional burden on the recipient assessee to prove actual discharge of duty by the supplier. As the invoices carried the requisite declaration and no contrary judgment was shown, the denial of credit could not be sustained.

Conclusion: The assessee was entitled to deemed Modvat credit, and the Revenue's challenge failed.

Ratio Decidendi: Where the statutory notification requires receipt of inputs under invoices declaring payment of appropriate duty, deemed Modvat credit cannot be denied to the recipient merely because the supplier is later found not to have actually discharged the duty liability, absent any further requirement in the notification.

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