Deemed Modvat credit cannot be denied where a notification's invoice declaration is only procedural and the substantive deeming fiction is satisfied.

Notification No. 58/97-C.E. was construed to create a substantive deeming fiction that excise duty on the notified inputs was deemed to have been paid, making Modvat credit available to the final product manufacturer. The invoice declaration requirement in Paragraph 4, stating that duty had been paid under Section 3A, was treated as procedural and incapable of overriding the deeming provision in Paragraph 2. An invoice stating that duty liability had been discharged under Rule 96ZP(3) was accepted as compliance because the payment was under Section 3A. Denial of deemed credit for the remaining invoices merely for absence of the exact declaration was therefore not sustainable.

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Issues: Whether the assessee was entitled to deemed Modvat credit under Notification No. 58/97-C.E. on inputs received from manufacturers working under Rule 96ZP, where some invoices stated that duty liability was to be discharged and the Department alleged non-compliance with the invoice declaration condition in Paragraph 4.

Analysis: The Notification created a deeming fiction in Paragraph 2 that excise duty was deemed to have been paid on the notified inputs and that credit of such deemed duty was allowable to the final product manufacturer. Paragraph 4, which required an invoice declaration that appropriate duty had been paid under Section 3A, was held to be a condition that could not override the substantive deeming provision. An invoice stating that duty liability had been discharged under Rule 96ZP(3) was treated as compliance because such discharge was under Section 3A. For the remaining invoices, the absence of the exact declaration did not justify denial of credit, as the procedural condition in Paragraph 4 was considered subordinate to the Government's substantive declaration in Paragraph 2.

Conclusion: The assessee was entitled to deemed Modvat credit on all the disputed invoices, and denial of credit for want of the invoice declaration was not sustainable.

Ratio Decidendi: Where a notification itself creates a deeming fiction that duty has been paid and credit is allowable, a procedural declaration condition in the invoice cannot be used to defeat the substantive benefit of deemed credit.

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