Deemed Modvat credit depends on an invoice declaring duty already discharged; a mere promise to discharge duty is insufficient.

Deemed Modvat credit under Notification No. 58/97-C.E. was available only where the invoice expressly declared that appropriate duty had already been discharged under Section 3A of the Central Excise Act, 1944. A statement that duty liability was merely to be discharged under Rule 96ZP(3) did not satisfy that condition, and the compounded levy scheme did not cure the defective declaration. On that basis, deemed credit on the disputed invoices was inadmissible and the disallowance was restored.

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Issues: Whether deemed Modvat credit was admissible when the invoices did not declare that appropriate duty had been discharged and instead stated that duty liability was to be discharged under Rule 96ZP(3).

Analysis: Deemed credit under Notification No. 58/97-C.E. was available only when the inputs were received under invoices carrying a declaration that appropriate duty had been discharged under Section 3A of the Central Excise Act, 1944. The wording on the invoices, stating that duty liability was to be discharged, did not amount to a declaration that duty had already been discharged. In the absence of such declaration, the condition prescribed by the notification was not satisfied, and the fact that the manufacturer was under the compounded levy scheme did not cure the defect.

Conclusion: Deemed Modvat credit was not admissible on the disputed invoices and the disallowance was in law.

Final Conclusion: The Revenue's challenge succeeded, the order allowing credit was set aside, and the adjudicating authority's disallowance was restored.

Ratio Decidendi: Deemed Modvat credit is admissible only on fulfilment of the notification's express condition that the invoice must declare that appropriate duty has been discharged; a declaration that duty is merely to be discharged is insufficient.

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