COMMR.OF CENTRAL EXCISE,JALANDHAR vs M/S KAY KAY INDUSTRIES

The Supreme Court addressed the issue of deemed MODVAT credit under Rule 57A of the Central Excise Rules, 1944, and Section 3A of the Central Excise Act, 1944. The Court held that the respondent was not entitled to the deemed MODVAT credit as the supplier had not paid the appropriate duty, emphasizing the obligation of the manufacturer to ensure duty payment on inputs. The Court upheld the lower authorities' decisions, affirming the disallowance of the credit and the imposition of a reduced penalty of Rs.20,000.