Commissioner of Central Excise, Jalandhar Vs. M/s. Kay Kay Industries 

The dispute in Commissioner of Central Excise, Jalandhar v. M/s. Kay Kay Industries arose under the MODVAT (Modified Value Added Tax) Scheme relating to deemed MODVAT credit. The respondent-assessee had availed deemed credit on inputs purchased from its supplier in accordance with the applicable Government notification.

During departmental verification, it was discovered that the supplier had not discharged the entire excise duty liability relating to the goods covered by the invoices. On this basis, the Department concluded that the respondent was not entitled to retain the deemed MODVAT credit and initiated recovery proceedings.