Dismissing the appeal of the assessee the ,High Court held that S. 43B shall appy only in cases of ‘statutory liability’. In the present case primary liability to pay excise duty is essentially on the manufacturers of the raw materials and inputs. As far as the Assessee is concerned, the liability to pay the said amount is only contractual. Therefore High Court held that the assessee would not be allowed to claim deduction of unutilized MODVAT credit u/s 43B of the Act. However, High Court agreed with the ITAT’s acceptance of the assessee’s alternate contention that unutilized MODVAT credit of the earlier year is allowable as a deduction in the relevant assessment year, to the extent that it has been adjusted by treating as actual payment of the credit for the assessment year in question. (AY .1999-00)