Deemed credit cannot exceed actual duty paid on inputs cleared under the relevant excise notification.

Deemed credit was unavailable beyond the actual duty paid on inputs where the supplier cleared goods under Notification No. 50/97-C.E. at the specified rate. The recipient could not claim 12% credit of invoice value when the invoices evidenced duty payment at 300 per MT, because the credit mechanism under Notification No. 58/97-C.E. did not permit credit exceeding the duty borne by the inputs. The absence of evidence that the supplier paid duty under the compounded levy scheme under Section 3A of the Central Excise Act was material, and the higher deemed credit claim was rejected.

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Issues: Whether the recipient of inputs was entitled to avail deemed credit at 12% of invoice value when the supplier had cleared the inputs on payment of duty under Notification No. 50/97-C.E. at the specified rate, and whether credit could exceed the actual duty paid by the manufacturer.

Analysis: The invoices showed that the supplier had paid duty under Notification No. 50/97-C.E. at the rate of 300 per MT. The recipient could not claim credit beyond the duty actually paid on the inputs. The supplier was not shown to have paid duty under the compounded levy scheme under Section 3A of the Central Excise Act, and the deemed credit mechanism under Notification No. 58/97-C.E. did not permit a credit higher than the duty borne by the inputs.

Conclusion: The claim for higher deemed credit was not sustainable and was rejected.

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