Deemed credit under Notification 58/97: procedural non-compliance with input-payment conditions did not defeat the credit claim.

Deemed credit under Notification No. 58/97 was held available where the object of the notification was otherwise satisfied, even though payment for inputs was made by another entity. The Tribunal treated the paragraph 5 condition as procedural rather than substantive, so non-compliance did not automatically defeat the credit claim. Rejecting a narrow literal construction that would deny relief to job workers and similar users of inputs, it followed earlier Tribunal reasoning and held that the condition could be condoned in appropriate cases. The denial of deemed credit was therefore unsustainable.

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Issues: Whether the assessee was entitled to deemed credit under Notification No. 58/97 despite the payment for inputs being made by another entity, and whether non-compliance with the condition in paragraph 5 of the notification was fatal to the credit claim.

Analysis: The notification was construed in light of the Tribunal's earlier ruling that the condition in paragraph 5 is procedural and that non-compliance may be condoned where the object of the notification is otherwise satisfied. The reasoning rejected a narrow literal reading that would defeat the benefit for job workers and similar users of inputs. Applying judicial discipline to follow that ratio, the Tribunal held that the condition did not bar the credit claim in the present case.

Conclusion: The assessee was entitled to take deemed credit and the denial of credit was unsustainable.

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