Deemed Cenvat credit on compounded levy inputs was admissible under the transitional notification and could not be denied.

Deemed Cenvat credit was available on inputs cleared by a manufacturer under the compounded levy scheme and received during the transitional period covered by Notification No. 29/2000-C.E. (N.T.). The notification treated duty as deemed to have been paid on specified inputs and allowed credit at the prescribed rate when the stated conditions were met. On that basis, the view that the manufacturer had not paid duty under the compounded levy scheme was found incorrect, and the credit was examined as admissible under the transitional arrangement and the earlier notification governing such inputs. Accordingly, the assessee was entitled to the credit and denial was not justified.

---

---

Issues: Whether deemed Cenvat credit could be denied on inputs cleared by a manufacturer under the compounded levy scheme and received by the assessee during the transitional period covered by Notification No. 29/2000-C.E. (N.T.).

Analysis: The inputs were cleared from the manufacturer in March 2000 when the compounded levy scheme was in force, and the assessee received them during the period for which the transitional notification operated. The notification treated duty as deemed to have been paid on specified inputs and permitted credit at the prescribed rate where the goods were received under the stated conditions. The finding that the manufacturer had not paid duty under the compounded levy scheme was held to be incorrect, and the credit was examined as admissible under the transitional arrangement and the earlier notification governing inputs from such manufacturers.

Conclusion: Deemed Cenvat credit was admissible and could not be denied to the assessee.

---