Deemed credit under Notification No. 58/97 remains available where supplier coverage under the compounded levy scheme is undisputed.

Deemed credit under Notification No. 58/97 was available to buyers of inputs received from manufacturers operating under the compounded levy scheme. Where the suppliers' coverage under that scheme was not in dispute, the recipients were not required to prove, by separate evidence, that the exact duty had been paid in the prescribed manner. Objections based only on invoice declarations and the absence of proof of precise duty particulars were insufficient to deny the credit. The operative effect was that deemed credit remained available to the buyers despite those documentary objections.

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Issues: Whether deemed credit was available to buyers of inputs received from manufacturers operating under the compounded levy scheme, and whether the recipients were required to prove that the suppliers had paid the exact duty in the prescribed manner.

Analysis: The respondents received inputs from units working under the compounded levy scheme. The revenue did not dispute that the supplier-manufacturers were operating under that scheme, though it questioned the form of declarations on the invoices and the exact duty particulars. The entitlement to deemed credit under Notification No. 58/97 was treated as available to buyers of such inputs, and it was held that the buyers were not required to lead evidence proving the correct duty payment by the manufacturers when the suppliers' coverage under the compounded levy scheme was not in dispute.

Conclusion: Deemed credit was available to the respondents, and the objection based on the invoice declarations and proof of exact duty payment failed.

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