Deemed credit under Notification 58/97 may survive a minor cheque shortfall when explained as bona fide adjustment of pending dues.

Deemed credit under Notification No. 58/97 was not to be denied across all invoices merely because cheque payment was short by a small adjusted amount. The shortfall was explained as an adjustment of pending dues arising from earlier returned goods, treated as a normal trade practice, and the condition of payment by account payee cheque was otherwise substantially met. Credit was therefore admissible for seven invoices, while credit for Invoice No. 1035 dated 24-1-99 was not allowed.

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Issues: Whether deemed credit under Notification No. 58/97 could be denied in respect of all invoices merely because the cheque payment was short by a small adjusted amount, and whether credit was admissible for the remaining invoices.

Analysis: The condition for deemed credit required payment by account payee cheque, but the discrepancy between the total invoice value and the cheque amount was explained as an adjustment of pending dues arising from earlier returns of goods. Such adjustment was treated as a normal trade practice. The concession made by the assessee in relation to one invoice was also taken into account, showing that the dispute did not affect the entire set of invoices in the same manner.

Conclusion: Denial of deemed credit for all eight invoices was not justified. Deemed credit was held admissible for seven invoices, while credit relating to Invoice No. 1035 dated 24-1-99 was not allowed.

Final Conclusion: The appeal succeeded in part, with the assessee obtaining relief for the bulk of the disputed credit and the disallowance confined to one invoice.

Ratio Decidendi: A minor shortfall in cheque payment does not justify denial of deemed credit for all invoices where the discrepancy is explained by a bona fide adjustment of pending dues and the condition is otherwise substantially satisfied.

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