Deemed Modvat credit denied where input price was adjusted, not paid by cheque or bankers' cheque, under the notification.

Deemed Modvat credit under Notification No. 58/97-C.E. (N.T.) was confined to inputs whose price was paid by cheque, demand draft or bankers' cheque. Where the consideration was only adjusted against sums payable to the input manufacturer, the mandatory payment condition was not met, so the credit claim failed. The appeal was rejected.

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Issues: Whether the appellant was entitled to deemed Modvat credit under Notification No. 58/97-C.E. (N.T.) when the consideration for the inputs was not paid by cheque, demand draft, or bankers' cheque.

Analysis: The notification permitted deemed credit only where the price of the inputs supplied by the manufacturer had been paid by cheque or bankers' cheque. The amount on which credit was claimed had not been paid by cheque, demand draft, or bankers' cheque, but was adjusted against sums payable to the input manufacturer. The mandatory condition attached to the notification was therefore not satisfied.

Conclusion: The appellant was not entitled to the deemed Modvat credit. The appeal failed and was rejected.

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