Deemed credit under the steel inputs notification applies where duty-paid intermediary goods are captively used in manufacture.

Notification No. 58/97-C.E. provided deemed credit at 12% for hot rolled non-alloy steel products, subject to compliance with its conditions, including receipt of duty-paid inputs under the prescribed cover. Where the manufacturer made strips from billets, paid duty on the strips, and used them captively in the manufacture of pipes and tubes, the notification conditions were treated as satisfied because duty payment on the strips was undisputed and the goods were used within the same manufacturing process. The respondent was therefore entitled to deemed credit under the notification, and the Revenue's challenge failed.

---

---

Issues: Whether the respondent was entitled to deemed credit under Notification No. 58/97-C.E. dated 30.08.1997 when the inputs were captively consumed and duty had been discharged on the intermediary product.

Analysis: The Notification granted deemed credit at 12% for hot rolled non-alloy steel products and required compliance with its conditions, including receipt of duty-paid inputs under prescribed cover. The respondent manufactured strips from billets, paid duty on the strips, and used them captively in the manufacture of pipes and tubes. Since the duty payment on the strips was not in dispute and the goods were used within the respondent's own manufacturing process, the conditions of the Notification were held to be satisfied.

Conclusion: The respondent was entitled to deemed credit under the Notification, and the Revenue's challenge failed.

---