Deemed credit on invoice-based clearances under Rule 96-ZP cannot be denied merely because the manufacturer's duty payment is disputed.

Deemed credit under Notification No. 58/97-C.E. was stated not to be denied merely because the input manufacturer's duty payment was disputed, where invoices recorded clearance under Rule 96-ZP of the Central Excise Rules. The buyer's entitlement was treated as dependent on the invoices and the deemed credit scheme, while any issue about non-payment or short payment of duty by the manufacturer was to be pursued against that manufacturer. On that reasoning, denial of deemed credit to the buyer was not justified, and the challenge to the credit grant failed.

---

---

Issues: Whether deemed credit under Notification No. 58/97-C.E. could be denied to the respondents merely because the manufacturer of the inputs had not discharged the duty, when the invoices recorded clearance under Rule 96-ZP of the Central Excise Rules.

Analysis: The respondents claimed credit on the strength of invoices stating that the goods were cleared under Rule 96-ZP. The claim was considered in the light of the legal position that deemed credit under Notification No. 58/97-C.E. is not defeated merely because the manufacturer's payment of duty is questioned. Any dispute as to whether the manufacturer discharged the correct duty was held to be a matter to be pursued against the manufacturer, rather than by denying credit to the buyer who relied on the invoices.

Conclusion: The denial of deemed credit was not justified, and the appeal challenging the grant of credit failed.

---