Covered CALL : is my margin deposited for WRITING the CALL net of premium received BLOCKED?

Is cash in my account used as margin or can the Security i hold also be used as a margin ?

You can use the security to short calls as well. But you will have to first pledge the security to get the collateral margin, which can be then used to short options. 

I didn't get your main question though, margin deposited net of premium received? 

If you short a 8500 call of Nifty at Rs 300, Rs 7500 is credited as premium to your account the next day. This premium can be used to take further positions. The margin blocked for 8500 call would be around Rs 20k. You can check out our SPAN calculator

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Sir, Can you please tell me the rationale of the haircut and 50% cash requirement when I am only writing one call option against one lot of shares that I have in the demat account? Is it because you cannot monitor what will be done by the client once margin is released based on the pledged collateral? Hope you will see this post because it is not a new one.