Transitional Cenvat credit on stock as of 1 April 2003 depends on inventory date, not dispatch date.

Amended Rule 9A of the CENVAT Credit Rules, 2002, read with Notification No. 40/2003-C.E. (N.T.) and the Board circular dated 30-4-2003, allowed one-time Cenvat credit on inputs lying in stock as on 1-4-2003. The operative test was the existence of stock on the relevant transitional date, not the date on which the supplier or trader dispatched the goods. The objection that the fabrics were not duty paid when removed from the supplier's premises was also unsupported by material. On that construction, the credit was admissible and could be retained.

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Issues: Whether one-time Cenvat credit under Rule 9A of the CENVAT Credit Rules, 2002 was admissible on inputs lying in stock as on 1-4-2003, even though the goods were dispatched by the supplier/trader on a different date.

Analysis: The amended Rule 9A, read with Notification No. 40/2003-C.E. (N.T.) dated 30-4-2003, shifted the relevant stock date for transitional credit from 31-3-2003 to 1-4-2003. The Board's Circular dated 30-4-2003 also clarified that inputs lying in stock as on 1-4-2003 would qualify for one-time credit. On that construction, the entitlement turned on the existence of stock on the relevant date, and not on the date on which the supplier dispatched the goods. The objection that the fabrics were not duty paid at the time of removal from the supplier's premises was also not supported by material.

Conclusion: The credit was admissible and the assessee was entitled to retain it.

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