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Issues: Whether deemed credit on inputs lying in stock and inputs under process as on 31-3-2003 was to be computed under Rule 9A(3)(a) of the Cenvat Credit Rules, 2002 or under Rule 9A(3)(b) of those Rules.
Analysis: Rule 9A(3)(a) governs calculation of credit on each input lying in stock and in process, to be worked out on the basis of rates and manner notified by the Central Government having regard to the average price, applicable duty rate and declared quantity. Rule 9A(3)(b), by contrast, applies to credit on inputs contained in fabrics or garments lying in stock as on 31-3-2003. Notification No. 35/03-C.E. (N.T.) dated 10-4-2003 was issued under Rule 9A(3), but the appellants' claim relating to unprocessed and under-processed input stock could not be brought under clause (b), which is confined to inputs contained in finished products. The lower appellate authority's view that clause (a) was the applicable provision was correct.
Conclusion: The appellant was not entitled to compute deemed credit under Rule 9A(3)(b) for inputs lying in stock or under process, and the demand based on Rule 9A(3)(a) was upheld.
Ratio Decidendi: The provision specifically governing the class of goods determines the method of deemed credit computation, and inputs lying in stock or under process must be assessed under Rule 9A(3)(a), not under the provision meant for inputs contained in finished goods.
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