Transitional Cenvat credit on declared grey fabrics upheld where stock was treated as inputs in statutory records.

Grey fabrics in declared stock were treated as inputs, not finished goods, for transitional Cenvat credit under the notification because the assessee was registered and recorded them as input in its statutory books. The adjudicating authority failed to establish with cogent findings that the goods were the assessee's finished products. On that basis, the relevant serial entry for inputs applied, and the credit taken was admissible. The Revenue's objection therefore did not succeed.

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Issues: Whether grey fabrics held in stock were to be treated as inputs or finished goods for the purpose of transitional Cenvat credit under the notification, and whether the credit taken on that basis was admissible.

Analysis: The notification provided different credit treatment for inputs and finished goods in respect of declared stock. The decisive question was the character of the declared grey fabrics in the hands of the assessee. The assessee was registered as a manufacturer, maintained records as a manufacturing unit, and treated grey fabrics as input in its statutory records. The adjudicating authority did not give cogent findings to establish that the grey fabrics were the assessee's finished goods. The appellate authority found that the stock was correctly treated as input and that credit was taken under the appropriate serial entry of the notification.

Conclusion: The grey fabrics were rightly treated as inputs, and the Cenvat credit was admissible. The Revenue's challenge failed.

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