Transitional input credit under Rule 57H cannot be denied for lack of proof of stock in process.

Rule 57A confers substantive credit of duty paid on inputs used in manufacture, and Rule 57H allows transitional credit for inputs in stock, received in the factory, or used in final products cleared on or after the specified date, subject to no double credit. The text states that the manufacturer need not prove the exact stock position at every stage of manufacture or furnish proof of stock in process or in finished form as a condition precedent. Denial of credit on that basis was unsustainable, and the matter required reconsideration on the materials produced under Rule 57A and Rule 57H.

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Issues: Whether credit of duty on inputs under Rule 57A read with Rule 57H could be denied on the ground that the manufacturer did not produce proof of stock lying in process or in finished form as on the relevant date.

Analysis: Rule 57A confers the substantive right to credit of duty paid on inputs used in the manufacture of final products. Rule 57H is a transitional provision that permits credit on inputs lying in stock or received in the factory, or used in final products cleared on or after the specified date, provided no double credit has been taken. The scheme requires verification of the stock and duty paid on the inputs, but it does not require the manufacturer to prove the exact stock position at every stage of manufacture or to furnish proof of stock in process as a condition precedent. The denial of credit on that ground had no legal basis and the matter required reconsideration on the materials produced and the relevant rules.

Conclusion: The denial of credit could not be sustained on the ground adopted by the authorities, and the matter was remitted for fresh reassessment in accordance with Rule 57A and Rule 57H.

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