Ordinary commercial meaning of stock supports deemed CENVAT credit for grey fabrics purchased for processing and cleared as processed goods.

Grey fabrics purchased for further processing and later cleared as processed fabrics were treated as inputs in stock, not finished goods, for deemed CENVAT credit under Notification No. 35/2003-C.E. (N.T.). Because the notification did not define the stock description, the expressions were construed in their ordinary commercial sense. The relevant distinction for deemed credit depended on the nature of the goods in stock, not on whether the claimant was registered as a dealer or manufacturer. On that basis, higher deemed credit was available where grey fabrics were purchased for processing and cleared on payment of duty as processed fabrics.

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Issues: Whether grey fabrics lying in stock with the assessee were to be treated as inputs or as finished goods for the purpose of availing deemed CENVAT credit under Notification No. 35/2003-C.E. (N.T.), dated 10-4-2003.

Analysis: The notification did not define the expressions used for stock lying with the dealer or manufacturer, so they were to be understood in their ordinary commercial sense. Grey fabrics purchased for further processing and thereafter cleared as processed fabrics were held to constitute inputs in stock, not finished goods in stock. The distinction for deemed credit under the notification depended on the nature of the goods in stock and not on whether the person claiming credit was registered as a dealer or manufacturer. As the assessee had purchased grey fabrics, sent them for processing, and cleared the processed fabrics on payment of duty, the higher deemed credit was held to be available.

Conclusion: Grey fabrics in stock were correctly treated as inputs, and the assessee was entitled to the higher deemed credit under the notification.

Ratio Decidendi: Where a deeming notification does not define the relevant stock description, the words must be construed in their ordinary commercial sense, and goods purchased for further processing retain the character of inputs for credit purposes.

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