Transitional Cenvat credit denied where finished goods cleared from factory were no longer 'lying in stock' on the relevant date.

Finished goods cleared from the factory before 31 March 2003 and stored in a port-side godown did not qualify as goods "lying in stock" for transitional Cenvat credit under Rule 9-A of the Cenvat Credit Rules, 2002. The rule applied only to inputs or finished products actually in stock, in process, or contained in finished products on the relevant date, subject to the prescribed declaration and documentary requirements. Because the goods had already been removed from the factory stock account and cleared on commercial invoices, mere continued custody at the port did not satisfy the statutory condition. Transitional credit was therefore not available.

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Issues: Whether finished goods removed from the factory before 31 March 2003 and lying in a port-side godown could be treated as goods "lying in stock" for the purpose of transitional Cenvat credit under Rule 9-A of the Cenvat Credit Rules, 2002.

Analysis: Rule 9-A permitted credit only in respect of inputs or finished products lying in stock, in process, or contained in finished products as on 31 March 2003, subject to the statutory declaration and documentary conditions. The goods in question had already been cleared from the factory on the basis of commercial invoices showing buyers' names and were moved to the port area for export. They had been removed from the factory stock account before the relevant date and were therefore no longer goods lying in the assessee's stock. The statutory requirement could not be satisfied merely because the goods remained in the assessee's custody at the port.

Conclusion: The goods stored at the port were not eligible for transitional Cenvat credit as goods lying in stock, and the disallowance of credit was justified.

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