Deemed credit on grey fabrics depends on proof of receipt for processing; absent records, fresh verification was ordered.

Entitlement to deemed credit under the exemption notifications depends on proof that grey fabrics were received for further processing, because Explanation 3 excludes processed fabrics used as input. Where the evidentiary record does not conclusively establish receipt of grey fabrics and original invoices or transport documents are absent, the credit claim cannot be finally determined. The matter was therefore remanded for fresh verification of the documents and reconsideration by the adjudicating authority, with the possibility of credit remaining open if the foundational factual requirement is proved.

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Issues: Whether the appellants were entitled to deemed credit under the relevant exemption notifications and whether the denial of credit should be set aside for fresh verification of the receipt of grey fabrics.

Analysis: The entitlement to deemed credit depended on the factual determination whether the appellants had received grey fabrics for further processing or had received processed fabrics, because Explanation 3 to the notifications excluded processed fabrics used as input for further processing. The evidentiary record did not contain original invoices or transport documents to conclusively establish receipt of grey fabrics. At the same time, the earlier remand had contemplated grant of credit if that foundational fact was proved, and the record suggested that one further opportunity was warranted to produce the relevant documents.

Conclusion: The denial of deemed credit was not finally affirmed; the impugned orders were set aside and the matter was remanded to the adjudicating authority for fresh consideration after verification of the documents.

Ratio Decidendi: Entitlement to deemed credit under the notifications is contingent on proof that grey fabrics were received for processing, and where the factual basis remains unverified the matter may be remanded for reconsideration rather than finally denied.

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