Rule 57H credit requires inputs to be in factory stock or received in factory; processor-held inputs are excluded.

Rule 57H of the Central Excise Rules, 1944 permits credit only where the Assistant Collector is satisfied that duty-paid inputs are lying in stock, are received in the factory on or after the relevant date, or are used in final products cleared from the factory on or after that date. The provision requires verification of the inputs' duty-paid character and a direct link to stock held in, or receipt into, the factory. Inputs held by processors outside the factory do not fall within that language and cannot be treated as stock in the factory for credit purposes. Credit was therefore denied.

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Issues: Whether inputs lying with a processor outside the appellant's factory could be treated as inputs lying in stock in the factory so as to qualify for credit under Rule 57H of the Central Excise Rules, 1944.

Analysis: Rule 57H empowers the Assistant Collector to allow credit only if he is satisfied that the inputs are lying in stock or are received in the factory on or after the relevant date, or are used in the manufacture of final products cleared from the factory on or after that date. The provision contemplates verification of the duty-paid character of inputs and links eligibility to inputs lying in or received in the factory. Inputs lying with processors outside the factory are not covered by that language, and the rule does not extend to stock held in the custody of processors.

Conclusion: Inputs lying with processors cannot be treated as inputs lying in stock in the factory for the purpose of Rule 57H. The denial of credit was upheld and the appeal failed.

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