Transitional credit under Rule 57H extends to traced inputs in semi-finished and finished goods, subject to proof and verification.

Rule 57H was interpreted as a transitional credit provision allowing duty-paid inputs received before acknowledgment of the declaration to qualify for credit even when those inputs were contained in semi-finished or finished goods. The rule was not read as limiting credit only to inputs lying in stock as such, because its wording and purpose supported a broader construction. Eligibility, however, depended on the assessee proving proper correlation and producing supporting documents to the satisfaction of the Assistant Commissioner for quantification of the credit.

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Issues: Whether credit under Rule 57H was admissible not only on inputs lying in stock as such but also on inputs contained in semi-finished and finished goods, subject to verification of correlation and documents.

Analysis: Rule 57H was read as providing transitional credit for duty paid on inputs received before the declaration was acknowledged. The rule did not expressly confine credit only to inputs lying in stock as such, and its object supported granting the benefit where the inputs were traceable in semi-finished or finished goods. The interpretation adopted by the lower authority was found inconsistent with the plain wording and legislative intent of the rule. However, the appellant had to establish the necessary correlation and supporting documentary proof to the satisfaction of the Assistant Commissioner for the exact quantum of credit.

Conclusion: Credit was held admissible on inputs contained in semi-finished and finished goods, subject to verification of records and correlation by the Assistant Commissioner.

Final Conclusion: The appellant succeeded to the extent that the restrictive denial of credit was set aside and eligibility was extended to traced inputs in semi-finished and finished goods, with quantification left to verification.

Ratio Decidendi: Transitional credit provision should not be narrowly confined where the rule does not expressly exclude inputs contained in work-in-process or finished goods, provided their correlation and duty payment are established.

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