Credit denial for inputs in process requires record verification where separate maintenance is not statutorily mandated.

Credit under Rule 57H could not be denied merely because separate records of inputs in process were not maintained, as no statutory provision required such separate maintenance. The quantity of inputs in process could be derived from the stock position on the relevant date together with subsequent receipts and consumption, using the records kept for inputs. Since the assessee's figures appeared to fall within available stock, the appellate authority held that those figures required verification against the relevant records before any final determination. The denial of credit was not sustained on the existing reasoning, and the matter was remanded for de novo adjudication after record verification.

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Issues: Whether credit under Rule 57H could be denied on the ground that the assessee did not maintain records of inputs in process and whether the stock position of such inputs could be worked out from existing records.

Analysis: The appellate authority found merit in the contention that no statutory provision required separate maintenance of records for inputs in process. It accepted that the quantity of inputs in process could be worked out from the stock position as on the relevant date, together with subsequent receipts and consumption, on the basis of the records maintained for inputs. The figures furnished by the assessee showed that the claimed quantity was within the available stock, but verification of those figures with the relevant records was necessary before final determination.

Conclusion: The denial of credit was not sustained on the existing reasoning, and the matter was remanded to the adjudicating authority for de novo adjudication after verification of the records. The impugned order was set aside, and the appeal was allowed by way of remand.

Ratio Decidendi: Where the rules do not require separate records of inputs in process, the quantum of such inputs may be determined from available stock and consumption records, and the issue should be verified afresh before denying credit.

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