Cenvat credit on capital goods cleared within the same year may still allow the remaining admissible credit.

Capital goods cleared as such in the same financial year did not justify denial of the balance 50% Cenvat credit where the scheme and the later express proviso indicated that full admissible credit could still be claimed. The applicable Cenvat rule generally allowed only 50% credit in the year of receipt, with the balance in a later year if the goods remained in use, but the later statutory proviso specifically covered same-year clearances. Read with the Cenvat framework and the General Clauses Act, the text supports the view that the remaining credit should not be refused solely because the capital goods were transferred within the same year.

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Issues: Whether the assessee was entitled to avail the balance 50% Cenvat credit on capital goods when the capital goods were cleared as such in the same financial year after availing the first 50% credit.

Analysis: The applicable rule under the Cenvat regime restricted credit on capital goods received in a financial year to 50% in that year, with the balance admissible in a subsequent year only if the capital goods remained in the possession and use of the manufacturer. The capital goods in question had been removed as such within the same financial year, so the condition for availing the balance credit under the general rule was not satisfied. However, the later proviso introduced in the Cenvat Credit Rules, 2002 expressly allowed the whole duty credit where capital goods were cleared as such in the same financial year. The earlier and later statutory position, read with the scheme of the Cenvat provisions and the General Clauses Act, supported the view that the assessee should not be denied the balance credit merely because the goods were transferred within the same year.

Conclusion: The assessee was entitled to avail the balance 50% credit, and the Revenue's challenge failed.

Final Conclusion: The appeal was rejected and the assessee's entitlement to the remaining credit was upheld.

Ratio Decidendi: Where capital goods are cleared as such in the same financial year, the Cenvat credit scheme should be construed to permit the assessee to avail the remaining admissible credit, especially when the later express proviso reflects the intended statutory treatment of such clearances.

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