Cenvat credit on capital goods may be taken in a later year if the goods are in possession and use, despite delayed installation.

Rule 4(b) of the Cenvat Credit Rules, 2002 permits balance Cenvat credit on capital goods to be taken in any subsequent financial year after receipt, so long as the goods are in the manufacturer's possession and use in that year. The provision does not require installation to precede availment of credit. On that basis, delayed installation did not defeat entitlement, and the objection to the balance 50% credit was rejected.

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Issues: Whether the assessee was entitled to take the balance 50% Cenvat credit on capital goods in a subsequent financial year, notwithstanding that installation of the capital goods took place later in that year.

Analysis: Under Rule 4(b) of the Cenvat Credit Rules, 2002, the balance credit may be taken in any financial year subsequent to the year in which the capital goods were received, provided the goods are in the possession and use of the manufacturer in such subsequent year. The rule does not impose a further condition that installation must precede the taking of credit. Since the capital goods were in the assessee's possession and use in the subsequent year, the statutory requirement stood satisfied.

Conclusion: The assessee was entitled to avail the balance 50% credit in the subsequent year, and the objection based solely on delayed installation was rejected.

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