Cenvat credit on capital goods received before 1-4-2000 was capped at 50% under Rule 57AC(2)(c).

Rule 57AC(2)(c) limited Cenvat credit on capital goods received in the factory before 1-4-2000 but not installed by that date to a maximum of 50% of the duty paid in the financial year 2000-2001. The phrase "subject to" was treated as a clear limitation and had to be applied as written. The illustration appended to the rule, which addressed capital goods received after 1-4-2000, could not override the plain language of clause (c). The assessee's entitlement was therefore confined to 50% credit in the relevant year, not full credit.

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Issues: Whether Rule 57AC(2)(c) of the Central Excise Rules, 1944 entitled the assessee to take 100% Cenvat credit on capital goods received before 1-4-2000 but not installed before that date, or restricted the credit to 50% in the relevant financial year.

Analysis: Rule 57AC(2)(c) permits Cenvat credit in respect of capital goods received in the factory before 1-4-2000 but not installed by that date, yet the credit is expressly subject to a ceiling of an amount not exceeding 50% of the duty paid in the financial year 2000-2001. The phrase 'subject to' denotes a limitation and must be given effect to. The illustration appended to the rule applies to capital goods received after 1-4-2000 and cannot govern the situation covered by clause (c). An illustration cannot control the plain language of the main provision.

Conclusion: The assessee was not entitled to 100% Cenvat credit under Rule 57AC(2)(c); the credit was confined to 50% in the relevant year.

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