Deferred Cenvat credit on capital goods applies only if the goods remain in possession and use in the subsequent year.

Deferred availment of the balance 50% Cenvat credit on capital goods is permitted only where the goods remain in the manufacturer's possession and use in the subsequent financial year. On the stated facts, the moulds and dies had been destroyed during manufacture and were no longer available in that year, so the statutory condition under Rule 57AC(2)(b) was not met. The denial of the balance credit was therefore justified.

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Issues: Whether the assessee was entitled to avail the balance 50% of Cenvat credit on capital goods in a subsequent financial year when the capital goods were no longer in possession and use.

Analysis: Rule 57AC(2)(b) permits the balance Cenvat credit to be taken in a financial year subsequent to the year of receipt only if the capital goods remain in the possession and use of the manufacturer in such subsequent year. The moulds and dies in question had been destroyed in the course of manufacture and were no longer available in the relevant subsequent year. The statutory condition for deferred availment of credit was therefore not satisfied.

Conclusion: The assessee was not entitled to the balance 50% of Cenvat credit, and the denial of credit was justified.

Ratio Decidendi: Deferred availment of balance Cenvat credit on capital goods is permissible only if the goods continue to remain in the manufacturer's possession and use in the subsequent year.

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