Cenvat credit on capital goods turns on dutiability at receipt, not later installation or utilisation.

Cenvat credit on capital goods is determined with reference to the dutiability of the final product when the capital goods are received in the factory. Rule 4(2) allows credit on receipt, while Rule 6(4) denies credit where capital goods are used exclusively for exempted goods. The cited line of authority treats the receipt date as the decisive point, so later installation, utilisation, or a subsequent change in duty status does not revive credit that was unavailable at receipt. The stated principle is that eligibility depends on the tax status of the final product at the time the capital goods enter the factory.

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Issues: Whether Cenvat credit eligibility for capital goods is to be determined with reference to the dutiability of the final product on the date of receipt of the capital goods or on the later date of installation or utilisation.

Analysis: Rule 4(2) of the Cenvat Credit Rules, 2002 permits credit on receipt of capital goods in the factory, while Rule 6(4) bars credit on capital goods used exclusively in the manufacture of exempted goods. The earlier decisions relied on consistently treated the date of receipt as the relevant date for testing credit eligibility, and held that later changes in duty status or subsequent use do not revive a credit that was not available when the goods were received. Applying that principle, the availability of credit depends on whether the final product was dutiable when the capital goods entered the factory.

Conclusion: Credit eligibility has to be determined with reference to the dutiability of the final product on the date of receipt of the capital goods, and not on the date of installation or later utilisation. The reference is answered against the assessee and in favour of the Revenue.

Ratio Decidendi: For capital goods, the relevant date for determining Cenvat credit eligibility is the date of receipt in the factory, and if the capital goods are then used exclusively for exempted final products, credit is not available merely because the final products become dutiable later.

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