SSI unit Cenvat credit on capital goods upheld where credit was taken before registration but used after registration.

An SSI unit was held entitled to avail Cenvat credit on capital goods under Notification No. 8/2003, and the challenge to that credit failed. The reasoning accepted that registration is required for utilisation under Rule 9 of the Central Excise Rules, 2002, while Rule 4(2)(a) of the Cenvat Credit Rules, 2004 permits only 50% utilisation in the year of availment and Rule 4(2)(b) allows the balance in the following year. As the credit was taken before registration but utilised after registration, denial of the credit was found unsustainable. The order allowing credit was upheld and the Revenue appeal was rejected.

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Issues: Whether an SSI unit was entitled to take and utilise Cenvat credit on capital goods, and whether the impugned order allowing such credit called for interference.

Analysis: The issue was treated as covered by an earlier decision holding that an SSI unit is not prohibited from availing Cenvat credit on capital goods under Notification No. 8/2003. The reasoning accepted that under Rule 9 of the Central Excise Rules, 2002 registration is a condition for utilisation, and that Rule 4(2)(a) of the Cenvat Credit Rules, 2004 restricts utilisation to 50% in the year of availment, while Rule 4(2)(b) permits utilisation of the balance in a subsequent year. Since the credit had been availed before registration and utilised after registration, the denial of full credit was found unsustainable.

Conclusion: The order allowing Cenvat credit to the assessee was upheld and the Revenue's appeal was rejected.

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