Transitional Cenvat credit limits on pre-2000 capital goods barred later-stage excess credit, with interest and penalty upheld.

Capital goods received before 1-4-2000 but installed thereafter qualified only for the credit available under the transitional Cenvat rule, namely 50% in the relevant financial year; the balance could not be carried forward to later years. Because the assessee took credit beyond that limit in two stages, the excess credit was inadmissible. As the credit availment itself was irregular, the consequential levy of interest and penalty was sustained.

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Issues: Whether the assessee was entitled to avail the balance Cenvat credit on capital goods received before 1-4-2000 but installed thereafter, and whether the penalty and interest imposed for excess availment were liable to be sustained.

Analysis: The capital goods had been received prior to 1-4-2000 and were not installed as on that date. Under the governing credit scheme, as interpreted in the binding precedent referred to by the Court, credit on such capital goods could be taken only to the extent of 50% during the relevant financial year, and the balance could not be availed in later years. The assessee's availing of credit in two stages beyond the permissible limit was therefore contrary to the applicable rules. Since the credit itself was held to be irregular, the liability to interest and penalty followed.

Conclusion: The assessee was not entitled to the additional Cenvat credit, and the levy of interest and penalty was upheld in favour of the Revenue.

Ratio Decidendi: Where capital goods are received before the operative date of the amended credit rules but are installed thereafter, the assessee can avail only the credit permitted by the transitional provision, and any excess credit taken later is inadmissible with consequential interest and penalty.

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