Cenvat credit on capital goods depends on continued possession and use; balance credit was denied when the moulds were already scrapped.

Balance Cenvat credit on capital goods was admissible in a later financial year only if the goods, other than specified exceptions, remained in the manufacturer's possession and use under Rule 4(2)(b) of the Cenvat Credit Rules, 2002. Because the moulds had already been used, became waste and scrap, and were no longer with the assessee when the credit was claimed, the statutory condition was not met. The remaining 50% credit was therefore not admissible and the disallowance was upheld in favour of Revenue.

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

Analysis: Rule 4(2)(b) of the Cenvat Credit Rules, 2002 permits the balance Cenvat credit in a later financial year only if the capital goods, other than specified exceptions, remain in the possession and use of the manufacturer in such subsequent year. On the undisputed facts, the moulds had been used, become waste and scrap, and were no longer available with the assessee when the balance credit was taken. The Board clarification and the cited Tribunal decisions supported the view that the statutory condition of possession and use was not satisfied.

Conclusion: The remaining 50% Cenvat credit was not admissible and the disallowance was upheld, in favour of Revenue.

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