Capital goods duty credit under the Compounded Levy Scheme: entitlement follows installation and production, with paragraph 8 applied.

Entitlement to capital goods duty credit under the Compounded Levy Scheme was linked to the year in which machinery was actually installed and commercial production commenced. Although the machinery had been received earlier, installation and production began only in the subsequent financial year, and paragraph 8 of the Board's circular was treated as governing that position. On that factual basis, 50% of the capital goods duty credit for the year of installation was accepted.

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Issues: Whether the assessee was entitled to avail 50% of the capital goods duty credit in the financial year 2000-2001 when the machinery was installed and commercial production commenced in that year, and whether the case fell within paragraph 8 of the Board's circular governing the Compounded Levy Scheme.

Analysis: The machinery had been received earlier, but it was installed only in the subsequent financial year and commercial production also commenced in that year. Since the unit had not actually operated under the Compounded Levy Scheme before installation and commencement of production, paragraph 8 of the Board's circular was held to govern the situation. On that factual and legal basis, the entitlement to 50% of the capital goods duty credit for the year of installation was accepted.

Conclusion: The assessee was entitled to take 50% of the capital goods duty credit for the financial year 2000-2001.

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