Later tax circular prevails for capital goods credit where installation after the cut-off date was expressly permitted.

Capital goods received before 1 April 2000 but installed and put to use after that date qualified for 50% CENVAT credit for the 2000-2001 year, because the later departmental clarification expressly permitted that credit for the operative period. The earlier circular denying credit yielded to the later, inconsistent clarification, and no separate distinction was drawn based on whether the assessee had previously enjoyed MODVAT facility. The relevant cut-off date remained 1 April 2000, so the assessee was entitled to the credit and the departmental challenge failed.

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Issues: Whether the assessee was entitled to 50% CENVAT credit on capital goods received before 01-04-2000 but installed after that date, in view of departmental circulars.

Analysis: The capital goods were received before 01-04-2000 but installed and put to use after that date, when the CENVAT credit regime became available to the assessee. The later departmental clarification expressly permitted availing of 50% credit in such cases for the financial year 2000-2001, and the Court held that this later clarification prevailed over the earlier circular that stated no credit was admissible for such capital goods. The Court also held that the circulars did not create any distinction based on whether the assessee had earlier enjoyed MODVAT facility, and the relevant cut-off date was 01-04-2000.

Conclusion: The assessee was entitled to 50% CENVAT credit on the capital goods, and the departmental appeal failed.

Ratio Decidendi: Where two departmental circulars on the same subject are inconsistent, the later clarification governing the operative period prevails, and capital goods received before the cut-off date but installed afterwards may qualify for the credit expressly permitted by the later circular.

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