Cenvat credit on capital goods is available on receipt, not only after installation, where the rule imposes no such condition.

Cenvat credit on capital goods was admissible on receipt, because the governing rule allowed availment at that stage and imposed only a quantified restriction on the credit available in the relevant year. Installation was not a statutory condition precedent, and the departmental circular also stated that installation was not required before taking credit. A contrary reading would conflict with the text of the rule and the established treatment of inputs. The denial of credit for alleged premature availment was therefore unsustainable, and the demand and penalty could not stand.

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Issues: Whether Cenvat credit on capital goods could be taken before the capital goods were installed in the factory.

Analysis: The applicable rule permitted credit of duty on capital goods on receipt, with only a quantified restriction on the extent of credit in the relevant financial year. The rule did not make installation a condition precedent. The departmental circular also ly stated that installation was not a pre-requisite for availing credit. A construction requiring actual installation before credit would be inconsistent with the text of the rule and with the established treatment of inputs, on which credit was traditionally taken on receipt and not only on actual use.

Conclusion: Credit on the capital goods was admissible on receipt and not contingent upon installation, so the denial of credit was unsustainable.

Final Conclusion: The demand and penalty based on premature availment of credit could not stand, and the assessee succeeded.

Ratio Decidendi: Where the governing Cenvat rule allows credit on receipt of capital goods and does not prescribe installation as a statutory condition, credit cannot be denied merely because the goods have not yet been installed.

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