Cenvat credit on capital goods remained capped at partial credit in the year of receipt when installation conditions were unmet.

Cenvat credit on capital goods during the relevant period was restricted to 50% in the financial year of receipt, with the balance available later if the statutory conditions were met. A Board circular dated 29 August 2000 applied only where the capital goods had been received and installed before 1 April 2000 and credit had not been taken earlier for some reason. On the admitted facts, the goods were not installed by 1 April 2000, so the circular could not extend credit beyond the rule. A plea that the goods were spares did not alter their treatment under the capital goods provisions.

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Issues: Whether the assessee was entitled to avail 100% Cenvat credit in April 2000 on capital goods received in March 2000 but not installed by 1 April 2000, and whether the Board circular dated 29 August 2000 permitted such credit.

Analysis: The credit scheme in the relevant period allowed only 50% of the duty paid on capital goods in the same financial year in which the goods were received, with the balance available in a subsequent financial year if the capital goods remained in possession and use. The circular relied upon by the assessee applied only where the capital goods had been received and installed before 1 April 2000 and credit had not been taken for some reason before that date. On the admitted facts, the capital goods were not installed by 1 April 2000, so the circular did not apply. The contention that the goods were spares did not change their treatment when credit was claimed under the capital goods provisions.

Conclusion: The assessee was entitled only to 50% credit in the financial year of receipt, and the appeal failed.

Ratio Decidendi: Where the governing credit rule permits only partial credit on capital goods in the year of receipt, a circular cannot enlarge the entitlement beyond the conditions expressly stated in it.

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