2004 (5) TMI 123 - AT - Central Excise

Summary

Issues involved: Interpretation of Rule 4(2)(a) of Cenvat Credit Rules, 2001 regarding claiming credit on capital goods received in a factory in a given financial year.

Summary:
The appellants, manufacturers of plastic products, received capital goods in 2000 but did not claim credit as they were under exemption. They later opted for the Cenvat Credit Scheme in 2001. The Commissioner disallowed 50% credit not availed in the year of receipt. The appellants argued that Rule 4(2)(a) does not prohibit claiming credit in a subsequent year. The Tribunal noted that the Rule allows taking up to 50% credit in the year of receipt and the balance in subsequent years. Denying credit for not claiming in the same year was deemed contrary to the Rules. Citing relevant case law, the Tribunal allowed the appeal and directed the 50% credit to be granted to the appellants.

This judgment clarifies that under Rule 4(2)(a) of Cenvat Credit Rules, 2001, manufacturers can claim credit on capital goods received in a factory in a given financial year. The Rule allows taking up to 50% credit in the same financial year of receipt, with the balance available for subsequent years. Denying credit for not claiming in the year of receipt was deemed incorrect as the Rules do not stipulate forfeiture of unclaimed credit. The decision emphasizes the flexibility provided by the Rules in claiming Cenvat credit on capital goods, ensuring manufacturers' entitlement to avail such benefits in compliance with the regulatory framework.