CENVAT Credit on Balance 50% of Capital Goods Can Be Availed in Subsequent Years: CESTAT Holds Rejection Unsustainable [Read Order]
Rule 4(2)(a) explicitly allows a manufacturer to avail only 50% of the capital goods credit in the year of receipt and to take the remaining 50% in any subsequent financial year, with no time restriction.
![CENVAT Credit on Balance 50% of Capital Goods Can Be Availed in Subsequent Years: CESTAT Holds Rejection Unsustainable [Read Order]](https://images.taxscan.in/h-upload/2025/11/13/2104832-cenvat-credit-capital-goods-cestat-taxscan.webp "CENVAT Credit on Balance 50% of Capital Goods Can Be Availed in Subsequent Years: CESTAT Holds Rejection Unsustainable [Read Order]")
The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Principal Bench, New Delhi, has held that the rejection of CENVAT credit taken on the balance 50% portion of capital goods in subsequent years is unsustainable, ruling that Rule 4(2)(a) of the CENVAT Credit Rules, 2004 permits such availment without any time limitation.
In an appeal filed by Navin Fluorine International Limited, challenging the Commissioner’s order that had confirmed excise duty demand and disallowed credit on the ground of alleged delay in availing capital goods credit.
The Tribunal examined the findings of the Commissioner, who had held that the assessee wrongly availed credit on capital goods beyond the prescribed one-year period.
However, after analysing the statutory framework, the tibunal observed that Rule 4(2)(a) explicitly allows a manufacturer to avail only 50% of the capital goods credit in the year of receipt and to take the remaining 50% in any subsequent financial year, with no time restriction.
The CESTAT noted that the appellant had furnished invoice-wise details indicating the dates of receipt of capital goods and the corresponding availment of the remaining 50% credit in the following financial year.
Since the CENVAT Credit Rules place no time bar on availing this remaining credit, the Commissioner’s rejection of the balance credit was held to be erroneous.
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The order states that “Under Rule 4(2)(a) of the 2004 Credit Rules, a manufacturer is permitted to avail only 50% of the credit on capital goods in the financial year of receipt, and the remaining 50% can be availed in any financial year subsequent to the year of receipt. There is no time limit placed to availing the remaining 50% credit.”
Accordingly, the appellate tribunal set aside the finding relating to the capital goods credit and held that the rejection of CENVAT credit on the balance 50% portion was unsustainable in law, as the availment fully complied with Rule 4(2)(a). Thus, the appeal was allowed.
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