clarity of rule 4(4) of CENVAT CREDIT RULES

its very simple, for taking credit you must not have capitalized the ED paid on capital goods.otherwise you would take dual benefit one under indirect tax and second under income Tax in form of claiming depreciation.

suppose if RULE 4(4) under CCR 2004 And explanation 9 to section 43 under income TAx act would not be exist then you  will add ED to the cost of assets then you will claim depreciation which will reduce your tax burden in income tax and further you will take credit of ED under Excise which will reduce your ED payment that means you will take dual benefit.

therefore to avoid this, both the Act provide to take benefit in either of income Tax Act or excise Law.

1.under income tax if u capitalize then depreciation will be claimed and no credit under excise OR

if you dont capitalize then you would not surely claim depreciation and accordingly claim credit under excise.

i hope you would have understood.