Yes, it goes into the capsule BEFORE you put the coffee in.
FAQ for Dolce Gusto ® BrewersRSS
What brewers will the capsules work in?
These refillable reusable capsules can be used with compatible Dolce Gusto ® brewers. This includes DeLonghi Creativa, DeLonghi Genio, DeLonghi Circolo, Melody2, and Krup's.