It is possible for assesment module to capture live camera video as input rather than submitting as a file. if its not possible is there any other way or module/plugin to achieve this.
Yes! Through a plug in. The PoodLL Online Assignment plugin (& the required PoodLL Filter) might be what you're looking for. It's a great because it simply adds in the audio/video options into the currently existing Assignment module. There may be other plug ins, but this is the one I am familiar with.
More info about PoodLL.
If you install both the PoodLL Filter and PoddLL Anywhere (for Atto or TinyMCE), you can input from a camera just about anywhere in Moodle where you can use the Atto or TinyMCE editors.