Capital goods credit turns on receipt date and continuing exclusions; pre-amendment Calcinator Assembly credit was allowed.

Capital goods credit under Rule 57Q depended on the legal regime in force on the date the goods were received. Components falling under Heading 84.74 remained excluded until 1-9-1996, and the removal of that exclusion by Notification No. 25/96-CE(NT) was not treated as retrospective or clarificatory; credit on components received between 23-7-1996 and 31-8-1996 was therefore inadmissible. By contrast, the item described as the "Calcinator Assembly" was received before 23-7-1996, when the broader pre-amendment regime applied, and credit on that item was admissible.

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Issues: (i) Whether components of capital goods falling under Heading 84.74 were eligible for capital goods credit under Rule 57Q of the Central Excise Rules for the period prior to 1-9-1996 on the basis that Notification No. 25/96-CE(NT) was clarificatory and retrospective; (ii) Whether credit was admissible on the item described as "Calcinator Assembly" received prior to 23-7-1996.

Issue (i): Whether components of capital goods falling under Heading 84.74 were eligible for capital goods credit under Rule 57Q of the Central Excise Rules for the period prior to 1-9-1996 on the basis that Notification No. 25/96-CE(NT) was clarificatory and retrospective.

Analysis: The exclusion of capital goods or components thereof falling under Heading 84.74 remained in force until 1-9-1996, when it was removed by Notification No. 25/96-CE(NT). The earlier Tribunal decision relied upon did not decide that Notification No. 25/96 was clarificatory or retrospective. On the facts, the components other than "Calcinator Assembly" were received in the factory between 23-7-1996 and 31-8-1996, when the exclusion still operated.

Conclusion: Credit on those components was not admissible and the disallowance was upheld in favour of Revenue.

Issue (ii): Whether credit was admissible on the item described as "Calcinator Assembly" received prior to 23-7-1996.

Analysis: For the period prior to the amendment of Rule 57Q by Notification No. 14/96-CE(NT), all capital goods used for processing goods in or in relation to manufacture were eligible for credit. The record did not show that the "Calcinator Assembly" was outside that use. As it was received before 23-7-1996, the broader pre-amendment regime applied.

Conclusion: Credit on the "Calcinator Assembly" was admissible in favour of Assessee.

Final Conclusion: The appeal succeeded only to the extent of the credit relating to the "Calcinator Assembly", while the denial of credit on the remaining components was sustained.

Ratio Decidendi: An amendment removing an exclusion from capital goods credit is not retrospective unless expressly or necessarily shown to be clarificatory, and credit must be tested by the legal regime prevailing on the date the goods were received.

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