Broad construction of "plant" under Modvat law allowed transformer credit, and the later amendment was treated as clarificatory.

Transformers used in a manufacturing plant were treated as capital goods eligible for Modvat credit under Rule 57Q because the term "plant" was given its ordinary commercial meaning and read broadly to cover machines, equipment and allied apparatus installed for manufacture. On that construction, transformers that enabled the plant to function fell within the general definition even before the specific insertion of clause (d). The amendment inserting transformers of capacity exceeding 75 KVA was treated as clarificatory, intended to remove doubt rather than create a new entitlement, so the credit claim was upheld for the earlier period.

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Issues: Whether transformers used in the assessee's plant qualified as capital goods for Modvat credit under Rule 57Q of the Central Excise Rules, 1944 for the period prior to 16-3-1995, and whether the amendment inserting transformers of capacity exceeding 75 KVA was clarificatory and retrospective.

Analysis: The expression "plant" in clauses (a) and (b) of Explanation I to Rule 57Q was held to be of wide commercial meaning and to include the aggregate of machines, machinery, equipment and allied apparatus installed for manufacture. On that reading, transformers used to enable the plant to function were covered by the general definition of capital goods even before the specific insertion of clause (d). The later amendment was treated as a clarificatory measure introduced to settle doubts and controversies, and not as a provision creating a new entitlement for the first time.

Conclusion: Transformers were eligible for Modvat credit under Rule 57Q even prior to 16-3-1995, and the assessee was entitled to the credit claimed.

Final Conclusion: The denial of Modvat credit was set aside and the assessee's claim was upheld on a broad, beneficial construction of the capital goods definition.

Ratio Decidendi: For a beneficial excise provision defining capital goods, the term "plant" must receive its ordinary commercial meaning, and a clarificatory amendment may be treated as retrospective where it merely removes doubt and does not create a new substantive right.

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