Undefined capital goods under customs exemption can be read broadly, with later amendments treated as clarificatory when goods fit the policy.

An undefined term in a customs exemption notification for 100% EOUs may be construed by reference to the relevant Exim Policy, and later amendments do not necessarily confine the original scope where the goods otherwise fit the broad expression. Front end loaders, slag pot carriers, belt conveyors and spares for cranes and conveyors were used for handling raw materials, finished goods and slag, and replacement parts, so they fell within "capital goods". The notification was construed liberally as an export-promotion measure, and duty exemption was available.

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Issues: Whether the imported front end loader, slag pot carrier, belt conveyor, and spares of cranes and conveyors qualified as "capital goods" for exemption under Notification No. 13/81-Cus. even though later amendments specifically mentioned some of those items.

Analysis: The expression "capital goods" in the original notification was not defined there, so the relevant Exim Policy definition was applied. That definition covered plant, machinery, equipment, accessories, and replacement items used for production or rendering services. The goods in dispute were used for handling raw materials, finished goods, and slag, and the spares were for replacement of machinery parts. The later amendments were treated as clarificatory and not mutually exclusive of the original entry. The notification, being an export-promotion exemption, was construed liberally to advance its purpose.

Conclusion: The disputed goods were held to be capital goods covered by Notification No. 13/81-Cus. and entitled to duty exemption. The appeal by the assessee succeeded and the department's appeal failed.

Ratio Decidendi: Where a customs exemption notification for 100% EOUs uses an undefined term such as "capital goods", the term may be construed in light of the relevant Exim Policy, and later specific amendments do not necessarily restrict the ambit of the original exemption when the goods otherwise fall within that broad expression.

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