Capital goods under Modvat include equipment essential to manufacture, and statutory text prevails over ministerial speeches.

Wires and cables used to power blowers that remove hazardous gas in the manufacturing process were treated as capital goods under Rule 57Q because the term "plant" was given a wide meaning and goods need not directly transform raw material if they are necessary for production or for making manufacture possible. On that basis, Modvat credit was held admissible. The Court also held that the scope of Rule 57Q must be determined from its text, context and object, and not from a Finance Minister's speech, which cannot control statutory interpretation.

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Issues: (i) Whether wires and cables used to supply power to blowers, which remove noxious gas generated in the manufacturing process, qualify as capital goods under Rule 57Q of the Central Excise Rules; (ii) whether reliance can be placed on the Finance Minister's speech for determining the scope of the Rule.

Issue (i): Whether wires and cables used to supply power to blowers, which remove noxious gas generated in the manufacturing process, qualify as capital goods under Rule 57Q of the Central Excise Rules.

Analysis: The definition of capital goods in Rule 57Q was construed in the context of the object of the Modvat scheme and the statutory meaning of manufacture in Section 2(f) of the Central Excise Act. The expression "plant" in the definition was held to be of wide import and not confined only to items directly participating in transformation of raw material. The Court held that goods used directly or indirectly for production or processing, or for making the manufacturing process possible, may fall within the definition where there is a nexus with manufacture. Since the blowers were necessary for removal of hazardous gas and the wires and cables were essential for making those blowers operational, they were treated as part of the manufacturing process and as capital goods.

Conclusion: Yes. The wires and cables are capital goods under Rule 57Q, and the assessee is entitled to Modvat credit.

Issue (ii): Whether reliance can be placed on the Finance Minister's speech for determining the scope of Rule 57Q of the Central Excise Rules.

Analysis: The scope of the Rule was held to depend on its own language, context, object, and settled principles of statutory interpretation. A ministerial speech could not control or determine the meaning of the Rule where the statutory text was required to be construed on its own terms.

Conclusion: No. The Finance Minister's speech cannot be used as the guide for determining the scope of the Rule.

Final Conclusion: The reference was answered in favour of the assessee on the Modvat credit issue, while rejecting the contention that the ministerial speech could govern the interpretation of the Rule.

Ratio Decidendi: For Modvat eligibility under Rule 57Q, capital goods include goods that are directly or indirectly necessary for production or for making the manufacturing process possible, provided they have a real nexus with manufacture; the statutory text, not a ministerial speech, controls the construction of the Rule.

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