Capital goods treatment for plant equipment under Modvat credit extends to transformers, panels and air compressors as clarificatory coverage.

Electrical transformers, switch gears, L.T. distribution panels, control panels and air compressors used in granite tile manufacture were treated as capital goods for Modvat credit under Rule 57Q because they functioned as integral parts of the plant and machinery. The Tribunal's earlier interpretation that such equipment, including component parts and accessories, fell within the rule was applied, and the later amendment to Notification No. 11/95 was regarded as clarificatory rather than creating a new entitlement. Air compressors were likewise covered as they supplied essential air pressure to the kiln and machinery, so credit was admissible for the disputed period.

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Issues: Whether electrical transformers, switch gears, L.T. distribution panels, control panels and air compressors used in the plant for manufacturing granite tiles were eligible as capital goods for Modvat credit under Rule 57Q, and whether the subsequent amendment expanding the definition applied to the disputed period.

Analysis: The disputed items were treated as integral parts of the plant and machinery used for production. Electrical transformers and panels were covered by the Tribunal's earlier view that such equipment falls within the definition of capital goods, and the same reasoning extended to component parts and accessories under the explanation to Rule 57Q. The amendment to Notification No. 11/95, though later in time, did not create a new entitlement but clarified the coverage of such items. Air compressors were also found to serve an essential plant function by supplying air pressure to the kiln and machinery, bringing them within the same explanatory clause.

Conclusion: The items qualified as capital goods and Modvat credit was admissible for the disputed period.

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