Capital goods definition for generating sets was substantively widened; 25 KVA sets remained outside Modvat credit under the earlier rule.

Generating sets of 25 KVA capacity did not qualify as capital goods for Modvat credit under the unamended Rule 57Q because the rule then covered generating sets only where output exceeded 75 KVA. Notification 14/96, which widened coverage under Heading 85.02 to include all generating sets, was held to be a substantive enlargement of the benefit and not a mere clarificatory amendment. The earlier authority was distinguished because it concerned the amended tariff-heading based definition generally, not the specific prior exclusion applicable to lower-capacity generating sets. Modvat credit was therefore not admissible on the 25 KVA sets.

---

---

Issues: Whether generating sets of 25 KVA capacity were eligible for Modvat credit as capital goods under Rule 57Q, and whether Notification 14/96 amending the definition of capital goods was clarificatory in relation to such generating sets.

Analysis: At the relevant time, Rule 57Q treated generating sets as capital goods only where their output exceeded 75 KVA. The goods in question were generating sets of 25 KVA and therefore did not fall within the then-existing definition. The subsequent amendment by Notification 14/96 expanded the coverage of Heading 85.02 so that all generating sets under that heading became eligible, which showed a substantive enlargement of the benefit rather than a mere clarification. The earlier decision relied upon was distinguished because it dealt with the effect of the amended tariff-heading based definition generally and not with the specific exclusion then applicable to generating sets up to 75 KVA.

Conclusion: Modvat credit was not admissible on generating sets of 25 KVA capacity under the unamended Rule 57Q, and Notification 14/96 was not clarificatory for that purpose.

Ratio Decidendi: Where a rule expressly limits capital goods status to generating sets exceeding a specified capacity, later expansion of the definition to include all goods under the same tariff heading is a substantive amendment and cannot be treated as clarificatory for claims falling outside the earlier limit.

---