Modvat credit on capital goods upheld where the pre-amendment definition already covered the equipment used in manufacture.

Modvat credit under Rule 57Q was admissible on the specified capital goods received before 23-7-1996 because the then-existing definition of capital goods was broad enough to cover machinery, equipment, apparatus, tools and appliances used in manufacture. Electrical control panels, airtight door butterfly dampers and vacuum circuit breakers fell within that ambit on the facts stated. Notification No. 14/96-C.E. (N.T.) dated 23-7-1996 was not treated as retrospectively restricting the earlier scope of capital goods, so the Revenue's reliance on it to deny credit for the prior period failed.

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Issues: Whether Modvat credit on the specified capital goods was admissible under Rule 57Q of the Central Excise Rules, 1944 for goods received before 23-7-1996, and whether Notification No. 14/96-C.E. (N.T.) dated 23-7-1996 could be treated as limiting the earlier scope of capital goods.

Analysis: The relevant definition of capital goods at the material time was broad enough to include machines, machinery, equipment, apparatus, tools and appliances used for producing or processing goods or for bringing out any change in any substance for manufacture of final products. On that basis, the electrical control panel, airtight door butterfly damper and vacuum circuit breaker were covered within the ambit of capital goods even before the amendment notification. The later notification was not treated as having retrospective restrictive effect, and the Revenue's reliance on it to deny credit for the earlier period was found misplaced.

Conclusion: Modvat credit was admissible on the impugned capital goods, and the Revenue's appeal failed.

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