TaxTMI 
TaxTMI 
1996 (6) TMI 222
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....by the appellant on two invoices and had directed the appellant to reverse the credit. 2.  Appellant is engaged in the manufacture of chemicals in a chemical plant which is completely automatic. The plant has a panel board and panel board has switches and other fittings. By the two invoices referred to above, appellant purchased such switches and treating them as capital goods as defined in Rule 57Q of the Central Excise Rules,1944, availed Modvat credit in respect of the duty paid on the switches and utilised the credit for payment of duty on the clearance of final product, namely, chemicals. Notice was issued to the appellant stating that switches cannot be regarded as capital goods for the purpose of Rule 57Q and, therefore, the ....
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....gard to the duty paid on the capital goods used by the appellant in its factory. Capital goods are defined in the Explanation to sub-rule (l) of Rule 57Q. Explanation, as it stood at the relevant time, reads thus :- "Explanation for the purposes of this section, (1) `capital goods' means - (a) machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products; (b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and (c) moulds and dies, generating sets and weighbridges used in the factor....
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....of the chemical plant and a new switch to be used in the panel board of an old chemical plant is a spare part of the chemical plant itself and, therefore, will be "capital goods" as defined in Explanation 1(a) of the Rule. The lower authorities did not advert to and ignored the definition of "capital goods" in Explanation 1(b). In the light of what is indicated above, switches of panel board of chemical plant which are used as spare parts will be "capital goods" for the purpose of Rule 57Q and since the final products of the appellant are specified in the annexure, the appellant would be entitled to the benefit of Rule 57Q. 6. My attention has been invited to order dated 10-9-1996 in appeal E/1368/95-NB M/s. J.K. Synthetics Ltd. v. ....
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....ot use the words "in relation to manufacture", the Bench was inclined to hold that the wide connotation of the words "in relation to manufacture" was not attracted in the context of the words "used for producing or................ for bringing about........." used in Explanation 1(a) of Rule 57Q. The Bench also adverted to the Explanation to Rule 57Q" substituted by Notification No. 14/96-C.E., dated 23-7-1996 and opined that the substituted Explanation was only clarificatory in nature and can be applied retrospectively. The case was remanded for redetermination of the eligibility for Modvat credit under Rule 57Q in terms of the substituted Explanation. 8. The opinion that the substituted Explanation to Rule 57Q is clarificatory and....