In a bowl, cream butter, sugar and cloves. Add eggs, one at a time, beating well after each addition. Combine flour and baking powder; add to creamed mixture alternately with milk. Fold in apples. Transfer to a greased and floured 9-in. round baking pan. Bake at 375° for 35-40 minutes or until a toothpick inserted in the center comes out clean. Cool on a wire rack.
Meanwhile, in a saucepan, combine sugar, flour and milk until smooth. Bring to a boil over medium-heat; cook and stir for 2 minutes or until thickened and bubbly. Remove from the heat. Stir a small amount into egg; return all to pan. bring to a gentle boil. Reduce heat; cook and stir for 2 minutes. Remove from the heat; whisk in butter and vanilla. Serve over warm cake. Sprinkle with ground cloves if desired.