CENVAT credit on secondary packing material remains available where MRP-based valuation treats packing as part of final value.

Packing material used for repacking and sale of instant coffee powder qualifies as an input for CENVAT credit because Rule 2(g) of the CENVAT Credit Rules, 2002 covers packing material used in or in relation to manufacture. Where the goods are cleared on MRP-based valuation under section 4A, the packing element is treated as part of the value of the final product, so duty paid on secondary packing material cannot be denied merely because it is secondary packing. The stated result is that credit was allowable on the duty paid on such packing material.

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Issues: Whether secondary packing material used for repacking and sale of instant coffee powder was eligible as input for CENVAT credit when the goods were cleared on MRP-based valuation under section 4A.

Analysis: Rule 2(g) of the CENVAT Credit Rules, 2002 defines input broadly to include packing material used in or in relation to manufacture of final products. The packed coffee powder was sold under MRP-based assessment, and section 4A treats the retail sale price as inclusive of packing-related charges. Since the secondary packing was used in the course of manufacture and sale of the final product, duty paid on such packing material could not be denied merely because it formed secondary packing. The prior Tribunal view in similar facts also supported allowance of credit where duty had been paid on MRP.

Conclusion: The respondent was entitled to CENVAT credit on the duty paid on the secondary packing material.

Final Conclusion: The appeal failed and the Revenue's challenge to the grant of credit was rejected.

Ratio Decidendi: Packing material used in relation to manufacture is an input for CENVAT purposes, and where goods are assessed on MRP basis under section 4A, the packing element is treated as part of the value of the final product, supporting credit on duty paid on such packing material.

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