Modvat credit on packing equipment upheld where the unit was used in manufacturing-related packing of finished goods.

Packing necessary to make finished goods marketable forms part of the manufacturing process and is incidental or ancillary to manufacture. On that principle, a Hot Melt Unit used for packing finished welding electrodes qualified as capital goods for Modvat credit under Rule 57-Q. The reference application also failed because no referable question of law arose from the Tribunal's order, the issue being already covered by settled Supreme Court law on marketability and manufacturing process.

---

---

Issues: Whether any referable question of law arose from the Tribunal's order so as to warrant a reference; and whether the assessee was entitled to Modvat credit on the Hot Melt Unit as capital goods under Rule 57-Q.

Analysis: The reference application was examined in the light of the settled principle that packing necessary to make finished goods marketable forms part of the manufacturing process and is incidental or ancillary to manufacture. The item in question was used for packing the finished welding electrodes, and the issue was already governed by the law laid down by the Supreme Court on marketability and manufacturing process.

Conclusion: No referable question of law arose. The assessee was entitled to Modvat credit on the Hot Melt Unit as capital goods, and the Revenue's reference application failed.

---