CENVAT credit on packing material is admissible where goods are cleared with packaging and no reuse is shown.

Credit of duty paid on packing material was held admissible under the CENVAT Credit Rules because the definition of "input" is broad and covers goods used directly or indirectly in relation to manufacture, including packing material. The scheme is intended to avoid multiple incidence of tax on the final product, and the fact that the finished goods were cleared along with the packing material did not justify denial of credit. In the absence of any finding that the packing material had been recalled and reused, a refusal based only on invoice description was unsustainable. The assessee therefore succeeded on the question of law.

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Issues: Whether credit of duty paid on packing material was admissible when such material was used for clearing the finished goods along with the products, though not physically packed in the usual sense.

Analysis: The definition of "input" under the CENVAT Credit Rules is wide and covers goods used in or in relation to manufacture, whether directly or indirectly, and also includes packing material. The object of the credit scheme is to avoid multiple incidence of tax on the final product. Since the finished goods were admittedly cleared along with packing material and there was no finding that the packing material had been recalled and reused, denial of credit merely because of the manner in which the invoices described the goods was unsustainable.

Conclusion: Credit on the packing material was admissible and the assessee succeeded on the question of law.

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