Marketability of pharmaceutical products includes necessary dispensing accessories for Modvat credit on inputs.

Plastic droppers supplied with pediatric liquid medicine were treated as part of the manufacturing process for Modvat purposes because they were necessary to render the product marketable and to enable proper dispensing of the prescribed dose. The analysis relied on Chapter 30, including Note 5, which treats treatment adopted to make pharmaceutical products marketable as manufacture. Since departmental directions required oral pediatric preparations to be supplied with a suitable transparent plastic measuring device, the dropper was not an extraneous accessory but an input used in or in relation to manufacture. Modvat credit was therefore admissible under Rule 57A.

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Issues: Whether plastic droppers supplied along with pediatric drops and packed in the carton could be treated as inputs used in or in relation to the manufacture of the final product, so as to qualify for Modvat credit under Rule 57A.

Analysis: The product fell under Chapter 30, and Note 5 to Chapter 30 treated any treatment adopted to render pharmaceutical products marketable to the consumer as manufacture. The dropper was not merely an optional accessory; it was necessary for proper dispensing of the liquid medicine in the quantity prescribed, and the departmental directions required oral pediatric preparations to be supplied with a suitable transparent plastic measuring device. On this basis, the supply of the dropper with the bottle was integral to making the product marketable to consumers and could not be regarded as an item extraneous to the manufacture of the final product.

Conclusion: The plastic dropper packed with the pediatric drops was an input used in or in relation to the manufacture of the final product, and Modvat credit was admissible.

Ratio Decidendi: Where an article supplied with a pharmaceutical product is necessary to render the product marketable and to enable its proper administration, it forms part of the manufacturing process for the purpose of Modvat credit under Rule 57A.

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