Inputs under excise credit rules include items integral to manufacture, but not secondary packing used only after completion.

Paper tubes and corrugated discs used to wind and stiffen rayon tyre yarn and cord were treated as inputs under Notification No. 201/79-C.E. because they were integrally connected with production and the finished product could not be completed or marketed without them. By contrast, cardboard boxes used only after completion of manufacture for protection and transport did not qualify, since secondary packing after the product is complete falls outside the notification. The operative test is whether the item is so closely connected with manufacture that the process would be commercially inexpedient without it.

---

---

Issues: Whether the paper tubes, corrugated discs and cardboard boxes used for packing rayon tyre yarn and cord were "inputs" under Notification No. 201/79-C.E. so as to qualify for credit.

Analysis: The relevant test was whether the goods were used in the manufacture of the finished excisable product within the meaning of the notification. Applying the broad principle that a process or activity so integrally connected with production that manufacture would be commercially inexpedient without it falls within the expression "used in the manufacture", the paper tubes and corrugated discs were held to be necessary for winding and stiffening the yarn and cord, without which the product could not be completed or marketed. The cardboard boxes stood on a different footing, as the yarn wound on the tubes was already a completed product and the boxes were required only for protection from elements and dirt and for transport to market.

Conclusion: The paper tubes and corrugated discs were inputs within Notification No. 201/79-C.E., but the cardboard boxes were not.

Ratio Decidendi: Goods are inputs for the purpose of the notification when they are so integrally connected with the manufacture of the finished product that the process would be commercially inexpedient without them, but materials used only as secondary packing after completion of manufacture do not qualify.

---