Packaging materials under Modvat can include tinplates used to make tins for packing finished goods.

Tinplates used to manufacture tins for packing the final product were treated as eligible inputs for Modvat credit under Rule 57A. The expression "packaging materials" was given its ordinary commercial meaning and was not confined to finished containers, so material used to make the package could qualify where it formed part of the process of making goods marketable. The reasoning also noted that a specific exclusion for plywood used in tea chests implied that analogous packing materials would otherwise fall within the rule. On that basis, tinplate used for tins was covered by the credit provision.

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Issues: Whether tinplates used to manufacture tins employed as packing materials for the final product qualified for Modvat credit under Rule 57A.

Analysis: Rule 57A permitted credit on inputs and expressly included packaging materials. The expression "packaging materials" was construed according to its ordinary meaning and was not confined to ready-to-use containers alone. A material used to make the package is distinct from the package itself, and tinplate was treated as a packing material in the relevant commercial and administrative context. The reasoning was also aligned with the principle that materials entering into and forming part of the process of making goods marketable form part of the manufacture of the final product. The specific exclusion of plywood for tea chests indicated that, absent such exclusion, analogous packing materials would fall within the benefit.

Conclusion: Tinplates used for making tins that pack the final product were eligible inputs for Modvat credit under Rule 57A, and the reference application failed.

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