Packaging material for Modvat credit includes sealing tapes used to make finished goods marketable

Cellophane adhesive tapes used to seal corrugated cardboard boxes were treated as packaging material eligible for Modvat credit under Rule 57A. The expression "packaging material" was read broadly to cover not only containers such as boxes and cartons, but also materials used in packaging. Because the tapes were used to seal boxes in which the finished Vanaspati pouches were cleared from the factory in a marketable condition, their use was regarded as part of the manufacturing process and as goods used in relation to manufacture.

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Issues: Whether cellophane adhesive tapes used for sealing corrugated cardboard boxes containing Vanaspati pouches qualify as packaging material or input eligible for Modvat credit under Rule 57A.

Analysis: The expression "packaging material" was held to be broader than "packages" and to include not only containers such as boxes and cartons but also materials used for packaging. The tapes were used to seal the cardboard boxes in which the packed product was cleared from the factory in a marketable condition. That use was treated as part of the manufacturing process and consistent with the inclusive scope of Rule 57A, which covers goods used in or in relation to manufacture and specifically includes packaging material. The reasoning also drew support from the principle that processes necessary to make goods marketable form part of manufacture.

Conclusion: Cellophane adhesive tapes used for sealing the cardboard boxes were eligible for Modvat credit as packaging material used in relation to the manufacture of the final product.

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