MODVAT credit for printing ink on tea packets allowed where printed particulars were necessary for marketable sale.

Printing ink used to print brand name, manufacturer details and other particulars on tea packets was treated as an eligible input for MODVAT credit because those printed particulars were necessary to make the goods marketable and compliant for sale. The reasoning was that manufacture is complete only when goods reach a marketable form, and ancillary processes connected with packing and identification can form part of manufacture. The earlier contrary view in Parle Products was regarded as distinguishable and not controlling. Accordingly, credit was allowed on the basis that the ink was used in relation to the manufacture and marketing of the final product.

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Issues: Whether printing ink used for printing the details, brand name, and manufacturer's name on tea packets was eligible for MODVAT credit as an input used in relation to manufacture and marketing of the final product.

Analysis: The classification of tea under the tariff depended upon packed condition and the details shown on the unit containers. The packet labels identified the goods in the market by brand, quality, and variety, and the printed particulars were a statutory and commercial necessity for sale. On that basis, the printed matter on the packet was treated as integral to putting the goods in a marketable form. The reasoning was supported by the principles that manufacture is complete only when goods are marketable, that ancillary processes connected with manufacture are part of manufacture, and that inputs used in relation to packing material and identification of goods may qualify for credit. The earlier contrary view in Parle Products was treated as distinguishable and not governing.

Conclusion: Printing ink used for printing the necessary details on tea packets was held to be an eligible input for MODVAT credit, and the disallowance was set aside in favour of the assessee.

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