Packaging materials and containers under Modvat credit: plastic crates for aerated waters were held ineligible inputs.

Plastic crates used to transport aerated waters were held not to qualify as inputs under Rule 57A because the extended definition of inputs, though including packaging materials, could not be stretched to cover fully finished marketable containers. The distinction between packaging material and packages or containers was treated as material, and the crates were therefore outside the ambit of eligible inputs for Modvat credit. A later notification excluding crates did not create entitlement for the earlier period because the crates were never within the rule's coverage.

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Issues: Whether plastic crates used for transportation of aerated waters qualify as inputs within the meaning of Rule 57A of the Central Excise Rules, 1944 so as to earn Modvat credit.

Analysis: The extended definition of inputs includes packaging materials, but the expression cannot be stretched to cover fully finished goods such as plastic crates which are marketable containers used for carriage of finished products. The distinction between packaging material and packages or containers was treated as material, and the crates were held not to fall within the ambit of packaging material for the purpose of Modvat credit. The later notification excluding crates did not create the entitlement for the earlier period, as crates were held never to have qualified as inputs under the rule.

Conclusion: Plastic crates used for transportation of aerated waters are not eligible inputs under Rule 57A, and Modvat credit is not admissible.

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