Input credit for aluminium foil lining in tea chests upheld as used in relation to manufacture of packed tea

Aluminium foils used as lining material in tea chests were treated as having a direct nexus with the packing of tea and therefore fell within the expression "used in or in relation to manufacture". The fact that tea chests were covered by a revenue exemption did not alter that conclusion. Credit on the aluminium foils was admissible, and the revenue appeal failed.

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Issues: Whether aluminium foils used as lining material in tea chests for packing tea were admissible as inputs used in or in relation to manufacture, so as to qualify for credit.

Analysis: The aluminium foils were not treated as a mere external packing item; they were used as lining material in the tea chest which formed part of the process of packing tea. On that basis, the use of aluminium foil had a direct nexus with the manufacture of package tea and fell within the expression "used in or in relation to manufacture". The exemption referred to by the revenue in respect of tea chests did not detract from this conclusion.

Conclusion: The credit on aluminium foils was admissible, and the revenue appeal failed.

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