Modvat credit for secondary packing suit-cases allowed where packing cost formed part of assessable value.

Duty-paid suit-cases used as secondary packing for tablets qualified as packaging material for Modvat credit because the governing Explanation to Rule 57A excluded packaging materials only where their cost was not included in the assessable value under Section 4. The rule did not define packaging materials, and the record showed that the suit-cases were used to pack the medicines and that their cost formed part of the assessable value of the patent or proprietary medicines. Since the statutory eligibility condition was satisfied, credit could not be denied.

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Issues: Whether duty-paid suit-cases used as secondary packing for tablets were eligible as packaging material for Modvat credit where their cost was included in the assessable value of the final product.

Analysis: The relevant Explanation to Rule 57A excluded packaging materials only where the cost was not included in the assessable value under Section 4 of the Central Excise Act. The rule did not define packaging materials. The suit-cases were used for packing the medicines as secondary packing and their cost was shown to have been included in the assessable value of the patent or proprietary medicines. Since the statutory criterion for eligibility was satisfied, there was no basis to deny credit.

Conclusion: The suit-cases qualified as packaging material for Modvat purposes, and the denial of credit was unsustainable.

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