Broad Modvat credit on packaging material extends to board used to make cartons for final product packing.

Modvat credit was held admissible on duplex board used to manufacture printed cartons for packing torches and miniature bulbs. The expression "packaging material" was construed broadly to extend beyond the immediate container and to include materials used in making cartons or other packing media where that use is integrally connected with packing the final product. On that interpretation, the disallowance of credit could not stand.

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Issues: Whether Modvat credit was admissible on duplex board used to manufacture printed cartons employed as packing material for torches and miniature bulbs.

Analysis: The dispute turned on the scope of the expression used in the Modvat scheme. The term was construed broadly to cover packaging material and not merely the immediate packing container. Duplex board was used for conversion into printed cartons, and those cartons were in turn used for packing the finished products. The reasoning adopted was that materials used in the manufacture of the packaging medium are also covered where the statutory expression has a wide amplitude and the use is integrally connected with packing of the final goods.

Conclusion: Modvat credit was admissible on duplex board used for packing torches and miniature bulbs, and the demand disallowing the credit could not stand.

Ratio Decidendi: Where the Modvat provision uses the wider expression packaging material, credit extends to materials used in the manufacture of cartons or other packing media that are employed for packing the final product.

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