Modvat credit on PVC sheets used for essential product containers was held admissible for marketing-linked manufacture.

Modvat credit was held admissible on PVC sheets used to make containers for sets of tools marketed with the final product. Applying the principle that input material used to manufacture containers integral to marketing of the final product qualifies for credit, the material was treated as eligible. The issue was decided in favour of the assessee, and consequential relief followed.

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Issues: Whether Modvat credit was admissible on PVC sheets used for making containers for sets of tools marketed along with the final products.

Analysis: The sets of tools were cleared in containers made out of PVC sheets. The disputed PVC sheets were used to manufacture the containers, which formed part of the marketed product arrangement. Following the ratio of the cited High Court decision on credit eligibility where containers are integral to marketing of the final product, the material used for making such containers was treated as eligible for credit.

Conclusion: Modvat credit on PVC sheets used for making containers for sets of tools was admissible, and the issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded and consequential relief was granted according to law.

Ratio Decidendi: Where input material is used to make containers that are essential for marketing the final product, credit is admissible on such input material.

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