Modvat credit on packing materials applies to items integral to the packing process, including plywood used in stack-mounted wrapping.

Packaging materials for Modvat purposes include not only the finished container but also materials used in making or completing the packing arrangement when they are integrally connected with packing of the final product. On the facts, plywood sheets used as a stand for mounting and stacking rolls wrapped in polyester film formed part of the packing process, so they qualified as packaging material. Modvat credit on the plywood sheets was therefore admissible, and the Revenue's challenge failed.

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Issues: Whether Modvat credit was admissible on plywood sheets used in connection with packing of the final product.

Analysis: The expression "packaging materials" was construed broadly to include materials used to make packages and not merely the finished package or container itself. On the facts, the plywood sheets were used as a stand for mounting and stacking the rolls on which polyester films were wrapped, and were therefore integral to the packing process. In that view, the plywood qualified as packaging material for the purposes of Modvat credit under the relevant rule.

Conclusion: Modvat credit on the plywood sheets was admissible and the Revenue's challenge failed.

Ratio Decidendi: Packaging materials under Rule 57A include materials used in the making or completion of packing arrangements, if they are integrally connected with packing of the final product.

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