Wide meaning of packaging material supports Modvat credit for reusable plastic crates used in transport.

Plastic crates used to transport aerated waters were treated as packaging material under Rule 57A, because the expression was given a wide meaning to cover ready-to-use containers and crates, not merely the raw material used to make them. Credit was also supported where the cost of repeatedly used packing formed part of the assessable value on a pro rata basis; in that setting, Modvat credit was not denied simply because the packing was returnable or durable. Invoices and a Cost Accountant's certificate were accepted as supporting inclusion of packing cost in valuation, and the narrower departmental view was rejected.

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Issues: Whether plastic crates used for transporting aerated waters qualify as packaging material eligible for Modvat credit under Rule 57A, and whether the inclusion of their cost in the assessable value supports the claim for credit.

Analysis: The expression "packaging material" was held to have a wide connotation and to include not only the material from which containers are made but also ready-to-use containers and crates themselves. The Tribunal followed earlier decisions which had distinguished the narrower view taken in a single-member ruling, and relied on the principle that where the cost of repeatedly used packing is included on a pro rata basis in the assessable value, Modvat credit cannot be denied merely because the packing is returnable or durable. The Cost Accountant's certificate and invoices were treated as supporting the inclusion of packing cost in valuation, and the contrary view of the department was not accepted.

Conclusion: Plastic crates used for carriage of aerated waters are packaging material within Rule 57A and Modvat credit is admissible; the appeals succeed.

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