Modvat credit on packing material remains admissible when its cost is included in the final product's assessable value.

Modvat credit on glass bottles used as packing material is admissible where their cost is included in the assessable value of aerated water. The exclusion under Rule 57A applies only when the packing material cost was not included in the final product's assessable value in the relevant period. After 1-4-1994, absence of an approved price list does not by itself defeat the claim; reliable evidence such as a Chartered Accountant's certificate may establish inclusion of cost. Where inclusion is shown, the objection based on double benefit does not survive and demand and penalty are not sustainable.

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Issues: Whether Modvat credit on glass bottles used as packing material was admissible when the cost of the bottles was included in the assessable value of aerated water, despite the absence of an approved price list after 1-4-1994.

Analysis: The relevant exclusion under the Explanation to Rule 57A denies Modvat credit only where the cost of the packing material was not included in the assessable value of the final product in the preceding financial year. The Tribunal found from the available price list that no abatement had been claimed for the bottles as durable and returnable packing, so the allegation of double did not survive. It further held that, after dispensing with approval of price lists from 1-4-1994, the proper evidence of inclusion of cost could be a Chartered Accountant's certificate. On the facts, the certificate showed that the cost of bottles on instalment basis had been included in the cost of aerated water.

Conclusion: Modvat credit on the glass bottles was admissible and the demand and penalty could not be sustained.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief in accordance with law.

Ratio Decidendi: Where the cost of packing material is shown to have been included in the assessable value of the final product, Modvat credit is admissible, and in the post-1-4-1994 regime such inclusion may be proved by reliable evidence such as a Chartered Accountant's certificate even without an approved price list.

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