Modvat credit on returnable glass bottles and crates was allowed where packaging cost formed part of assessable value.

Modvat credit was held admissible on glass bottles and crates used for packing aerated water where the packaging cost formed part of the assessable value of the final product. The Tribunal followed earlier co-ordinate bench rulings and accepted that, for durable and returnable bottles, the relevant cost could be apportioned on a pro rata basis according to the number of possible uses. The Revenue's challenge therefore failed, and the assessee was entitled to the credit on the packaging materials as claimed.

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Issues: Whether Modvat credit was admissible on glass bottles and crates used for packing aerated water when the cost of such packaging was included in the assessable value, even on a pro rata basis.

Analysis: The Tribunal followed its earlier co-ordinate bench decisions holding that glass bottles and crates used for aerated water are eligible for Modvat credit where the packaging cost is included in the assessable value of the final product. It was also accepted that, for durable and returnable bottles, the relevant cost may be worked out on a pro rata basis having regard to the number of possible uses.

Conclusion: Modvat credit on the bottles and crates was admissible, and the Revenue's challenge failed.

Final Conclusion: The appeal was rejected, leaving the assessee entitled to the benefit of Modvat credit on the packaging materials as claimed.

Ratio Decidendi: Where the cost of glass bottles and crates used for packing aerated water is included in the assessable value of the final product, Modvat credit is admissible, and for durable returnable containers the cost may be apportioned on a pro rata basis according to their possible uses.

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