Modvat credit for packing materials upheld where Kraft paper used to make cartons formed part of the final product price.

Modvat credit was held admissible on Kraft paper used to make cartons for packing aluminium containers, because the cartons were used in relation to the final product and their cost formed part of its price. Applying earlier decisions and the High Court ruling on packing materials, the Tribunal treated the paper as an eligible input for Modvat purposes. The Revenue's challenge therefore failed.

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Issues: Whether Modvat credit was admissible on Kraft paper converted into cartons and used for packing aluminium containers.

Analysis: The Tribunal noted that the same issue had already been decided in favour of the assessee in earlier decisions, including by following the High Court ruling on admissibility of credit in respect of materials used for packing the final product. As the cartons were used for packing and their cost formed part of the price of the end product, the material was treated as an input for Modvat purposes.

Conclusion: Modvat credit on the Kraft paper used for making cartons was admissible and the Revenue's appeal failed.

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