Modvat credit on packing machinery upheld where equipment was used in making the product marketable.

Modvat credit was held admissible on a rewinding machine used to print price details on film for packing a vegetable product, because the machine had sufficient nexus with manufacture and with making the final product marketable. The appellate authority applied the principle that goods and processes necessary to render the product marketable can form part of manufacture for credit purposes. A restrictive view of capital goods and a contrary Tribunal decision were not accepted, as they did not displace the reasoning adopted below. The Revenue's challenge failed and the credit was upheld.

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Issues: Whether Modvat credit was admissible on the rewinding machine used for printing the price on film employed in packing the vegetable product, and whether such machine qualified as capital goods having nexus with manufacture.

Analysis: The lower appellate authority allowed the credit relying on the principle that goods required to make the final product marketable and processes necessary for that purpose form part of the process of manufacture. The Revenue's reliance on a restrictive view of capital goods and on a contrary Tribunal decision was not accepted, as the reasoning adopted by the appellate authority was not shown to be misplaced or irrelevant to the issue.

Conclusion: Modvat credit on the machine was upheld and the Revenue's challenge failed.

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