i totally understand the box model. this question is more about trying to pin down a semantic methodology regarding when to use margins and when to use padding.
her
It depends on what you're trying to accomplish visually. Would container have other child elements which might hang over into the gutter on either side of the paragraph? If so, a margin makes more sense. But if container should have a 12-pixel gutter for all elements, period, it makes the most sense to use the padding to avoid having to apply margins to multiple element sets.
Generally speaking you always want paragraphs to have vertical margins to ensure consistent paragraph leading.