A method of manufacture of an integrated circuit packaging system includes: providing an encapsulation system having a mold chase with a buffer layer attached thereto; forming a base integrated circuit package including: providing a base substrate, connecting an exposed interconnect to the base substrate, a portion of the exposed interconnect having the buffer layer attached thereon, mounting a base component over the base substrate, forming a base encapsulation over the base substrate and the exposed interconnect using the encapsulation system; and releasing the encapsulation system providing the portion of the exposed interconnect exposed from the base encapsulation, the exposed interconnect having characteristics of the buffer layer removed.