Modvat credit on empty drums and cans need not be reversed where existing Tribunal precedent treats them outside the reversal requirement.

Modvat credit taken on empty drums and cans used for receipt of inputs was not required to be reversed merely because those drums and cans were not themselves liable to duty. The Tribunal followed its prior decisions that such drums and cans are neither inputs in their own right nor waste arising in processing of inputs, and noted that no stay had been granted by the Supreme Court against that line of authority. On that basis, the existing precedent was applied and reversal of Modvat credit was held unwarranted.

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Issues: Whether Modvat credit taken in respect of empty drums and cans was required to be reversed on the ground that such drums and cans were not liable to duty.

Analysis: The issue had already been decided in a series of Tribunal decisions, including the view that drums and cans in which inputs are received are neither inputs by themselves nor waste arising in the course of processing of inputs. The Tribunal also noted that no stay had been granted by the Supreme Court against those decisions and followed the existing precedent.

Conclusion: Reversal of Modvat credit was not warranted and the departmental appeal was dismissed.

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