Input credit on broken bottles during manufacture was protected under Rule 57D(1), with no reversal required before the amendment.

Credit on inputs used in bottles that broke during manufacture was not required to be reversed under Rule 57D(1) of the Central Excise Rules, 1944 for the period before Notification No. 8/93-C.E. (N.T.). The rule, as it then stood, already protected credit where part of the inputs was contained in waste, refuse or by-product arising in the manufacturing process, and broken bottles were treated as waste arising during manufacture. The later amendment clarified the position but did not create the allowance for the first time, so the Revenue's challenge failed.

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Issues: Whether credit on inputs used in bottles that broke during manufacture was required to be reversed under Rule 57D(1) of the Central Excise Rules, 1944, for the period prior to the amendment made by Notification No. 8/93-C.E. (N.T.), dated 2-11-93.

Analysis: Rule 57D(1), as it stood during the material period, protected credit where part of the inputs was contained in waste, refuse or by-product arising during manufacture. The amended text expressly referred to inputs having become waste in or in relation to the manufacture of the final product, but the breakage of bottles was already covered by the earlier rule as waste arising in the manufacturing process. The amendment did not create the allowance for the first time.

Conclusion: Credit was not required to be reversed, and the Revenue's challenge had no merit.

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