Modvat credit on broken packing bottles was retained under Rule 57D, as scrap from the process did not require reversal.

Modvat credit on inputs used in glass bottles broken during packing and later disposed of as scrap was not required to be reversed. The Tribunal applied Rule 57D and followed the principle that where waste arises from the packing process, credit cannot be denied merely because part of the inputs ends up as scrap. No contrary authority was shown, and the departmental objection failed.

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Issues: Whether Modvat credit taken on inputs used in glass bottles that were broken during packing and disposed of as scrap was liable to reversal.

Analysis: The disputed bottles were used in the packing process, and the waste or breakage resulting from that process was treated as covered by Rule 57D. The Tribunal followed the earlier decision holding that where waste arises out of the packing process, credit cannot be denied or reversed merely because part of the inputs ends up in waste or scrap. No contrary authority was shown.

Conclusion: Modvat credit was not liable to reversal on the broken glass bottles, and the departmental objection failed.

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