Empty drums on removal were not treated as manufactured goods, so duty and Modvat credit reversal were not required.

Empty drums removed after their contents were taken out were treated as not amounting to a new product emerging from manufacture, because mere emptying and one-time use did not establish that the drums had become waste or scrap under the tariff note. On that basis, their removal from the factory did not attract duty, and the corresponding Modvat credit was not required to be reversed. The Tribunal followed its earlier view on the same issue and accepted that usable drums remained drums for tariff purposes despite having been emptied.

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Issues: Whether duty was payable on empty drums removed from the factory after the contents were taken out, and whether Modvat credit was required to be reversed on such removal.

Analysis: The issue was held to be covered by the Tribunal's earlier decision that empty drums, after being emptied and removed, do not amount to a new product emerging from manufacture. It was also observed that such drums were not shown to have become waste or scrap within the meaning of the tariff note, as mere one-time use did not establish that they had ceased to be usable as drums. On that basis, the removal of empty drums did not attract duty, and the corresponding Modvat credit was not liable to be reversed.

Conclusion: Duty was not payable on the empty drums and reversal of Modvat credit was not required; the appeals succeeded.

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