Modvat credit reversal on emptied containers and packing waste was unsustainable under later Tribunal rulings.

Modvat credit was not required to be reversed for containers cleared without duty and for packing waste and scrap generated in the factory. The Tribunal applied later decisions holding that emptied containers and packing waste do not become dutiable scrap merely because they were used once, and treated the issue as no longer open for reconsideration. On that basis, the demand for reversal of credit could not be sustained, and the assessee's appeal succeeded.

---

---

Issues: Whether Modvat credit was required to be reversed in respect of containers cleared without payment of duty and packing waste and scrap arising in the factory.

Analysis: The Tribunal noted that the earlier view relied upon by the lower authority had been recalled and that later Tribunal decisions had held that emptied containers and packing waste do not become dutiable scrap merely because they have been used once. Applying the ratio of the later decisions, the Tribunal treated the issue as no longer res integra and found that the demand for reversal of Modvat credit could not be sustained.

Conclusion: The requirement to reverse Modvat credit was rejected and the assessee's appeal was allowed.

---