Modvat credit on reformed duty-paid containers remains available where the input character is unchanged by factory reformation.

Modvat credit on duty-paid flattened metal containers used as inputs was not denied merely because the containers were reformed in the factory before use or because the reformed containers were exempt from duty. The Tribunal followed its earlier ratio in the assessee's own case and treated the point as no longer res integra, applying the principle that the duty-paid character of the input was not altered by reformation for packing use. The credit was therefore available to the assessee.

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Issues: Whether Modvat credit of duty paid on flattened metal containers, reformed into containers before use, could be denied under Rule 57A of the Central Excise Rules, 1944 on the ground that the reformed containers were exempted from duty.

Analysis: The appeal involved a question already concluded by the Tribunal in the assessee's own earlier case. The governing principle applied was that flattened containers could serve as inputs in the manufacture and packing of the final product, and the mere fact that the containers were reformed in the factory or that the reformed product was exempt from duty did not alter the character of the duty-paid input so as to deny Modvat benefit. The issue was treated as no longer res integra and the earlier ratio was followed.

Conclusion: Modvat credit could not be denied; the issue was decided in favour of the assessee.

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