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DARWIN, Feb 12 AAP

February 12 2013, 6:28PM

The Northern Territory government says it will pull no punches in fighting a lawsuit by drinks giants against its cash-for-containers scheme.

On Tuesday the NT government said the scheme encouraged people to recycle 35.5 million containers since it commenced in January last year.

Drinks companies Coca-Cola Amatil, Schweppes Australia and Lion Pty Ltd have launched legal action due to begin in the Federal Court in Sydney next week.

"This government is committed to fighting this important challenge," said NT Chief Minister Terry Mills.

"The most senior lawyer in the government, the solicitor general, and his team have been briefed to pull no punches in meeting this legal challenge," he said in a statement.

Under the NT's container deposit legislation, people get a 10c refund for returning empty bottles and cans bought in the jurisdiction.

Coca-Cola has said it believes the refund will act as a new tax on its products and could hurt sales.

In the past, Coca-Cola has said it had advice that the NT's legislation conflicted with the federal Mutual Recognition Act.

South Australia, which runs a similar refund scheme, has an exemption under the act.

Mr Mills said given the number of businesses with an interest in the recycling scheme, the proceedings in Sydney would be screened live at the NT Supreme Court in Darwin so local people can watch.

The federal court action is expected to be heard from 8.30am (CST) to approximately 1.45pm (CST) on February 19.

"This is an issue that could affect many Territory families who regularly utilise this as a means of reward-based recycling," Mr Mills said.

A spokeswoman for Coca-Cola did not immediately return calls.

By Xavier La Canna