I want it so that I put a Milk Bucket into a furnace, and out comes my modded item, Cheese. This works fine, it's just that the Bucket doesn't get returned when I do this. If anyone can fix this, please reply to this, thanks.

 

My code is below.

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GameRegistry.addSmelting(new ItemStack(Items.milk_bucket), new ItemStack(RandomItems.cheese_item), 0.5F);

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You could however make a new block like a churn,

and use an onclick event that returns you the cheese and an empty bucket,

cooking milk to get cheese is a bit unrealistic

 

Or you can use this Tutorial as a reference on how to make a multi input/output furnace:

http://www.minecraftforum.net/forums/mapping-and-modding/mapping-and-modding-tutorials/1571450-multi-input-output-furnace-with-variable-input