Assessable value after destructive testing cannot be inflated by overheads without proof; duty, interest and penalty fail.

Destructive testing did not, by itself, take the batteries outside excise, but the assessable value could not be enhanced by adding overheads without evidentiary support and statutory backing. The damaged batteries were part of the raw material stream returned to production, and the overheads were already reflected in the prime products cleared on duty payment; reintroducing them for the tested batteries would create a second incidence of duty. On that basis, the redetermination of value was unjustified and the demand, interest, and penalty could not be sustained.

---

---

Issues: Whether the assessable value of batteries cleared after destructive testing could be enhanced by adding overheads, and whether duty, interest, and penalty could be sustained on that basis.

Analysis: Batteries came into existence and were not shown to be exempt from excise merely because they were subjected to testing or became damaged in the process. However, the enhancement of value by adding overheads required evidentiary support and statutory backing, neither of which was established. The tested batteries represented only part of the raw material stream returned to production, and the alleged overheads would already be reflected in the value of the prime products ultimately cleared on payment of duty. Reintroducing those overheads for the damaged batteries would amount to an unwarranted second incidence of duty.

Conclusion: The redetermination of assessable value was unjustified, and the demand, interest, and penalty could not be sustained.

---