Excise duty on in-factory test samples fails where goods are not cleared for sale and are destroyed during testing.

Samples drawn from finished goods and sent for testing within the factory were not treated as excisable removals because they were not cleared for sale and could not be regarded as complete until testing was finished. Samples destroyed during the testing process were therefore not liable to excise duty, and the duty demand was held unsustainable.

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Issues: Whether excise duty could be demanded on samples drawn from finished goods and sent for testing within the factory, where the samples were destroyed during testing.

Analysis: The goods were sent for testing in the factory and were not cleared for sale. Since the goods could not be removed without testing, they were treated as incomplete until the testing process was completed. The samples destroyed during testing were therefore not liable to duty.

Conclusion: Duty was not payable on the samples destroyed during testing, and the demand was unsustainable. The impugned order was set aside and the appeal was allowed with consequential relief.

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