Excise duty on testing samples remains payable where removal and destruction records are not maintained.

Excise duty applies to samples cleared for in-house or external testing when the manufacturer does not maintain records of their removal, value or destruction. The stated excise procedure requires accounts of samples removed for testing and subsequently destroyed. Without such evidence, the quantity actually destroyed during quality-control testing cannot be established. Manufactured goods fit for consumption are treated as dutiable upon removal for testing, whereas only destruction proved through records may escape duty. The text states that the clearances were treated as home-consumption clearances, sustaining duty, interest and penalty.

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Issues: Whether excise duty was payable on samples cleared for in-house testing and testing by outside agencies where no accounts were maintained for their removal, value, or destruction.

Analysis: The samples had admittedly been cleared for testing within and outside the factory. The applicable excise procedure required records of samples removed for testing and of their destruction. In the absence of such accounts, the assessee could not establish the quantity, if any, destroyed during quality-control testing. Applying the principle that a manufactured product fit for consumption is dutiable when removed for testing, while only proved destruction during testing escapes duty, the clearance was liable to be treated as clearance for home consumption.

Conclusion: Duty, interest and penalty on the samples were sustainable; the issue was decided against the assessee and in favour of the Revenue.

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