Intermediate manufacture samples destroyed after testing were not liable to duty, as they were not finished goods

Samples of yarn and fabrics drawn at the intermediate stage of manufacture for quality testing, properly recorded in laboratory registers and destroyed after testing, were treated as not being finished goods. On that basis, the record supported the view that no excise duty was payable on such samples, and the earlier appellate finding on the same issue was followed because there was no material change warranting a different result. The Revenue's challenge therefore failed.

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Issues: Whether samples of yarn and fabrics drawn during the intermediate stage of manufacture and destroyed after testing were liable to duty.

Analysis: The record showed that the samples in dispute were not finished goods, but were drawn during manufacture for quality testing. They were properly accounted for in the laboratory records and were destroyed after testing. The prior appellate finding on the same issue had also held that there was no material change warranting a different view.

Conclusion: The samples were not liable to duty and no duty could be recovered from the assessee. The Revenue's appeal failed.

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