Factory testing of PCC poles did not amount to utilisation as such, so excise duty was not attracted.

Central excise duty was not payable on PCC poles destroyed during factory testing because testing was essential to determine marketability, and the poles could not be sold or removed without it. Under Rules 9 and 49, duty arises on removal from the factory or on utilisation as such within the factory. Testing the poles for marketability did not amount to such utilisation, so destruction in the course of testing did not trigger duty.

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Issues: Whether central excise duty was payable on PCC poles destroyed during testing in the factory, and whether such testing amounted to utilisation as such within the factory under the relevant excise rules.

Analysis: Testing was held to be essential for making the goods marketable, because without such testing the poles could not be sold or removed. Under Rules 9 and 49, duty liability arises on removal from the factory or when goods are utilised as such in the factory. On the facts, using the poles for testing to determine whether they were marketable did not amount to utilisation as such within the factory. The destruction of poles in the course of testing therefore did not attract duty.

Conclusion: The poles destroyed during testing were not liable to central excise duty, and the departmental challenge failed.

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