Mandatory testing and marketability determine duty liability; cylinders destroyed during compliance were not treated as removed for excise duty.

Gas cylinders destroyed during mandatory testing were not liable to duty because the testing process was integral to manufacture and marketability under the applicable gas cylinder regime and Indian Standards. As the cylinders had not yet reached the stage of marketable excisable goods, there was no effective removal at the pre-testing stage that could attract duty. Loss occurring during compliance with the prescribed testing procedure was treated as inherent in the process, so duty did not arise on the cylinders destroyed in testing.

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Issues: Whether duty was leviable on gas cylinders destroyed during mandatory testing before they could be marketed, and whether there was effective removal of excisable goods at the pre-testing stage.

Analysis: The cylinders were subject to compulsory tests under the applicable gas cylinder regime and the relevant Indian Standards. The testing process was integral to manufacture and marketability, and some loss during such tests was inherent in compliance with the prescribed procedure. Since the cylinders could not be said to have reached the stage of marketable excisable goods before testing was completed, there was no effective removal attracting duty at that stage.

Conclusion: Duty was not leviable on the cylinders destroyed during the mandatory testing process, and the Revenue's appeal failed.

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