Mandatory quality control testing did not create excisable goods where cable samples were consumed in destructive testing.

Cable pieces removed from each drum for mandatory quality control testing were not treated as excisable goods because the contract and purchase order required testing as an integral and compulsory part of manufacture before the cables could be regarded as fully manufactured. The sample length taken for destructive testing was consumed in the process and became unusable, so it did not amount to goods emerging from manufacture for central excise purposes. No excise duty was chargeable on the cable pieces used for this testing, and the assessee prevailed on that issue.

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Issues: Whether the cable pieces removed from the drum for mandatory quality control testing were excisable goods liable to central excise duty.

Analysis: The contract and purchase order required the cables to conform to technical specifications and to undergo quality control testing before they could be treated as fully manufactured goods. The testing was not a post-manufacture incidental exercise but an integral and compulsory part of the manufacturing process. Since the sample length cut from each drum was consumed in the destructive testing and became unusable, that portion could not be regarded as excisable goods emerging from manufacture.

Conclusion: No excise duty was chargeable on the cable pieces removed for mandatory quality control testing, and the assessee succeeded on this issue.

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