Stewards have ruled South Australian galloper Happy Trails out of the Dato Tan Chin Nam Stakes at Moonee Valley after a discovering what appeared to be a puncture wound on the horse's neck.

Chief steward Terry Bailey ordered the horse's scratching under a rule which permits them to do so without giving a reason.

The scratching followed a visit to the horse's Caulfield stable shortly before 11am on Saturday.

Stewards from the Compliance Assurance Team told an inquiry at Moonee Valley they inspected Happy Trails in its stable at 9am and noticed no abnormality.

They then waited for Paul Beshara to arrive and five minutes later again entered the stable and noticed wetness on the horse's neck.

Further inspection revealed a mark which when pressed caused blood to appear.

A hematoma also formed in the vicinity of the mark on the neck.

Beshara denied he had treated the horse on Saturday, saying it had been receiving treatment for a rash during the week.

He said steward Dion Villella had scratched the scab of an old wound as he inspected Happy Trails' neck, causing blood to appear.

He said the stewards must have missed the mark on their first inspection.

"He's had nothing, you can swab him as much as you like and you'll find nothing," Beshara said.

Happy Trails had been one of the top chances in the Moonee Valley race which he won last year.

The inquiry into the matter will continue on a date to be fixed.