On March 12, 1994, about 1100 eastern standard time, N8938W, a Piper PA-28-235, registered to Horton Drilling Company, experienced an in-flight fire on takeoff from Sebring Airport, Sebring, Florida, while on a 14 CFR Part 91 personal flight. Visual meteorological conditions prevailed at the time and no flight plan was filed for the local flight. The airplane was substantially damaged and the pilot and one passenger reported no injuries. The flight was originating at the time of the accident. The pilot stated that after takeoff about 800 feet agl the engine failed and smoke and flames were observed from the firewall area. He turned back to the airport, landed, and evacuated the airplane. Local fire departments arrived and extinguished the fire after it consumed a major portion of the airplane. FAA investigators examined the aircraft and found a hole in the aft portion of the muffler. The location of the hole would allow hot exhaust gases to leak directly on to the carburetor.