1985 (3) TMI 76 - HC - Central Excise

Summary

Issues:
Whether Polyurethane Foam produced in a ship by the 'one-shot' process is liable for excise duty.

Analysis:
The Writ Petitioner, a limited company, holds a Central Excise License to manufacture goods covered by the Central Excise Tariff Item 15-A, including Polyurethane Foam. The controversy arises from the manufacturing activity carried out by the petitioner outside its factory premises, specifically in ships, docks, and ports. The petitioner contends that the Polyurethane Foam produced through the 'one-shot' process in the ship is not a result of a manufacturing process and should not be considered excisable goods under Section 3 of the Central Excise Act.

The definition of 'excisable goods' under Section 2(d) includes goods specified in the First Schedule as subject to excise duty. The petitioner argues that for a commodity to be excisable, it must be brought into existence by a manufacturing process and be marketable. However, the court finds that the Polyurethane Foam produced in the ship through chemical and physical operations constitutes a manufacturing process. The court emphasizes that the term 'produce' in Section 3 of the Act extends to goods produced but not necessarily manufactured, making them liable for excise duty.

The court distinguishes previous judgments, such as Shakti Insulated Wires Pvt. Ltd. and Vijay Textiles cases, which dealt with different manufacturing processes and products. It concludes that the Polyurethane Foam produced by the petitioner through the 'one-shot' process qualifies as an excisable commodity, rejecting the argument that its fixation to the ship renders it non-marketable.

Additionally, the court addresses cases like Union of India v. Delhi Cloth and General Mills, and Ramavatar v. Assistant Sales Tax Officer, which are not directly relevant to the current issue. It also discusses the judgment of the Delhi High Court in D.C.M. v. Joint Secretary, emphasizing the material, economic, and legal aspects of determining excisability. Applying these tests, the court determines that Polyurethane Foam meets the criteria of an excisable commodity, having exchange value and not being prohibited for sale by law.

Referring to the Punjab High Court's decision in M/s Jiwan Singh v. The Senior Superintendent of Central Excise, the court dismisses the petitioner's arguments regarding the mobility of goods, affirming that the Polyurethane Foam produced through the 'one-shot' process is subject to excise duty.

In conclusion, the court holds that the petitioner is liable to pay excise duty on the Polyurethane Foam manufactured insitu in the ship by the 'one-shot' process, dismissing the writ petition with costs.