P.A. Choudary, J.
1.The Writ Petitioner - a limited Company with its registered office situated at Hyderabad - has a Central Excise Licence to manufacture artificial of synthetic resins and plastic material, and articles thereof. The petitioner - Company holds L 4 No. 6/78 Central Excise Licence authorising it to manufacture goods covered by the Central Excise Tariff Item 15-A. Item 15-A mentions several products of which we are concerned with a product called by name Polyurethane Foam. Normally, the above the said product - which is one of the excisable goods within the meaning of Section 3 of the Central Excise Act - is produced or manufactured within the factory premises. The goods so manufactured are normally despatched as Polyurethane Foam. There is no dispute that the production of such Polyurethane Foam is subject to the excise-duty leviable by reason of Section 3 of the Central Excise Act read with Item 15-A of the First Schedule. But, the present controversy relates to the manufacturing activity of the petitioner-Company carried on outside its factory located at Hyderabad and in ships, docks and ports like Visakhapatam. The petitioner-Company for that purpose was licensed under Rule 174 of the Central Excise Rules authorising it to carry on an operation for the production or manufacture of the excisable goods. The petitioner-Company while adopting the process called 'one shot' process, pumps the required raw-material into the cavities of the ship and manufactures a new product which is admittedly called Polyurethane Foam.
2. Now, the question is, whether Polyurethane Foam so produced in the ship by the above mentioned method of 'one shot' process is liable to be visited which excise-duty
3. The contention of the petitioner is not that what is produced by the above method is not polyurethane Foam. On the other hand, the learned counsel for the petitioner has repeatedly admitted before us to the several questions put to him that the above said process produced polyurethane foam. But, his contention is that polyurethane foam to produced is not a result of a manufacturing process, and a product so produced is not marketable and should, therefore, be regarded as not being an excisable goods within the meaning of section 3 of the Central Excise Act. Section 3 of the Central Excise Act authorities levy and collections of duties of excise on all excisable goods which are produced or manufactured in India.
4. Now, the expression 'excisable goods' is defined in Section 2(d) of the Central Excise Act as to mean goods specified in the First Schedule as being subjected to duty of excise. Prima facie, therefore, polyurethane foam produced in the ship though 'one-shot' process should be regarded as an excisable commodity subject to the levy and collection of duties of excise. But, the argument of the learned counsel for the petitioner is that before a commodity can be called an excisable goods it should have been brought into existence by process of manufacture and that, it should be an economical commodity as understood in the popular parlance. In examining this matter without reference to any decided cases, it must be held that polyurethane foam which is produced in the ship by 'one shot' process is clearly a result of manufacturing operation. In the manufacture of Polyurethane Foam in the ship various chemicals were used and were subjected to different chemical processes which alone could produce the above mentioned Polyurethane foam. It cannot, therefore, be defined that Polyurethane Foam had been produced by following the method of manufacture. But that is even more important is this aspect to note is the fact that the statute not only has the word 'manufacture' but also the word 'produce'. According to the literal meaning of this word occuring in Section 3 of the Act, excisable goods which is produced, though not manufactured, is still liable to be levied duties of excise. In view of the fact that Polyurethane Foam has been produced by the result of chemical and physical operation it cannot be denied that Polyurethane Foam is the produce of that process or that operation. Accordingly, the argument of the learned counsel that the resulting Polyurethane Foam is not manufactured within the meaning of Section 3 of the Act, cannot be accepted. It is not a case where an article was merely undergone a process of purification. It is a case of chemical action taking place among various articles and resulting in a new produce. If that is not a manufacturing process and if that is not an activity producing a commodity, it is difficult to see what else would answer description of manufacturing activity. The judgment relied upon by the learned counsel reported in Shakti Insulated Wires Pvt. Ltd. & Another vs. Union of India (1982 ELT - 10) where insulating bare copper-aluminium strips for advantageous use as conductor has been held to be not a manufacturing process cannot have any application to the facts of the present case. Similarly, the judgment reported in Vijay Textiles, Nerol Abendaly vs. Union of India (2) 1979 E.L.T. (J 181), holding that the process of making cotton fabric, or man made fabric, does not bring into existence any new woven - stuff or woven substance, will be of no application to the facts of this case. There the question was whether a fabric which is already woven and was in existence but was subjected to a process resulted in the manufacture of cotton fabric or, any manufacture of man-made fabric In answering that question in the negative, the Gujarat High Court relied upon the meaning of the word 'fabric' as connoting the idea of woven-stuff or woven-substance. We, therefore, do not find that case also of any use to the petitioner. We, accordingly, hold that Polyurethane foam is produced or manufactured, in the ship by the above mentioned 'one-shot' process. But, then the petitioner contends that Polyurethane Foam is not an excisable goods because Polyurethane Foam so produced is irretrievably fixed to the ship and has thus lost its marketable quality which, according to the petitioner's contention, is an essential qualification for a commodity to be called an excisable commodity within the meaning of section 3 of the Central Excise Act. In support of this contention, the learned counsel has referred to the judgment of the Supreme Court reported in Union of India vs . Delhi Cloth and General Mills (3) : 1973ECR56(SC) , and in Ramavatar vs . Assistant Sales Tax Officer (4) : 1SCR279 , and above all the judgment of the Delhi High Court in Delhi Court & General Mills v. Joint Secretary (5) 1978 E.L.T. J-121.
5. In Union of India vs. Delhi Cloth and General Mills's case, the question which has been considered by the Supreme Court is, whether deodorised groundnut oil produced or manufactured in the factory can be called an excisable goods. The Supreme Court said, overruling the contention of the Central Government, that deodorised oil is not marketable and does not answer the description of refined oil and that, therefore it is not an excisable commodity. We find that case.
6. In Union of India vs. Delhi Cloth and General Mills's case, the question which has been considered by the Supreme Court is, whether deodorised groundnut oil produced or manufactured in the factory can be called on excisable goods The Supreme Court said, overruling the contention of the Central Government, that deodorised oil is not marketable and does not answer the description of refined oil and that, therefore, it is not an excisable commodity. We find that case has no bearing on the question with which we are concerned here. Polyurethane Foam produced by the petitioner and fixed in the ship is not only an end-product but is so understood in the popular parlance.
7. The next decision of the Supreme Court in Ramavatar vs. Assistant Sales Officer's case, on which the petitioner has placed reliance, is not also of much use to the petitioner. In that case, the Supreme Court was concerned with the question whether betel leaves, which were specifically enumerated for the purpose of sales tax, should be treated as vegetables and granted exemption The Supreme Court negatives that contention.
8. The judgment of the Delhi High Court in D.C.M. vs. Joint Secretary is a case where the question whether calcium carbide in its naked form used in generation of acetylene gas within the factory of manufacture is 'goods' within the meaning of tariff Item 14-AA, was considered. Tariff Item 14-AA speaks of calcium carbide as an excisable goods. But the contention of the Delhi Cloth and General Mills was that calcium carbide referred as Item 14-AA was a product which could be marketable, and calcium carbide produced by the Delhi Cloth and General Mills Company Limited in that case was a substance which should be treated as not falling within item 14-AA of the tariff. In examining that argument, the Delhi High Court observed that the question whether particular 'goods' are goods within the meaning of the Excise Act will have three aspects viz., material, economic and legal. The Delhi High Court observed that the material composition of goods shows whether the goods is in a form in which it has utility, value or exchangeability, and that things which are in a raw or unfinished or an intermediate stage of formation may not have reached a form of goods as contemplated in the list of goods in the First Schedule of the Act. The Delhi High Court also observed, that only those goods which have a utility could have exchange value. Finally, the Delhi High Court considered the matter from the point of view of regulation by Law which might forbid sale of goods in the market unless those goods had attained certain form of purity. In that case impurified calcium carbide was held not to be calcium carbide within the meaning of tariff item 14-AA because it has no utility and also because it has no exchange value and also because, Law forbids sale of such commodity. We find, applying the above three tests to the product Polyurethane Foam produced or manufactured by the petitioner in this case, that Polyurethane Foam is an excisable commodity. It has exchange value and no Law forbids its sale. The mere fact that the product is fixed cannot make the goods 'Non-excisable goods'. We accordingly find that Polyurethane Foam manufactured or produced by the petitioner through 'one-shot' process insitu in the ship is an excisable article.
9. The Judgment of the Punjab High Court in M/s Jiwan Singh vs. The Senior Superintendent of Central Excise, referred to in Re : Ajay Enterprises (P) Ltd. (6), is a case where the question that had been considered was whether steel chairs fixed to a bus is 'furniture' within the meaning of Item 40 of the First Schedule to the Central Excise Act On the reasoning that furniture's essential quality is its mobility, the Punjab High Court held that fixed chairs cannot be called furniture. We, therefore, find that the above cases where have been cited by the petitioner will be of no avail to the main argument of the learned counsel for the petitioner.
10. We, therefore, hold that the petitioner is liable to pay excise duty at the appropriate rate on Polyurethane Foam produced or manufactured by the petitioner insitu by 'one-shot' process.
11. Accordingly, we dismiss this writ petition with cots.