LexBARNAGORE JUTE FACTORY CO. ETC. ETC. versus INSPECTOR OF CENTRAL EXCISE AND ORS. ETC. ETC.
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BARNAGORE JUTE FACTORY CO. ETC. ETC. A V. INSPECTOR OF CENTRAL EXCISE AND ORS. ETC. ETC. DECEMBER 3, 1991 [ P.B. SAWANT AND B.P. JEEVAN REDDY, JJ.] B Industries (Development and Regulation) Act, 1951-Sections 9( 1) and Explanation 3(d), (1) and 30, and First Schedule-Heading 23(2)-Jute yarn manufactured or produced by jute textile industry, as intermediate product.for captive consumption in the same industrial unit for manufacturing jute tex- tile-Whether goods m_anufactured in a scheduled industry-Whether exigible C to cess-Whether levy of cess, a duty of excise-Whether cess could be levied by weight-Notification levying cess with reference to weight-Validity of Jute Manufactures Cess Rules, 1976--R.ule-Application of Central Ex- cises and Salt and Rules, 1944 in relation to levy and collection of Cess- Retrospective amendment of Rules 9 and 49 of the Central Excise Rules in D 1982-Whe~her applicable to levy and collection of cess under section 9 of the Industries (Development and Regulation) Act, 1951-Whether Cess Rules a legislation by incorporation or by reference. Section 9(1) of the Industries (Development and· Regulation) Act, 1951 provided for the levy of cess on an goods manufactured or produced in ~he industries specified in the First Schedule to the Act at the rate/rates notified by the Central Government in that behalf. Jute Textile Industry E was one of the industries specified in the First Schedule. By order No. S.0.141(2), the Central Government specified the class of goods manufac- tured or produced in the schedule industry of textiles and also the rate of F cess on each of the "goods. Jute textile and jute yarn were both subjected to cess among other goods. Rule 2(0 of Jute Manufactures Cess Rules, 1976, made by the Central Government under Section 30 of the Act, by Notification dated 18th February, 1976 defined jute manufactures as manufactures of jute, including twist-yarn thread, rope and twine, all sorts etc. and by Rule 3, the provisions of the Central Excises and Salt Act and the rules made thereunder were made applicable in relation to levy and collection of cess from the jute manufacturers as they applied in relation to levy and collection of duty of excise on jute manufacturer under the Central Excises and Salt Act. G The appellant-company was engaged in manufacture of jute prod- H 95 96 SUPREME COURT REPORTS (1991) SUPP. 3 S. C.R. A ucts like jute twine, yarn, sacking, carpet backing etc. Jute Twin~ and Jute Yarn, manufactured by them was used in their own establishment for manufacturing other (finished) products. Notices were issued to the appellant-company and otber jute manu- facturers, to pay the cess at the specified rate on their products, including B jute twine and jute yarn, produced in their units. Several jute manufac- turers filed Writ Petitions in the High Court, challenging the levy of cess. The Writ Petitions were dismissed by the High Court. Hence, the Jute manufacturers, filed appeals before this Court. The Department also filed an appeal by special leave. Writ Petitions were also C filed by other Jute manufacturers questioning the notifications and the notices calling upon the jute manufacturers to pay the cess. On behalf of the Jute manufacturers it was contended that Jute yarn was not one of the products mentioned in Heading 23 of the First Schedule to the Act, though jute twine and jute rope were expressly mentioned, that D though yarn was specifically mentioned in all other sub-headings, it was omitted under sub-heading (2), and hence, jute yarn was out of the purview of the Act, that the cess could not be levied on intermediate products, but could be levied only on the final produclc;; that a reading of section 9(1) showed that the levy of cess had to be with reference to the E F value of the product (ad valorem) and that the notificafion in question levied the cess by weight, which was not permissible and could not have been contemplated by Sub-section (1) of Section 9, as was evident from a reading of the proviso; and such a levy (by weight) brought about an unequal and anamolous consequence in that coarse jute products having lower value were subjected to higher cess than finer· quality jute textiles, that until the amendment of Rules 9 and 49 of the Central Excise Rules, by Finance Act, 1982, with retrospective effect from February, 1944, they provided for levy of excise duty only at the stage o
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