1. Dispute concerning cess on captively consumed jute yarn and the cumulative duty limit under Section 9 of the Industries (Development and Regulation) Act. (Para 1 )
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1996 Supreme(SC) 1904
SUPREME COURT OF INDIA
K.Venkataswami : S.P.Bharucha
Mahabir Jute Mills
Versus
Collector Of Central Excise, Allahabad
Case No. : .
Date of Decision : 11/11/96
The maximum excise duty limit of 13 paise per cent under Section 9(1) of the Industries (Development and Regulation) Act, 1951, applies only to the duty on the goods produced, excluding any duty levied on the materials used in their manufacture.
Headnote:(A) Industries (Development and Regulation) Act, 1951 - Section 9(1) - Excise duty - Maximum limit of 13 paise per cent of the value - Applicability to goods produced - The limit on the rate of excise duty applies to the duty on the goods produced; the duty levied on the materials used to manufacture such goods is not relevant for the purpose of determining if the statutory limit has been transgressed. (Para 4)
Facts of the case:
Appeals were filed against an order of the appellate tribunal concerning the levy of cess on jute yarn captively consumed for the manufacture of jute fabrics. The appellants contended that the cumulative incidence of duty on both the yarn and the resulting fabrics exceeded the statutory limit of 13 paise per cent of the value as prescribed under the relevant Act.
Findings of Court:
The court held that the limit of 13 paise per cent of the value refers specifically to the duty on the goods produced. The duty levied on the inputs used to make such goods is not relevant to the calculation of this limit.
Issues: Whether the levy of cess is illegal on the ground that the cumulative incidence of duty on both the raw material and the finished product exceeds the maximum limit of 13 paise per cent of the value under Section 9 of the Industries (Development and Regulation) Act.
Ratio Decidendi: By reason of Section 9(1) of the Industries (Development and Regulation) Act, 1951, excise duty may be levied on goods manufactured or produced in specified industries, provided the rate does not exceed 13 paise per cent of the value of the goods. The relevant duty is that which is levied on the goods produced; the duty on what has been used to make such goods is not relevant. (Para 4)
Result: Appeals dismissed.
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Table of Contents
2. Whether cess is leviable on captively consumed yarn and if cumulative duty on yarn and fabrics exceeds the limit under Section 9, IDR Act. (Para 1 )
3. The statutory limit on excise duty pertains to the goods produced; duty on materials used to manufacture such goods is irrelevant to the limit. (Para 3 , 4 )
4. The maximum duty limit under Section 9(1) of the Industries (Development and Regulation) Act applies to the goods produced, not the cumulative incidence including raw materials. (Para 4 )
5. Appeals dismissed. (Para 5 )
6. Is cess leviable on jute yarn captively consumed for the manufacture of jute fabrics?
Yes, the court held that this issue is covered against the appellants by existing precedent. (Para 2 )
7. Does the duty limit under Section 9 of the Industries (Development and Regulation) Act apply to the cumulative incidence of duty on raw materials and finished goods?
No. The limit applies to the duty on the goods produced; duty levied on materials used to make such goods is not relevant for the purpose of this limit. (Para 3 , 4 )
(1) THESE appeals are directed against the judgment and order of the Customs, Excise and Gold (Control) Appellate tribunal. The appeal before the tribunal was filed by the present appellants. Two issues were raised, namely:
(1 No cess could be levied on jute yarn which was captively consumed in the same factory for the manufacture of jute Fabrics; and
(2 if cess were levied on jute yarn as well as on the jute fabrics (hessain or sacking) manufactured therefrom, the cumulative incidence of the duty, in the case of both hessain and sacking, would exceed 13 paise per cent of the value in breach of the powers granted under Section 9 of the Industries (Development and Regulation) Act.
(2) IT is fairly stated that the first issue is now covered against the appellants by the judgment of this court in M/s. Barnagore Jute Factory Co. (5" Ors. v. Inspector of central Excise & Ors., reported in 1992 (57 E.L.T. 3 (SC) = 1992 (1 SCC 401.
(3) IN respect of the second issue, the argument before the tribunal was rejected in the following words :
"IN any case there can be no doubt over the fact, and we can take judicial notice of it, that yarn can be and is sold in the market, and that it is clearly "goods" different from hessain or sacking. We do not find anything in Section 9(1 of the Industries (Development and Regulation) Act to the effect that the limit of 13 paise per cent of the value should be taken to refer to the cumulative incidence of the goods produced by a particular industry, even though the goods maybe quite different and distinct from one another."
(4) THE same argument has been advanced before us. Having regard to the terms of Section 9(1 of the Industries (Development and Regulation) Act, 1951, we find the argument difficult to accept. By reason thereof, excise duty may be levied on goods manufactured or produced in industries specified in the Schedule thereto, provided that the rate thereof does not in any case exceed 13 paise per cent of the value of the goods. It is the duty on the goods produced which is relevant for the purpose. The duty levied on what has been used to make such goods is not at all relevant. The argument on this basis, therefore, that the levy of the cess is illegal because the maximum limit provided by the section is transgressed cannot be accepted.
(5) THE appeals are dismissed. There shall be no order as to costs.
