Back
1979 Supreme(Cal) 111
High Court Of Calcutta
CHITTATOSH MUKHERJEE, BANKIM CHANDRA RAY
NEW CENTRAL JUTE MILLS COMPANY LIMITED - Appellant
Versus
INSPECTOR OF CENTRAL EXCISE - Respondent
F. M. A. 115 Of 1979
Decided On : 03/28/1979
A.RAHAMAN, ANWAR HUSAAIN, B.P.BANERJI, D.K.DHAR, D.K.SEN GUPTA, Debi Prasad Pal, MANISHA SEAL, Mitra, NILAVA, P.K.PAL, P.L.KHAITAN, R.K.Murarka, R.N.BAJORIA, S.C.BOSE, SAMAR BANERJI
The Central Government has the power to levy cess under Section 9(1) of the Industries (Development and Regulation) Act, 1951 on all goods manufactured or produced by a scheduled industry, including intermediate products like jute twine and yarn. The imposition of cess according to weight is not per se arbitrary and discriminatory, and the Act contains enough guidelines for imposition of a temporary levy for development purposes.
Headnote:
INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 - SECTION 9(1) - JUTE MANUFACTURES CESS RULES, 1976 - JUTE TWINE AND YARN - CESS LEVY - VALIDITY - DISCRIMINATION - ARTICLE 14 - ARTICLE 31B - CONSTITUTION OF INDIA.
Fact of the Case:
The appellants, manufacturers of jute products, challenged the levy of cess under Section 9(1) of the Industries (Development and Regulation) Act, 1951 read with the Jute Manufactures Cess Rules, 1976. They contended that the levy of cess on jute twine and yarn, which were intermediate products used for captive production, was unauthorized and illegal. They also argued that the imposition of cess according to weight was discriminatory and violative of Article 14 of the Constitution.
Finding of the Court:
The Court held that the Central Government had the power to levy cess under Section 9(1) of the Act on all goods manufactured or produced by a scheduled industry, including intermediate products like jute twine and yarn. The Court further held that the imposition of cess according to weight was not per se arbitrary and discriminatory, and that the Act contained enough guidelines for imposition of a temporary levy for development purposes. Therefore, the levy of cess under Section 9(1) was not violative of Article 14 of the Constitution.
Issues: 1. Whether the Central Government had the power to levy cess under Section 9(1) of the Industries (Development and Regulation) Act, 1951 on intermediate products like jute twine and yarn? 2. Whether the imposition of cess according to weight was discriminatory and violative of Article 14 of the Constitution?
Ratio Decidendi: 1. The Court held that the Central Government had the power to levy cess under Section 9(1) of the Act on all goods manufactured or produced by a scheduled industry, including intermediate products like jute twine and yarn. The Court reasoned that the First Schedule to the Act, which specified the industries subject to control by the Central Government, was not exhaustive, and that the Act authorized the Central Government to levy cess on all goods manufactured or produced by a scheduled industry. 2. The Court held that the imposition of cess according to weight was not per se arbitrary and discriminatory, and that the Act contained enough guidelines for imposition of a temporary levy for development purposes. The Court reasoned that the cess was to be utilized for development purposes, that the proceeds were to be used for the scheduled industry as a whole, and that the imposition of cess according to weight was an established principle of taxation.
Final Decision: The Court dismissed the appeals, holding that the levy of cess under Section 9(1) of the Act was valid and not violative of Article 14 of the Constitution.
( 1 ) THE appellants companies arc manufacturers of the jute products like jute twine, yarn, sacking, carpet backing etc. The appellants have further claimed that portions of jute twine and jute yarn manufactured by them are used for producing finished products, namely, jute textiles. In other words, portions of jute twine and jute yarn are their intermediate products for captive consumption.
( 2 ) JUTE Textile Industries is one of the industries specified in the First Schedule of the Industries (Development and Regulation) Act, 1951. But the specifications relating to jute industry in the First Schedule of the said Act have been from time to time amended/substituted. The Act LXX1 of 1956 substituted the First Schedule of the Industries (Development and Regulation) Act, 1951 with effect from 1st of March, 1957. The Heading No. 23 of the First Schedule is as follows :-"textiles (including those dyed, printed or otherwise processed); (1) * * * * (2) made wholly or in part of jute, including jute twine and rope. (3) * * * * (4) * * * * (5) * * * * by the said amending Act of 1956, two Explanations have been also inserted in the First Schedule of the Parent Act. "
( 3 ) THE Central Government by G. S. R. 89 (E), dated 18th February, 1976 made and published the Jute Manufactures Cess Rules, 1976. The clause (f) of Rule 2 of the said Jute Manufactures Cess Rules, 1976 defined "jute manufactures" as 'manufactures of jute' of Bimlipatam jute or of Mesta fibre of all sorts including : (1) twist, yarn, thread, rope and twine, all sorts, containing more than 50 per cent by weight of jute (including Bimlipatam jute or Mesta fibre) calculated on the total fibre content in or in relation to the manufacture of which any process is ordinarily carried on with aid of power ; (2) others, but excluding any such manufacture,-- (i) * * * * (ii) * * * *
( 4 ) THE Central Government by its Order No. S. O. 141 (2) in the exercise of its powers under Section 9 (1) of the Industries (Development and Regulation) Act, 1951 specified the classes of goods manufactured or produced wholly or in part in the scheduled industry of textiles as mentioned in column (2) of the Table below the Order on which a duty of excise shall be levied and collected as a cess for the purposes of the said Act for a period of one year commencing from the 1st March, 1976 at the specified rates. The said period has been since extended for another year. The Collectorate of Central Excise and Customs, West Bengal by a trade notice dated 28th April, 1977 clarified that jute twines and jute yarn when consumed within the factory of production for conversion into manufacture falling under the Tariff Item No. 22-A were subjected to levy of cess. The said trade notice further stated that it had been decided that jute twine and jute yarn consumed within the factory though exempted from payment of Central Excise duty, were liable to levy of cess under the Jute Manufactures Cess Rules, 1976.
( 5 ) THEREAFTER, the respondents had individually called upon the appellants to pay cess on jute twine and jute yarn on captive consumption with effect from 1st of March, 1976.
( 6 ) THE present appellants had filed writ petitions challenging the levy of cess under Section 9 (1) of the Industries (Development and Regulation) Act, 1951 read with the Jute Manufactures Cess Rules and Orders made thereunder. Levy of any cess on jute twine and yarn in the process of manufacture of other jute products was challenged as unauthorised and illegal. His Lordship Mr. Justice Amiya Kumar Mookerji analogously heard and disposed of the Rules obtained by these appellants. The learned Single Judge held that the levy of jute cess under the aforesaid provisions of law were valid and authorised. Therefore, the learned Single Judge discharged the Civil Rules. The appellants, being aggrieved thereby, have preferred these appeals under Clause 15 of the Letters Patent.
( 7 ) WE have heard these appe
