2009 (2) TMI 485 - AT - Indian Laws

Cess u/s 5A(1) of the Textile Committee Act 1963 - Manufacture - The Hon ble Apex Court in the case of M/s. Ujagar Prints & Ors. v. Union of India & Ors 1988 -TMI - 42346 - SUPREME COURT OF INDIA held that processing like bleaching dyeing printing or finishing etc. amounts to manufacture and therefore the processing activities carried out by the Appellants amount to manufacture of textile and therefore liable to pay the cess in terms of Section 5A(1) of the Textile Committee Ac. - the issuance of Demand Notice cannot be faulted as it is issued in accordance with law and sustainable. There is no merit in the Appeal and hence it is dismissed.

Summary

Issues:
Challenge to Demand Notice for cess under Textile Committee Act, 1963. Applicability of cess on independent processors. Double taxation claim. Opportunity for hearing before issuance of Demand Notice.

Analysis:

1. Challenge to Demand Notice: The Appellants contested a Demand Notice dated 3-2-2005 amounting to Rs. 5,89,307 for the period from 10/2003 to 9/2004. The Appellants argued that they are independent processors, not manufacturers of textile, and thus not liable to pay cess under Section 5A(1) of the Textile Committee Act, 1963. They claimed that demanding cess from them would result in double taxation, citing a precedent from CESTAT. The Appellants emphasized that processing textile does not constitute manufacturing, hence no cess should be levied.

2. Opportunity for Hearing: The Appellants further contended that they were not given an opportunity before the issuance of the Demand Notice, which they deemed as against the rules and unsustainable in law. They requested the Demand Notice to be set aside and the Appeal to be allowed based on this ground.

3. Respondent's Argument: The Respondent, represented by Shri Javed Ansari, opposed the Appellants' stance. They referred to judgments from the Hon'ble Apex Court, specifically citing cases like M/s. Ujagar Prints & Ors. v. Union of India & Ors. and Aditya Mills Ltd. v. Union of India. The Respondent asserted that there was no case of double taxation and argued in favor of upholding the Demand Notice.

4. Judgment and Ruling: After considering arguments from both sides and reviewing relevant case laws, the Presiding Officer found that the processing activities undertaken by the Appellants, such as bleaching, dyeing, printing, etc., amounted to manufacturing as per the precedent set by M/s. Ujagar Prints case decided by the Hon'ble Apex Court. Consequently, the Appellants were held liable to pay the cess under Section 5A(1) of the Textile Committee Act. The Officer dismissed the relevance of the CESTAT ruling cited by the Appellants in light of the Supreme Court's decision. It was noted that a show cause notice was issued before the Demand Notice, refuting the Appellants' claim of lack of opportunity for a hearing.

5. Conclusion: The Presiding Officer concluded that the Demand Notice was lawfully issued and sustainable. The Appeal was deemed without merit and subsequently dismissed, with no costs awarded.