2004 (9) TMI 136 - AT - Central Excise

Summary

Issues involved:
Interpretation of Jute Manufactures Cess Act, 1983 and Jute Manufactures Cess Rules, 1984 regarding the liability of hessian bags and sacking bags made from jute fabrics to pay cess.

Detailed Analysis:

The issue referred to the Larger Bench for consideration was whether hessian bags and sacking bags made from jute fabrics, on which duty of cess had already been paid, would be further liable to cess under the Jute Manufactures Cess Act, 1983 and the Jute Manufactures Cess Rules, 1984. The appellants argued that since they purchased hessian cloth with paid jute cess and converted it into bags, they should not be required to pay cess again. They contended that cess on jute is not a multiple tax, and therefore, no additional cess should be applicable on the bags made from hessian cloth.

The Revenue, represented by Shri D.N. Choudhary, argued that as per Section 3(1) of the Jute Manufactures Cess Act, 1983, a duty of excise is levied on every article of jute manufacture produced in India. Referring to the Schedule under Section 3(1), which lists different jute products and their corresponding cess rates, the Revenue contended that hessian bags and sacking bags fall under the category of 'any other article of jute manufacture' and are separately liable to pay cess. The Revenue relied on legal precedents, including a Supreme Court decision, to support the position that cess must be collected for each jute product specified in the Schedule.

After careful consideration, the Tribunal concluded that cess must be collected on each product listed in the Schedule to the Jute Manufactures Cess Act, 1983. Since hessian bags and sacking bags are distinct entries in the Schedule, separate cess is applicable on them, even if the hessian cloth used in their production had already incurred cess. The Tribunal ruled in favor of the Revenue, stating that separate cess is required for hessian bags and sacking bags manufactured from previously cess-paid materials.

In summary, the Tribunal's decision clarified that under the Jute Manufactures Cess Act, 1983, separate cess is leviable on each jute product specified in the Schedule, including hessian bags and sacking bags made from jute fabrics on which cess had already been paid. The judgment emphasized the necessity of collecting cess on each jute product individually, regardless of any previous cess payments on the raw materials used in their production.