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TMI Blog1991 (12) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... s. For the sake of convenience, we shall refer to the facts in Civil Appeal No. 2439 of 1979 and to the facts in Civil Appeal arising from Special Leave Petition No. 5466 of 1980. During the arguments before us, facts of these two cases alone were referred. 2. The appellant in Civil Appeal No. 2439 of 1979, New Central Jute Mills Company Ltd., is a company engaged in manufacture of jute products like jute twine, yarn, sacking, carpet backing etc. Jute twine and jute yarn, manufactured by them is used in their own establishment for manufacturing other (finished) products. In other words, jute twine and jute yarn are intermediate products which are captively consumed in the same unit for manufacturing the end-products which fall within the expression 'jute textiles'. 3. Jute textile industry is one of the industries specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (hereinafter referred to as the 'Act'). The Act, as is well known, was enacted in 1951 to provide for the development and regulation of certain industries. Section 2 of the Act contains a declaration to the effect "that it is expedient in the public interest that the Union ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specified in the notified order, and different rates may be specified for different classes of goods : Provided that no such rate shall in any case exceed two annas per cent of the value of the goods. Explanation.- In this sub-section, the expression "value" in relation to any goods shall be deemed to be the wholesale cash price for which such goods of the like kind and quality are sold or are capable of being sold for delivery at the place of manufacture and at the time of their removal therefrom, without any abatement or deduction whatever except trade discount and the amount of duty then payable. (2) The cess shall be payable at such intervals, within such time and in such manner as may be prescribed, and any rules made in this behalf may provide for the grant of a rebate for prompt payment of the cess. (3) The said cess may be recovered in the same manner as an arrear of land revenue. (4) The Central Government may hand over the proceeds of the cess collected under this section in respect of the goods manufactured or produced by any scheduled industry or group of scheduled industries to the Development Council established for that industry or group of industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (f) of Rule 2 which read thus :- "f. 'Jute manufactures' means manufactures of jute, or 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 the aid of power; (2) other, but excluding any such manufacture, - (i) which contains 40 per cent or more by weight of wool, or (ii) which contains no wool or less than 40 per cent by weight of wool and less than 50 per cent by weight of jute (including Bimlipatam jute or Mesta fibre)." 9. It may be noticed that this definition is not only inclusive but also specifically includes jute, yarn, thread, rope and twine, all sorts. 10. Rule 3 applies the provisions of the Central Excises and Salt Act, 1944 and the rules made thereunder in the matter of levy and collection of the cess from the jute manufacturers. It reads as follows : "3. Application of Central Excises and Salt Act and the Rules made thereunder - Save as otherwise pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -headings, yarn is specifically mentioned but in the case of sub-heading (2), yarn is omitted. This omission is deliberate and meaningful which is evident from the fact that the corresponding entry in the original First Schedule expressly included jute yarn but when the First Schedule was substituted in 1956, jute yarn was specifically omitted. This has some meaning. It shows that jute yarn is outside the purview of the Act. In other words, an industry engaged in production of jute yarn is not within the purview of the Act. If so, cess under Section 9 cannot also be levied on such products. He submitted further that the cess cannot be levied on intermediate products but can be levied only on the final products. (2) A reading of Section 9(1) shows that the levy of cess has to be with reference to the value of the product (ad valorem). The notification in question levies the cess by weight. Such a levy is not permissible and could not have been contemplated by sub-section 1 of Section 9 which is evident from a reading of the proviso. As a matter of fact, such a levy (by weight) brings about an unequal and anomalous consequence. It is well known that finer the jute textile, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral supported the levy. He submitted that Section 9 empowers the Central Government to levy cess "on all goods manufactured or produced in any such scheduled industry as may be specified in this behalf by Central Government by notified order". Once jute textile industry is notified by Central Government, says he, all the goods manufactured or produced in such industry can be subjected to cess. He emphasises the fact that sub-heading 2 of Heading 23 is inclusive in nature and must be deemed to take in jute yarn. According to him, the fact that jute yarn, which was specifically mentioned in the corresponding sub-heading before 1956 but is not found repeated in the present schedule is of little consequence. Learned Solicitor General did not concede that under Rules 9 and 49 of Central Excise Rules, as they stood before they were amended in 1982, intermediate products captively consumed were not exigible to duty. In any event, he submitted, it is now well settled by decisions of this Court rendered under the provisions of Central Excise Act that duty can be levied on intermediate products as well even though captively consumed within the same factory or premises. The same principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the petitioners' very factories. In such a situation, can it be said that jute yarn is not "goods manufactured or produced" in the petitioners' industries? We think not. In this situation, we are not prepared to attach any significance to omission of word 'yarn' in this sub-heading in 1956. In this context, we may recall the observations of this Court in Harakchand v. Union of India (1970 S.C. 1453 at 1461) to the effect that "there was no scientific or logical scheme in the classification of First Schedule of the Act 65 of 1951, but it is a mere enumeration and grouping of various items". Indeed, the Calcutta High Court has held, relying upon the said decision that the word "Textiles" in Heading 23 does not qualify sub-heading 2 of Heading 23. 17. It is then argued that if we arrive at the above conclusion on the basis of the language employed in Section 9, it would lead to an anomalous situation viz., while the jute yarn industry would not be within the purview of the Act (i.e., would not be subject to control and regulation provided by the Act) its products would be liable to pay cess under Section 9. This cannot be, says the learned counsel. We are not impressed. Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decision of this Court in J.K. Cotton Spg. & Wvg. Mills (supra) establishes the said fact. Different High Courts had taken different views. There was no decision by this Court. It is, therefore, wrong to assume that under the unamended rules, it was 'well settled' that duty could not be levied on captively consumed goods. The second and more important aspect is the nature of the cess in question. Though levied and collected as a cess, the imposition under Section 9 is a duty of excise. Section 9 says so in so many words. The explanation to sub-section (1) of Section 9 defines the expression 'value' in practically the same terms as it is defined in the Central Excise Act. And Rule 3 of the Jute Cess Rules provides that except as otherwise provided in the said rules, the provisions of Central Excise Act, and the rules made thereunder "shall, so far as may be, apply in relation to the levy and collection of the cess as they apply in relation to the levy and collection of the duty of excise on Jute Manufactures under that Act". The language employed in this rule is significant. According to it, the provisions of the Central Excise Act and Rules are applicable in the matter of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be levied and collected in accordance with the provisions of the Central Excise Act and the Rules. The effect is as if the words "for the time being in force" were there after the words "the provisions of Central Excises and Salt Act, 1944 (1 of 1944) and the Rules made thereunder" in Rule 3. We are, therefore, of the opinion that the amendment of Rules 9 and 49 made in 1982 (with retrospective effect from 1944) is equally applicable in the matter of levy and collection of cess under the Act. The contentions urged by Shri Ganesan are accordingly rejected. In this view of the matter, it is not necessary to dwell upon the difference between cases where the provisions of another Act are incorporated by reference and cases where a mere reference is made to another Act - a distinction pointed out in a recent decision of this Court in Bhatinda Improvement Trust v. Balwant Singh [1991 (4) S.C.C. 368]. 19. Coming to the second contention urged by Shri Salve, we see no substance in it. Under the Schedule to the Central Excise Act, jute was taxed with reference to weight. So also was jute yarn; vide Entry 22A and 18D of the Schedule. Even the 1985 Act taxes jute and jute yarn by we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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