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TMI Blog1980 (2) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... e may be levied and collected as a cess for the purposes of this Act on all goods manufactured or produced in any such scheduled industry as may be specified in this behalf by the Central Government by notified order a duty of excise at such rate as may be 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 13 paise 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." 4. The proviso to section 9(1) explains what is missing in the former part of section 9(1). The proviso explains that the cess will be levied at a rate not exceeding 13 paise per cent of the value of the goods. The expression `value' has been explained in the explanation. On a perusal of explanation, it is clear that the cess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a section or clause gets incorporated into it, and becomes an integral part of it, and has no independent existence apart from it. There is in the eye of law, only one enactment, of which both the section and the explanation are two inseparable parts. `They move in a body if they move at all'. " Relying on this decision of the Supreme Court, I hold that the explanation is an integral part of section 9(1) of the Act. If it is so, the incidence of levy of cess postulates the delivery of goods at the place of manufacture and their removal from the factory. If these two conditions are satisfied, then the authority shall levy cess on any manufactured goods. In this connection, reference may also be made to Craise on Statute Law, Seventh Edition, at page 395, which runs as follows :- "Where a statute is passed for the purpose of supplying an obvious omission in a former statute, or, as Parks J. (afterwards Baron Parke) said in R.V. Dureley `to explain a former statute', the subsequent statute has relation back to the time when the prior Act was passed. Thus, in Att. Gen. v. Pougett, it appeared that by a Customs Act of 1873 (53 Geo. 3, C. 33) a duty was imposed upon hides of 9 s. 4 d. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. (J 269) = (A.I.R. 1939 Federal Court 1). While making distinction between taxes on the sale of goods and taxes on the goods themselves, their Lordships held : "The essence of a tax on goods manufactured or produced is that the right to levy it accrues by virtue of their manufacture or production." I humbly accept the observation of their Lordships of the Federal Court. In my opinion, section 3 of the Excise Act is not in pari materia with section 9(1) of the Act. In the latter case, the incidence of taxation takes place when the goods are delivered at the manufacturer's place and their removal from the factory. On the other hand, under the Excise Act, the incidence of taxation takes place as soon as the goods are manufactured or produced by the manufacturer. Learned Counsel for the petitioner has also drawn my attention to a decision in the Delhi Cloth and General Mills Company Ltd. and Another v. The Joint Secretary, Govt. of India, Ministry of Finance and Another - 1978 E.L.T. (J 121) = (1978 Taxation Law Reports 2094). 9. In the present case the admitted position is that the petitioner manufactures twine and yarn. Thereafter, twine and yarn are put into another pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents, in this connection, relies on a decision of the Supreme Court in the Bihar Cooperative Development and Cane Marketing Union Ltd. v. Bank of Bihar - A.I.R. 1967 Supreme Court 389. In that case their Lordships were interpreting the explanation to section 48 (1) of the Bihar and Orissa Co-operative Society Act, 1935, and their Lordships were of opinion that the explanation was within the four corners of section 48(1) of the said Act. This decision has been interpreted by the Supreme Court in M/s. Hiralal Ratan Lal v. The Sales Tax Officer, Section 11 Kanpur and Another - A.I.R. 1973 Supreme Court 1034. While interpreting that decision of the Supreme Court, their Lordships held as follows in paragraph No. 24 of the decision : "On the basis of the language of the explanation this court held that It did not widen the scope of clause (c). But from what has been said in the case, it is clear that if on a true reading of an explanation it appears that it has widened the scope of the main section, effect must be given to legislative intent notwithstanding the fact that the legislature named that provision as an explanation. In all these matters the Courts have to find out the true ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of certiorari and quash Annexure 7 and 8. The parties shall bear their own costs. [Judgment per : M.P. Verma, J.]. - I have heard the judgment delivered by my learned Brother and I do not find anything profitable to add to it. The principle laid down by my Brother while explaining section 9(1) of the Industries (Development and Regulation) Act, 1951 is quite sufficient and needs no elaboration. 16. Learned Counsel for the respondents has strenuously argued that as far as the order of Government of India in respect of levy of cess is concerned, it is levied and collected on all the jute products, that is, twines and yarns manufactured in a factory. There is no exemption for the jute twines and yarn manufactured and consumed within the factory. In the process of manufacturing, the moment the raw material takes the shape of yarns and twines, the manufacture is complete and cess is leviable on such products. According to his contention, the cess is levied on the goods manufactured and not on sale. Learned Counsel went on to argue that it is not the concern of the Government while levying cess on the manufactured goods to ascertain whether such products have got marketability v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it is not consumed in the ordinary sense of the term. The consumption here means intermediary use for the purpose of manufacture of sacks and hessians which are produced in the factory on which cess may be levied. 17. Learned Counsel for the respondents has further argued that section 9(1) of the Act is charging section and the court should be precluded from looking to the appendix, that is, the explanation appended to the section itself. Here again, I am unable to accept the contention. To my mind, the explanation appended to the section is obviously to explain the omission in the charging part of the section and the omission in the present case is with regard to the manner of charging cess and at what point it should be charged. In order to remedy it, the Explanation has been added thereto. Thus, this forms the integral part of the section and it must be read along with it. Taking this into consideration, it makes all the more clear that the cess is to be levied on such manufactured goods and finished products at the time of removal from the factory premises which have got exchangeable and marketable value. I, therefore, respectfully agree with the judgment delivered by m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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