TMI Blog2014 (6) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... on under the proviso to sub-section (1) of Section 5A is concerned, the same is available to handloom and powerloom industries. The Appellants, who are manufacturing finished goods and not grey fabrics, i.e. the raw material, being not handloom or powerloom industries, cannot derive advantage of exemption on the basis of the raw material manufactured by other manufacturers. Thus, the Appellants are manufacturers of textiles in the aforestated facts and circumstances of the case and being so, they are subject to levy of cess in terms of the aforestated scheme of Law. - Decided against assessee. - TCA No. 43/2001 - - - Dated:- 6-3-2012 - Dr. T.C. Kaushik, Presiding Officer Shri Alok Kothari, C.A., for the Appellant. Dr. G.R. Sharma, Special Counsel and Shri D.P. Singh, Jr. Counsel, for the Respondent. JUDGMENT Aggrieved by the Demand Notice No. TC/NZD/JAP/6901/2001-02 (1130)-10561, dated 6-11-2001 for Rs. 18,69,937/- for the period 4/1997-98 to 4/2000-01 issued by the Assessing Officer, Textile Committee (North Zone), New Delhi, (Exhibit marked as Annexure 5 to the Appeal) the Appellants have filed the present Appeal. 2. Briefly stated facts are that the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 55(2)/73-AC of 1975, only mill-made yarn, cloth, made-ups, etc., are subjected to cess at the stage when it is being cleared/removed from the mill premises and not from any other premises. Under the said circular, there cannot be levy on the activities of dyeing, bleaching and printing undertaken by independent processor like appellant since independent processors are not covered under the definition of mill. The said circular is binding and hence respondents cannot levy cess upon appellants on the basis of the said circular. 6. Mr. Alok Kothari also submitted that since there is no definition of word manufacture in the said Act, definition of manufacture cannot be borrowed from any other legislation. Needless to state here that though in Memorandum of Appeal there appears to be reference to number of rulings, yet none of the rulings were relied upon by Mr. Alok Kothari. In support of his case nor did he press and/or advance any further arguments in addition to the above. 7. Dr. G.R. Sharma, Counsel for the Respondents submitted that Section 5A(1) of the Textiles Committee Act, 1963 provides for levy and collection of cess on all textiles manufactured in India at s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner that the expression from out of as appearing in the proviso means that any product though by itself textiles within the meaning of Section 2(g) of the Act but manufactured out of textiles manufactured by a handloom or powerloom industry is exempted from a levy under the Act, in our view is devoid of merit. Doing so would tentamount to nullifying the effect of the main provision by adding words to it and enlarging its scope, which is not permissible. 9. My attention was also drawn to paras 17 to 19 of the said judgment to the effect that the proviso to a particular provision of a Statute only embraces the field, which is covered by the main provision. The contents of paras 17, 18 and 19 of the said judgment are reproduced as under : 17-18. The Supreme Court in Tribhovandas H. Tamboli v. Gujarat Revenue Tribunal (1991) 3 SCC 442 : (AIR 1991 SC 1538) held that a proviso to a particular provision of a statute only embraces the field which is covered by the main provision. Therefore, its scope is to carve out an exception to the main enactment and it excludes something which otherwise would have been within the Rule but it has to operate in the same field and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moment there is transformation into a new commodity commercially known as a separate and distinct commodity having its own character and use, manufacture takes place. See the observation of this Court in Union of India v. Delhi Cloth General Mills, 1963 Suppl (l) SCR 586 : (AIR 1963 SC 791) Union of India v. HUF Business known as Ramlal Mansukhrai, Rewari, (1971) 1 SCR 936 : (AIR 1971 SC 2333) Allenbury Engineers P. Ltd. v. Ramkrishna Dalmia, (1973) 2 SCR 257 : (AIR 2973 SC 425), Dy. Commr. Sales Tax (Law) Board of Revenue (Taxes) Ernakulum v. Pio Food Packers, (1980) 3 SCR 1271) : (AIR 1980 SC 1227), Chowgule Co. Pvt. Ltd. v. Union of India (1981) 1 SCC 653 : (AIR 1981 SC 1014) and the cases referred to in the decision of this Court in Empire Industries Ltd. v. Union of India, 1985 Suppl (1) SCR 292 : (AIR 1986 SC 662). 11. I was taken by the ld. counsel, Dr. Sharma, to the Common judgment dated 8-4-2010 passed by the Division Bench of the Hon ble High Court of Gujarat in the case of Shree Jagadamba Textiles Pvt. Ltd. v. Textile Committee [2011 (263) E.L.T. 38 (Guj.)], wherein in para 25 it is held : 25. Averting to the facts of the present case, we find that the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es manufacture or not, a reference will have to be made to one of the earliest decisions in Delhi Cloth Mills Ltd. v. Union of India - 1977 (1) J199 (S.C.) = (1963) Supp 1 SCR 586. It was emphasized in the said case that not every process would amount to manufacture unless it is accompanied by totally new and different article having distinctive name, character and use. In CCE v. Rajasthan State Chemical Works - 1991 (55) 444 (S.C.) = 1991 (4) SCC 473, it was held in para 12 as under (SCC at p. 478-79) : 12. Manufacture implies a change but every change is not manufacture, yet every change of an article is the result of treatment, labour and manipulation. Naturally, manufacture is the end result of one or more processes through which the original commodities are made to pass. The nature and extent of processing may vary from one class to another. There may be several stages of processing, a different kind of processing at each stage. With each process suffered the original commodity experiences a change. Whenever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity. But it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that question also to the Larger Bench. This led the Larger Bench in Ujagar Prints (II) to revisit the question. It affirmed Empire Industries on this question. 14. The word manufacture has also been dealt in para 19 of the aforesaid judgment of the Hon ble Delhi High Court which is reproduced hereunder : 19. Turning to Section 5A of the TCA, the taxable event is manufacture of textiles and the cess is levied as a duty of excise on such manufacture. Even if the petitioners submission is accepted and the meaning of the word manufacture is not imported from the CE Act, then even in its ordinary legal sense it would in terms of dictum in Empire Industries as reaffirmed in Ujagar Prints (II) include the process of dyeing, printing and bleaching since they bring about a change, perhaps an irreversible change, to the grey cloth so processed and that amounts to manufacture. Therefore, there is no merit in the submission that for the purposes of Section 5A of TCA the processes of bleaching, dyeing and printing do not amount to manufacture. 15. Ld. counsel for respondents has vehemently opposed the argument advanced by the appellants that cess is not leviable from pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate and distinct commodity having its own character and use, manufacture takes place. In the present case the Appellants have categorically come on record and further submitted that they are independent processors and undertaking job work of finishing/dyeing of man-made fabric and being so, such process or processes undertaken by the Appellants are included in the definition of word manufacture . 18. Regarding applicability of Circular No. 55(2)/73AC of 1975 issued by Textiles Committee to the units undertaking processing work, I am in total agreement with Respondents. Appellants being processors of textiles are undoubtedly manufacturers under the Act and hence are liable to pay cess under the Act. I really do not find any substance in the argument of Appellants that they are not covered by Circular No. 55(2)/73 AC of 1975 and since any circular issued by Ministry of Textiles is binding on Respondents, Respondents cannot levy cess upon the appellants under the said Circular No. 55(2)/73AC of 1975. It is nobody s case that appellants are liable to pay cess under said Circular No. 55(2)/73AC of 1975. As rightly submitted by ld. counsel for respondents from the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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