Pawan Exports P. Ltd. vs Union of India and Others

Bharati Sapru, J.—Heard learned counsel for the petitioner and Shri Ashok Kumar Nigam, Additional Solicitor General of India for the respondents and also perused the material on record. This petition has been filed by the petitioner being aggrieved by an order passed by the Cess Committee Appellate Tribunal dated October 20, 2005 by which it has imposed cess on the petitioner treating it to be a manufacturer. Respondent No. 3 has completely relied upon a judgment of the same committee dated April 30, 2004 passed in the case of Chandhok Textiles Exporter P. Ltd. v. Assessing Officer, Textile Committee.

I have also perused the judgment, which has been given for the case of Chandhok. In that judgment the Textiles Committee Cess Appellate Tribunal has relied upon a judgment of the Delhi High Court in the case of Nath Bros Exim. International Ltd. Vs. Union of India and Others, .

In that case there was a clear finding that the matter did not relate to the power loom and handloom industry and therefore, it was not entitled to the benefit of section 5A of the Textiles Committee Act, 1963, which reads as hereunder:

(1) There shall be levied and collected as a cess for the purposes of this Act, a duty of excise on all textiles and on all textile machinery manufactured in India at such rate, not exceeding one per cent, ad-valorem as the Central Government may, by notification in the official gazette, fix:

Provided that no such cess shall be levied on textiles manufactured from out of handloom or power loom industry.

The case is therefore, clearly distinguishable from the present case as in the present case the assessee has sought the benefit of the provisions of section 5A(1) proviso that is to say that it has made a clear statement that it is doing the job work of bleaching and dyeing of textile, which had been made by the power loom industry. The question therefore, arises that if and whether the assessee shall be entitled to the benefit of the proviso or not. The proviso to the section clearly extends the benefit to the manufacture of textile out of the power loom and handloom industry. Even if, it is accepted that the petitioner is a manufacturer at the second stage then the textile on which the petitioner is working does not cease to be a product of the power loom and handloom industry.

In this case as it is well established by the petitioner that his product is being made out of the power loom and handloom industry then clearly he is entitled to the benefit of the proviso.

Even after being subjected to bleaching, dyeing or any other process the gray cloth, which is finished by the assessee would not cease to be the outcome of the power loom industry and, therefore, even if, the assessee has been considered to be a manufacturer of textile by virtue of the judgment of the apex court in the case of Ujagar Prints Vs. Union of India (UOI) and Others, then too as a manufacturer of the power loom industry he would be entitled to the benefit of the proviso at that stage of manufacture because there is no bar under the proviso with regard to the stages of manufacture.

In the counter-affidavit that has been filed by the Union it has not been disputed that the petitioner is doing job work out of the textile, which is made by the power loom industry. In view of this the assessee is entitled to the benefit of section 5A. The impugned order passed by respondent No. 3 dated October 20, 2005 is, therefore, not justified in the facts and circumstances of the case, it is set aside. The writ petition is allowed.