Single levy of jute cess barred fresh demand on laminated fabrics and jute bags already taxed at fabric stage.

Cess under the Jute Manufactures Cess Act, 1983 could not be demanded again on laminated jute fabrics and jute bags made from jute fabrics where cess had already been paid at the fabric stage. The exemption notifications and departmental trade notice indicated that cess was intended to be levied only once on the jute product. The earlier Larger Bench ruling was distinguished because it had not considered the relevant exemption notifications and clarifications. On that basis, the further demand on the laminated fabrics and bags was held unsustainable and was set aside.

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Issues: Whether cess under the Jute Manufactures Cess Act, 1983 could be demanded again on laminated jute fabrics and jute bags made from jute fabrics on which cess had already been paid.

Analysis: The exemption notifications and the departmental trade notice showed that the legislative intent was to collect cess only once on the jute product. The earlier Larger Bench ruling was found not to have considered the exemption notifications issued under the Jute Manufactures Cess Act, 1983. Since cess had already been levied at the stage of jute fabrics, a further demand on the laminated fabrics and the bags made therefrom would not accord with the levy scheme and the exemptions and clarifications in force.

Conclusion: The additional demand of cess on laminated fabrics and jute bags was not sustainable and was set aside.

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