Textile cess liability for job work processors upheld where prior payment on raw material was not proved

Processing factories engaged in bleaching, dyeing, printing or finishing job work are liable to textile cess where cess has not already been paid on the raw material, and payment may be made by the processor or the supplier. The applicable circular also grants exemption if prior payment of cess is proved. Because the appellants failed to establish that cess had already been paid by the supplier, they did not discharge the burden required by the circular. The demand notice was therefore upheld and the appellants were held liable to pay the cess.

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Issues: Whether processing factories engaged in job work are liable to pay textile cess unless they prove that cess on the raw material has already been paid.

Analysis: The Circular applicable to processing factories provided that units exclusively doing bleaching, dyeing, printing or finishing job work are liable to pay cess on products where no cess has been paid on the raw material, and that such cess may be paid jointly or severally by the processor or the supplier. It also provided an exemption where prior payment of cess is proved. The Appellants did not establish that cess had already been paid by the supplier, so the burden cast by the Circular was not discharged.

Conclusion: The Appellants were held liable to pay the cess and the demand notice was upheld.

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