Textiles cess on manufactured garments upheld: narrow exemption, no double taxation, and manufacturer includes hired-labour production.

The proviso to Section 5A(1) of the Textiles Committee Act was confined to a narrow exemption for textiles actually manufactured from handloom or powerloom, and could not be extended to silk readymade garments merely because their raw material had originated from such sources; the cess therefore remained applicable. Levy of cess under the Act was not impermissible double taxation alongside customs duty, because customs duty arose on import while the cess arose on manufacture, and the statute expressly contemplated additional levy. A person who gets textiles manufactured through agents, contractors or hired labour falls within "manufacturer" for Section 5A, so manufacturer-exporters are covered by the cess.

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Issues: (i) whether the proviso to Section 5A(1) of the Textiles Committee Act, 1963 exempted silk readymade garments exported by the petitioners from cess; (ii) whether levy of cess under the Act in addition to customs duty on imported silk amounted to double taxation; and (iii) whether an exporter who gets textiles manufactured through agents, contractors or other instrumentalities falls within the expression "manufacturer" for the purpose of Section 5A.

Issue (i): whether the proviso to Section 5A(1) of the Textiles Committee Act, 1963 exempted silk readymade garments exported by the petitioners from cess.

Analysis: The charging provision levied cess on all textiles manufactured in India, while the proviso carved out only a limited exception for textiles manufactured from handloom or powerloom . The expression "manufactured from out of" was read in context and not in isolation. The exemption was confined to textiles actually produced by handloom or powerloom industry in the finished form and could not be expanded to cover later processed or converted garments merely because the raw material had originated from such industry. A proviso cannot be construed so as to enlarge its scope beyond the main provision.

Conclusion: The petitioners were not entitled to exemption under the proviso, and the cess was validly attracted on that count.

Issue (ii): whether levy of cess under the Act in addition to customs duty on imported silk amounted to double taxation.

Analysis: The customs levy operated at the stage of import, whereas the cess under the Act operated at the stage of manufacture of textiles. The two imposts were distinct in incidence and purpose. Section 5A(2) also expressly contemplated levy under the Act in addition to any other cess or duty leviable under any other law. The contention of double taxation therefore failed.

Conclusion: The levy did not amount to impermissible double taxation.

Issue (iii): whether an exporter who gets textiles manufactured through agents, contractors or other instrumentalities falls within the expression "manufacturer" for the purpose of Section 5A.

Analysis: Section 5A fastened the levy on manufacture of textiles, and the Act did not define "manufacture" or "manufacturer". The Court adopted the statutory meaning reflected in Section 2(f) of the Central Excise and Salt Act, 1944, under which manufacture includes processes incidental or ancillary to completion of a product and a manufacturer includes a person who produces goods through hired labour or on his own account. On that basis, a person who gets textiles produced through an agent, servant or contractor is also a manufacturer. The inclusion of exporters in Section 12 further indicated legislative intent that exporters engaged in such manufacturing activity were covered.

Conclusion: The petitioner, being a manufacturer-exporter, fell within the Act and could be subjected to cess.

Final Conclusion: The impugned public notice was upheld in substance, and the writ petition failed on all substantive grounds.

Ratio Decidendi: A proviso to a charging section must be confined to the limited exception it creates, cess levied at the stage of manufacture is distinct from customs duty levied at import, and a person who causes textiles to be manufactured through agents, contractors or hired labour is a manufacturer for the purpose of the levy.

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