Independent textile cess liability survives excise exemption, and assessment may rely on other reliable material when returns are absent.

Cess under Section 5A of the Textiles Committee Act was treated as a standalone fiscal liability for textile manufacturers, so exemption from excise duty did not remove liability to cess because exemption affects levy, not the excisable character of the goods. The assessment rule was also read as permissive rather than exclusive: where an assessee failed to file returns, the Assessing Officer could rely on other reliable material, not only the sources listed in Rule 8, provided the assessee had an opportunity to contest the figures. On that construction, the cess demand and assessment method were sustained.

---

---

Issues: (i) whether cess under Section 5A of the Textiles Committee Act, 1963 is an independent liability of a textile manufacturer and remains payable even where the manufacturer is exempt from excise duty under the Central Excise Act, 1944; (ii) whether, in the absence of returns by the assessee, the Assessing Officer may assess cess on the basis of material obtained from sources other than those mentioned in Rule 8 of the Textiles Committee (Cess) Rules, 1975.

Issue (i): whether cess under Section 5A of the Textiles Committee Act, 1963 is an independent liability of a textile manufacturer and remains payable even where the manufacturer is exempt from excise duty under the Central Excise Act, 1944.

Analysis: The charging provision was read as creating a standalone obligation to pay cess on textiles, unconnected with the actual liability to excise duty under the Central Excise Act, 1944. The exemption granted to hosiery from excise duty did not alter its character as excisable goods, because exemption affects levy and not the description of the goods. The scheme of the Act, the rules, and the legislative purpose showed that cess was intended to be levied in addition to excise duty, if any.

Conclusion: The issue was decided against the assessee and in favour of Revenue; hosiery manufacturers remained liable to cess notwithstanding exemption from excise duty.

Issue (ii): whether, in the absence of returns by the assessee, the Assessing Officer may assess cess on the basis of material obtained from sources other than those mentioned in Rule 8 of the Textiles Committee (Cess) Rules, 1975.

Analysis: Rule 8 was treated as enabling the Assessing Officer to obtain figures from specified sources for convenience, but not as excluding all other reliable material where the assessee failed to file returns. The statutory scheme would be frustrated if assessment were confined only to the two enumerated sources in every case. The assessee was, however, entitled to an opportunity to dispute the correctness of the figures relied upon.

Conclusion: The issue was decided against the assessee and in favour of Revenue; assessment could be made on the basis of other valid sources after giving the assessee an opportunity to contest them.

Final Conclusion: The reference was answered in the affirmative and the appeal failed, leaving the cess demand and the assessment approach sustained under the statutory scheme.

Ratio Decidendi: Where the charging provision imposes an independent fiscal liability, exemption from a different excise levy does not extinguish that liability, and a prescribed assessment mechanism will not be read as excluding other reliable material unless the statute clearly forbids it.

---