Manufacturer liability for textile cess fails where garments are made by independent job workers without factual proof of control.

Cess under the Textile Committee Act, 1963 is recoverable only from the actual manufacturer, and mere branding, supply of specifications, or sale of finished garments does not establish manufacture where production is done by independent job workers. On the record, the petitioners were not shown to exercise the pervasive control or supervision needed to be treated as manufacturers, so the levy was unsustainable. The Court also held that the belated initiation of recovery proceedings supported the plea of delay and laches. The assessment and appellate orders were quashed, with consequential refund and discharge of the bank guarantee.

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Issues: (i) whether the petitioners could be treated as manufacturers liable to pay cess under the Textile Committee Act, 1963, when the garments were produced through independent job workers, and (ii) whether the demand was barred by limitation and delay.

Issue (i): whether the petitioners could be treated as manufacturers liable to pay cess under the Textile Committee Act, 1963, when the garments were produced through independent job workers.

Analysis: Liability to cess under section 5A of the Textile Committee Act, 1963 attaches to manufacture of textiles and textile machinery and recovery is from the manufacturer. The record showed that the petitioners consistently asserted that the garments were made by independent job workers operating on their own account, without the petitioners exercising the kind of pervasive control and supervision that would convert them into manufacturers. The show cause notice and the assessment order proceeded on inconsistent assumptions, while the impugned finding of control and supervision was unsupported by factual material. Mere supply of specifications, branding, and sale of the finished garments did not establish manufacture by the petitioners.

Conclusion: The petitioners could not be treated as manufacturers for purposes of cess, and the levy was unsustainable.

Issue (ii): whether the demand was barred by limitation and delay and laches.

Analysis: The proceedings were initiated long after the commencement of the statutory regime and sought to reach back over a substantially earlier period. The Court held that the contention of unreasonable delay had substance, and the belated initiation of recovery proceedings reinforced the unfairness of the impugned action.

Conclusion: The demand was also liable to be defeated on the ground of delay and laches.

Final Conclusion: The assessment and appellate orders were quashed and set aside, the cess demand was held unsustainable, and the writ petition was allowed with consequential refund and discharge of the bank guarantee.

Ratio Decidendi: Cess under the Textile Committee Act can be recovered only from a person shown on the record to be the manufacturer, and a finding of manufacture cannot rest on branding, sale, or bare assertions of supervision without supporting factual material.

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