Cess on jute yarn and captive consumption remains liable under the statutory charging provision, despite non-removal from factory.

Cess under Section 9(1) of the Industries (Development and Regulation) Act, 1951 was held leviable on jute yarn produced by mills engaged in jute textiles, because the charging provision applies to goods manufactured in a scheduled industry and is not confined by the wording of the First Schedule entry. The subordinate Jute Manufacturers Cess Rules, 1976 and the Central Excise Rules, 1944 could regulate payment mechanics, but could not restrict the substantive levy. Jute yarn used captively within the factory and not removed from the premises remained liable to cess, as removal-based limitations could not override the statutory charge.

---

---

Issues: (i) Whether cess under Section 9(1) of the Industries (Development and Regulation) Act, 1951 could be levied on jute yarn produced by mills engaged in jute textiles under Item 23(2) of the First Schedule; (ii) Whether jute yarn used within the factory as an intermediate product and not removed from the premises escaped cess liability under the Jute Manufacturers Cess Rules, 1976 and the Central Excise Rules, 1944.

Issue (i): Whether cess under Section 9(1) of the Industries (Development and Regulation) Act, 1951 could be levied on jute yarn produced by mills engaged in jute textiles under Item 23(2) of the First Schedule.

Analysis: The charging provision authorises levy of cess on all goods manufactured or produced in a scheduled industry specified by notified order. Item 23 of the First Schedule covers textiles made wholly or in part of jute, and the Court held that the entry identifies the scheduled industry and is not confined to the exact articles named in the sub-heading. Jute yarn is a product of the jute textile industry and is capable of being brought to market as goods. The First Schedule and its explanations do not restrict the charging power under Section 9(1).

Conclusion: Cess on jute yarn was validly leviable and the challenge to the notification failed.

Issue (ii): Whether jute yarn used within the factory as an intermediate product and not removed from the premises escaped cess liability under the Jute Manufacturers Cess Rules, 1976 and the Central Excise Rules, 1944.

Analysis: The Court held that the rules framed under Section 30 of the Act regulate the time, manner, and intervals of payment, but cannot cut down the substantive levy created by Section 9(1). Rule 3 of the Jute Manufacturers Cess Rules makes the Central Excise law applicable only so far as may be, and the removal-based limitations in Rules 9 and 49 of the Central Excise Rules cannot override the independent cess levy under the Act. Captive consumption of jute yarn within the factory did not negate its character as goods liable to cess.

Conclusion: Non-removal and captive consumption did not exempt jute yarn from cess.

Final Conclusion: The writ petitions challenging the levy of cess on jute yarn were rejected, and the impugned levy was upheld as within the statutory power conferred by the Act.

Ratio Decidendi: Under Section 9(1) of the Industries (Development and Regulation) Act, 1951, cess is leviable on all goods produced by a scheduled industry, and subordinate rules under Section 30 cannot narrow the substantive charging provision by importing removal-based limits from the Central Excise regime.

---