Tea cess is a one-time levy at production stage, and later exemption notifications cannot expand the charging provision.

Tea cess under the Tea Act was treated as a one-time levy at the stage of production from tea leaves, because the statutory definition of tea covers the plant and all commercially known tea made from its leaves. On that construction, cess under Section 25 attaches when tea is first manufactured, not again on black tea cleared after duty-paid tea had already suffered cess. A later exemption notification dated 11-11-1999 could not enlarge the charging provision or sustain a demand for an earlier period not covered by the statute. The demand for cess on black tea cleared during the prior period was therefore unsustainable.

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Issues: Whether cess was payable on black tea manufactured from duty-paid tea already subjected to tea cess, and whether the exemption notification issued on 11-11-1999 could be relied upon to sustain the demand for the prior period.

Analysis: Section 3(n) of the Tea Act, 1953 defines tea as the plant and all varieties of the product commercially known as tea made from the leaves of the plant. On that statutory definition, the levy of tea cess was held to be a one-time levy at the stage of production from tea leaves. The earlier Supreme Court reasoning referred to in the judgment supported the view that tea remains within the statutory definition when produced from tea leaves, and cess under Section 25 of the Tea Act, 1953 attaches accordingly. A later exemption notification could not expand the levy or be used to infer that cess was otherwise payable for the earlier period when the statute itself did not contemplate such a levy.

Conclusion: The demand of cess on black tea cleared during the prior period was unsustainable, and the issue was decided in favour of the assessee.

Final Conclusion: The levy was confined to the first stage of manufacture from tea leaves, and the impugned demand based on the exemption notification failed.

Ratio Decidendi: Where the charging statute contemplates a one-time levy at the stage of production from tea leaves, a subsequent exemption notification cannot enlarge the levy or validate a demand for a prior period not covered by the statute.

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