Captive consumption treated as removal for cess purposes on jute yarn and twine used within the same factory.

Jute yarn and twine manufactured and consumed captively within the same factory for further manufacture of jute products were treated as liable to cess under the Jute Manufactures Cess Rules, 1976. The Tribunal applied the view that captive consumption amounted to removal for duty and cess purposes, and noted that this position was supported even apart from the retrospective amendments to Rules 9 and 49 of the Central Excise Rules, 1944 made by Section 51 of the Finance Act, 1982. Cess was therefore payable on the captively consumed goods, and the demand was sustained in favour of the Revenue.

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Issues: Whether jute yarn and twine manufactured and consumed captively within the factory for further manufacture of jute products were liable to cess under the Jute Manufactures Cess Rules, 1976.

Analysis: The levy arose under the Jute Manufactures Cess Rules, 1976 framed under the Industries (Development and Regulation) Act, 1951. The Tribunal noted that, even apart from the retrospective amendments to Rules 9 and 49 of the Central Excise Rules, 1944 brought about through Section 51 of the Finance Act, 1982, captive consumption within the same factory amounted to removal for the purpose of duty and cess. The reasoning followed the earlier Tribunal view that the statutory levy extended to goods consumed in further manufacture in the same factory.

Conclusion: Cess was payable on jute twine and yarn consumed captively within the factory, and the demand was sustained in favour of the Revenue.

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