Cess on captively consumed intermediate jute goods is valid; levy by weight also survives the statutory ceiling challenge.

Cess under Section 9 of the Industries (Development and Regulation) Act, 1951 extends to jute yarn and jute twine manufactured within a scheduled jute textile industry and captively consumed in the same factory, because the charging provision applies to goods produced in the scheduled industry, including intermediate goods. Rule 3 incorporates the Central Excise framework for levy and collection, so captive consumption does not remove such goods from charge. The levy by weight is also valid, as the statute does not require an ad valorem basis and permits a different mode of levy so long as the value-linked statutory ceiling is not exceeded.

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Issues: (i) Whether jute yarn and jute twine produced within a scheduled jute textile industry and captively consumed in the same factory are liable to cess under Section 9 of the Industries (Development and Regulation) Act, 1951 read with the Jute Manufactures Cess Rules, 1976. (ii) Whether the levy of cess by weight, and not strictly ad valorem, is valid and within the statutory ceiling.

Issue (i): Whether jute yarn and jute twine produced within a scheduled jute textile industry and captively consumed in the same factory are liable to cess under Section 9 of the Industries (Development and Regulation) Act, 1951 read with the Jute Manufactures Cess Rules, 1976.

Analysis: The statutory scheme treats the scheduled industry as the unit of levy and authorises cess on all goods manufactured or produced in the scheduled industry specified by notification. The expression used is broad enough to include intermediate goods manufactured in the factory, even if they are subsequently consumed in the same unit for further manufacture. Rule 3 makes the Central Excise law applicable for levy and collection of cess in a continuing manner, so later changes in the excise law apply to cess as well. Captive consumption does not take the goods outside the charging provision.

Conclusion: The levy on jute yarn and jute twine captively consumed within the same factory is valid and is in favour of Revenue.

Issue (ii): Whether the levy of cess by weight, and not strictly ad valorem, is valid and within the statutory ceiling.

Analysis: Section 9 does not confine the mode of levy to value alone. The proviso only imposes a ceiling linked to value, while the charging provision leaves room for the Government to adopt an appropriate basis of levy so long as the prescribed ceiling is not breached. Since the levy of excise on jute and jute yarn has historically been made by weight, the adopted basis was held permissible. No material was shown to establish breach of the statutory ceiling.

Conclusion: The levy by weight is valid and the challenge to the ceiling fails, in favour of Revenue.

Final Conclusion: The Court upheld the cess on intermediate jute goods and sustained the impugned method of levy, while granting relief only in the connected appeal allowed on its own facts.

Ratio Decidendi: A cess imposed on goods manufactured or produced in a scheduled industry may validly extend to intermediate goods captively consumed in the same factory, and the mode of levy may be other than ad valorem so long as the statutory ceiling tied to value is not exceeded.

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