1. This appeal is directed against the impugned order-in-appeal dated 20-6-1984 passed by the Collector (Appeals), Calcutta.
2. Factual structure of the case is that the appellants M/s. Kamarhatty Co. Ltd., Kamarhatty, holder of Central Excise Licence are Jute Manufacturers namely Fabrics and bags falling under T.I. 22A(1) and 22A(2) respectively. According to the department the appellants paid duty only on one stage i.e. at the stage of clearance but no duty was paid by them at the intermediate stage i.e. to say on Fabric for manufacture of bags, which according to the department was payable by the appellants as per the Cess orders issued under Rule 3 of Jute Manufactures Cess Rules, 1976 issued under Section 9 of the Industrial (D & R) Act, 1951. Accordingly nine show cause notices for different period ranging from March 1981 to April 1983 were issued to the appellants calling upon them to show cause as to why the total duty amount of Rs. 2,48,300.56 be not demanded. The appellants contested the said show cause notices on various grounds. However, the Assistant Collector vide his Order-in-Original No. 2(22A) of 84/AC XII dated 28-1-1984 confirmed the said demand made in the aforesaid show cause notices. Against that order of the Assistant Collector the appellants filed their appeal before the Collector of Appeals, Calcutta but without success. Hence the present appeal.
3. We have heard Shri B.B. Gujral, learned Counsel for the appellants and Shri L.C. Chakravarti, learned JDR for the respondents.
4. At the outset Shri B.B. Gujral, learned Counsel for the appellants submitted that the issue as to whether cess was payable separately on sacking cloth captively consumed in making the bags once cess has been paid in respect of the bags cleared is a concluded issue. In Chitavalasah Jute Mills v. Collr. of C. Ex. [1989 (39) ELT 157A (Tri.) wherein after referring the case of Nellimarla Jute Mills Co. Ltd v.Collr. of C. Ex., Guntur [1987 (31) ELT 209] it was held that there is no warrant for demanding cess separately on sacking cloth captively consumed for making the bags once the cess has been paid in respect of the bags cleared. In reply Shri L.C. Chakravarti, learned JDR submitted that the period involved in the instant case is from October 1980 to April 1983 and the case of Nellimarla Jute Mills (supra) relates to levy of cess during the period from 1-5-1984 to 30-9-1984 after coming into force of the Jute Manufactures Cess Act, 1983 which came into effect from 1-10-1984.
5. We have considered the submissions. It is not in dispute that the appellants manufactured "Hessian" and "Sacking" and captively used them for the purpose of manufacturing Hessian bags and sacking bags after payment of the cess leviable thereon. In the case of Chitavalasah Jute, Mills, supra it was held that there was no warrant for demanding cess separately on sacking cloth captively consumed for making the bags once the cess has been paid in respect of the bags cleared. For this proposition reliance was also placed on the case of Nellimarla Jute Mills, supra. Needless to say that in that case it was also argued by the Department that the case of Nellimarla Jute Mills related to the period 1-5-1984 to 30-9-1984 and, therefore, the ratio of that judgment will not apply to a case which relates to the period before coming into force of the Jute Manufactures Cess Act, 1983. After examining the provisions of the old Cess Act of 1951 and Cess Act, 1983 the said contention was repelled.
6. Thus following the ratio of the said decision rendered by the CEGAT in the case of Chitavalasah Jute Mills, supra, we allow the appeal and set aside the impugned order with consequential relief.