Full Judgment
Fabrics, be it sacking or Hessian, having included the sacking/hessian bags there is no scope to charge once again the cess duty on the jute bags when jute fabrics are both central excise and cess duty paid. The appellants are correct when they state that if further cess duty is levied under the circumstances on jute bags, it would tantamount to double taxation of cess levy. Hence, the Asstt.
Collector's action demanding further cess duty on jute bags cannot be endorsed." 2. The facts of case, in brief, are that the respondents herein are engaged in the manufacture of jute and its products. However, they received duty paid fabrics from different jute mills to the extent of 1122.016. MTs. for purpose of stiching jute bags during the period from August, 1985 to 10th December, 1985 and after stiching jute bags the respondents herein removed these bags from the factory to the extent of 1125.523 MTs. (including duty paid twine received) without further payment of cess duty @ Rs. 61.35 per M.T. On scrutiny of the private records of the respondents herein, it was found that the respondents herein had received 1122.016 MTs. of jute fabrics and dispatched 1125.523 MTs. of bags including rags, chindies and twine without payment of cess and without maintaining proper accounts. Therefore, a show cause notice was issued to the respondents herein on 30th Dec.
1985 asking them to explain as to why cess duty to the extent of Rs. 69,050.84 should not be demanded from them. The respondents herein in reply to the show cause notice submitted that since the raw material namely jute fabrics had already paid cess, therefore, the finished goods (jute bags) do not attract further liability of cess duty and therefore, if cess is to be paid at each stage, it will amount to double or triple payment; that Central Excise Rules being made applicable in the case of cess under Section 3(4) of Jute Manufacture Cess Act, 1983; that no cess is liable on goods (jute bags). The Asstt.
Collector after taking submissions of the respondents herein into consideration, confirmed the demand of cess duty amounting to Rs. 69,050.84.
3. Shri Sanjeev Sachdeva, the learned SDR appearing for the appellant submitted that the respondents herein are jute processors and were manufacturing jute bags out of duty paid jute fabrics; that jute bags so manufactured were another variety of jute manufactures; that the respondents herein are manufacturer of jute bags within the meaning of Section 2(f) and was also producer of the jute bags as defined in Section 2(c) of the Jute Manufactures Cess Act, 1983 and therefore, cess duty is leviable on the said new items of jute in terms of Section 3(1) of the said Cess Act; that there was no exemption from cess on jute manufactures; that jute bags manufactured out of duty paid jute fabrics were different products and satisfies all the conditions of "Jute Manufacture" as defined under Section 2(a) of the JMCA, 1983.
4. None appeared for the respondents. However, the point being a short one, it was decided to proceed with the matter in the absence of the respondents.
5. Heard the submissions of the SDR perused the case records. We find that the admitted position is that the respondents herein received jute fabrics after payment of duty of cess thereon. We also find that jute fabrics and jute bags fall under the same tariff entry; that was Tariff Entry 22A. Since these two items fell under the same tariff entry, the conversion of jute fabrics into jute bags cannot be termed as manufacture for the purpose of Section 2(f). We also find that conversion of jute fabrics into jute bags does not show that the respondents herein deal with jute. We also find that the appellant referred to Trade Notice No. 230/85, dated 3-12-1985 read with T. N.No. 60/86, dated 19-3-1986 issued by the Collectorate of Calcutta-II which clarified 'sacking' includes sacking bags and 'Hessian' includes Hessian bags and when cess is paid at fabric stages, no further levy of cess is attracted at the stage of bags made thereof. We find that the ld. Collector (Appeals) in Para 4 of his order which has been reproduced in the opening paragraph of this order has correctly analysed the position. In the circumstances, we do not find any reason to interfere with the impugned order. Having regard to the above finding, we reject the appeal.