Dyeing, Bleaching Fabrics On Job-Work Basis Not Liable To Textile Cess Under Textiles Committee Act: Supreme Court

The Supreme Court on Monday (October 26) ruled that dyeing and bleaching fabrics received from handloom and powerloom units on a job-work basis do not amount to manufacture for the purpose of levying textile cess under the Textiles Committee Act, 1963.

A bench of Justice S.V.N. Bhatti and Justice N.V. Anjaria observed that the word 'manufacture' is not defined under the Act and cannot be interpreted by borrowing its definition from another law.

The court observed, “As already stated above, the word 'manufacture' is not defined in the Act, and it is neither safe nor permissible in law to advert to and adopt the connotation 'manufacture' as defined in another statute, and on the basis of such alien definition, treat the activity undertaken by respondent No.1 to be the manufacturing activity.”

The court further observed, “At the best, it is the textile upgraded, not to become 'manufacture' in its sense as could be applied in the context of Section 5A in particular and for the purpose of context of the Act in general. It has to be held that respondent No.1 cannot be subjected to and cannot be made liable to pay the textile cess, as there is no 'textile manufactured' in its units.”

The dispute concerned a ₹2.68 lakh cess demand against Premium Suiting Pvt. Ltd., which processes fabrics supplied by handloom and powerloom units.

The Textiles Committee argued that bleaching and dyeing were processes incidental to manufacture under the Central Excise Act, 1944. The court rejected this argument, holding that the definition of manufacture under one law cannot automatically be applied to another.

Section 5A of the Textiles Committee Act exempts textiles manufactured from the handloom or powerloom industry from cess. The court held that Premium Suiting merely carried out supplementary processing on fabrics already manufactured by these industries and returned them to the manufacturers.

Describing the processing unit as an extended arm of the textile manufacturers, the court ruled that its activities did not amount to manufacture under the Act. It upheld the Allahabad High Court's decision quashing the cess demand and dismissed the Textiles Committee's appeal.

For Appellant: Advocate Chirag M. Shroff

For Respondents: Advocates Tanmaya Agarwal, AOR, Aditi Agarwal, Astha Goyal, Jayesh Sharma,Muhammad Nomaan Khan, Neel Kamal Mishra