VARELI TEXTILE INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners are mill companies engaged in the business of manufacture of synthetic fabric. For the purpose of their business they import yarn called polyester filament yarn from different countries. On this imported item, the respondents are levying and collecting cess on textiles at the rate of 0.05% ad valorem. This cess is levied on the additional duty of customs which is being levied and collected as provided under the Customs Tariff Act, 1975.

(2.) Petitioner of Special Civil Application No. 8195 of 1988 contends that an amount of Rs. 30,757.69 ps. (Rupees thirty thousand seven hundred fifty-seven and paise sixty-nine only) has been unlawfully recovered as and by way of cess on textiles. The petitioner of Special Civil Application No. 8196 of 1988 contends that an amount of Rs. 2,70,989.11 ps. (Rupees two lakhs seventy thousand nine hundred eighty- nine and paise eleven only) has been unlawfully recovered in the same way as contended by the petitioner of Special Civil Application No. 8195 of 1988. Further, contention of the petitioners is that under the provisions of the Customs Tariff Act, 1975 levy of additional duty or countervailing duty of customs calculated at certain percentage of basic customs duty can be levied. It is further contended that Customs Tariff Act, 1975 does not provide for levy of any cess. On the aforesaid basis, it is contended that the levy of cess on textiles at the rate of 0.05% ad valorem is unauthorised, violative of Arts. 19(1)(g), 265 and 300A of the Constitution of India. Therefore, it is prayed that levy of cess on the yarn imported by the petitioners at the rate of 0.05% ad valorem be declared as having been imposed and collected without authority of law. It is further prayed that an appropriate writ, order or direction be issued restraining the respondents from levying and collecting any cess on the yarn imported by the petitioners. The petitioners have also prayed for appropriate direction for refunding the amount of "cess" so collected.

(3.) The respondents have filed affidavit-in-reply in both the petitions. It is contended that the cess is levied under the provisions of the Textiles Committee Act, 1963. Sec. 5A(1) of the said Act reads as follows :