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18. Smt. Zutshi then cited the judgment of the Delhi High Court in the case of J.K. Cotton Spinning and Weaving Mills and Anr v. Union of India and Ors., reported in 1983 E.L.T. 239 (Del.). In this judgment, the validity of the retrospective amendments to Rules 9 and 49 of the Central Excise Rules had been upheld. It had also been held (vide para 22 of the judgment) that in terms of the amended Rules 9 and 49, the utilisation of excisable goods even in a continuous process, so long as the goods are identifiable and capable of physical removal, would attract duty whether in fact they are physically removed or not. According to her, this judgment squarely covered the cases before us. She also pointed out that there had been a number of earlier tutlgments of various High Courts covering the same issue. While in some of jhem it had been held that use for captive consumption was not "removal" in other cases the contrary view had been taken. In this connection she referred to the judgment of the Allahabad High Court in the case of Union of India and Ors. v. Union Carbide India Ltd., reported in 1978 E.L.T. (J 1), and the judgment of the Calcutta High Court in the case of Union Carbide Co. Ltd. v. Assistant Collector of Central Excise and Ors., reported in 1978 E.L.T. (J 180). According to her, these judgments supported the Department's view that even captive consumption amounted to "removal".

24. In regard to the first ground, namely that captive consumption would not constitute removal, Shri Khaitan has advanced a number of interesting arguments. As already mentioned, he has relied heavily on the judgment of the Patna High Court, which no doubt is in favour of his stand. We, however, observe that in the similar cases which went up before the Calcutta High Court, a contrary decision was given. It is true that the discussion on this point is not in the Calcutta High Court judgments as detailed as in the Patna High Court judgment. However, the same issue, namely, whether jute yarn used in the manufacture of other jute products in the same factory was liable to cess, was squarely before the Calcutta High Court and that High Court did not accept the contention that cess could not be levied on such yarn. Some observations which have a bearing on this question, which have been made in the appellate judgment of the Calcutta High Court, and they are reproduced below :-

39. Thus, on a very careful study of the various judgments, we find that the majority of them are in favour of the view that use for captive consumption, as in the present case, would amount to "removal". Among the three judgments of the Delhi High Court (within whose jurisdiction we are situated), the preponderance of opinion again seems to be in favour of the same view. In such a situation, where there are conflicting judgments, we have to arrive at our own decision as to which of these can be taken as representing the preponderance of judicial opinion. It seems to us that the preponderance is undoubtedly in favour of the view that captive consumption, as in the present case, amounts to "removal" within the meaning of Rules 9 and 49.

42. For these reasons, and having given the most anxious consideration to the various authorities on the subject, we are of the view that jute yarn which is used for captive consumption is also liable to the cess.

43. As regards the second ground advanced by Shri Khaitan, it has not been controverted, and we shall assume it to be correct for the sake for the purposes of the present discussion, that the cumulative incidence of cess on jute yarn and hessian/sacking would come to about 17 or 18 paise per Rs. 100/- of the value of the goods. In other words, it would exceed 13 paise per Rs. 100/- of the value. (We do not think there is any serious doubt that the maximum limit is 13 paise per Rs. 100/- of the value, and not 13 paise per 100 paise ; if the latter interpretation were intended, there was no need to use the words "13 paise per cent of the value of the goods", and the section could have simply said "13 per cent of the value of the goods"). The question is whether such a cumulative levy is contrary to the provisions of the proviso to Section 9(1). We observe that the classes of description of goods on which cess is to be levied, and the respective rates, have been specifically laid down in the various statutory orders issued by the Ministry of Industry and Civil Supplies. It has not been contested before us that both the yarn which is captively consumed and the hessian/sacking which is produced from it, are covered by these orders. In effect, therefore, we are being invited to say that these statutory orders issued by the Government are in excess of its jurisdiction. This ground which could appropriately have been taken before the High Courts, but, as already observed, it was not. We do not think we are competent to pronounce on the validity or otherwise of these statutory orders.