Textile Cess: Dyeing, Bleaching Not Manufacture, Says SC

Bleaching and Dyeing Job Work on Powerloom Fabric Is Not Manufacture, No Textile Cess: Supreme Court

Published: 26 October 2026 · NyayVidhan

The Supreme Court held that a job-work unit which bleaches, dyes and processes man-made fabric received from powerloom and handloom units, and returns it to them, does not manufacture textiles and owes no cess under Section 5A of the Textiles Committee Act, 1963. Refusing to borrow the Central Excise Act's definition of manufacture, it read the undefined word in its common parlance sense and dismissed the Textiles Committee's appeal against the Allahabad High Court's order (paras 6.1-6.7, 7).

Key holdings

Textile cess under Section 5A falls on textiles manufactured in India; textiles manufactured out of the handloom or powerloom industry are expressly exempt (paras 5, 6.4).

The Central Excise Act's wider definition of manufacture, covering incidental or ancillary processes, cannot be borrowed for the Textiles Committee Act (paras 5.4-5.5, 6.1).

Statutes not in pari materia do not supply each other's definitions, which are often extended or artificial meanings serving their own enactment (paras 5.7-5.8.2).

A job worker that bleaches and dyes powerloom fabric and returns it works as an extended arm of the exempt manufacturer and owes no cess (paras 6.3, 6.5-6.7).

Judgment digest by NyayVidhan: a summary of the court's judgment, not its text. The judgment itself is the authoritative version.

Brief Facts

Premium Suiting Pvt. Ltd. bleaches, dyes and processes 100% man-made fabrics supplied by powerloom and handloom units, on a job-work basis (paras 3, 3.2). After an audit letter reported that most independent textile processors in Uttar Pradesh were not paying cess, the Textiles Committee's assessing officer issued a show cause notice and, on 21.11.2001, assessed Rs 2,68,293 as textile cess; its inspecting officer said the powerloom exemption applied only at the loom stage (paras 3.1-3.3). The Cess Appellate Tribunal, following its own Chandok Textile Exporters ruling that processing amounted to manufacture, dismissed the company's appeal (para 3.4). The Allahabad High Court quashed the demand on 06.03.2013 in Writ Tax No. 354 of 2006 (paras 1-2).

Court's Findings

Section 5A levies cess on textiles and textile machinery manufactured in India, but not on textiles manufactured out of the handloom or powerloom industry. Section 2(g) defines textiles as any fabric, cloth, yarn, garment or other article made wholly or partly of cotton, wool, silk, artificial silk or other fibre; manufacture is not defined (paras 5-5.3). The Court endorsed the High Court's refusal to import the Central Excise Act definition, under which manufacture includes processes incidental or ancillary to completing a product: a word undefined in one statute cannot be read as defined in another unless the legislature provides for it by reference or incorporation, as R.C. Jain, Jagatram Ahuja and Maheshwari Fish Seed Farm hold (paras 5.4-5.8.2). Manufactured in Section 5A therefore bears its common parlance meaning (para 6.1). The company receives fabric already manufactured by powerloom and handloom units, dyes and bleaches it and returns it; no manufacturing takes place in its units (paras 6.2-6.3). Its work is an extended activity, supplementary and ancillary to the exempt powerloom manufacture, and the bleached and dyed fabric is at best textile upgraded, not textile manufactured (paras 6.5-6.7).

Legal Principle

A word left undefined in a statute cannot take the definition given to it in another statute, such as the Central Excise Act, unless the legislature provides for this by reference or incorporation; it bears its common parlance meaning. Bleaching and dyeing fabric on job work is not manufacture under Section 5A (paras 5.5-5.6, 6.1, 6.7).

NyayVidhan's view · Practice note

Why It Matters

For textile processors working on job-work terms, the ruling settles that dyeing and bleaching fabric already woven by powerloom or handloom units, and returning it to them, is not manufacture attracting cess under Section 5A (paras 6.5-6.7). An authority cannot fill an undefined word in one levy with a definition from another statute unless the legislature has incorporated it; the word takes its common parlance meaning (paras 5.5-5.6, 6.1). The judgment does not itself decide the separate demand of 06.01.2006, which the Court described as a separate cause of action (para 3.5). See also Cadila Health Care, a Supreme Court ruling on tax classification and the interpretation of taxing statutes, and Sultan Singh on legislation by reference.

Editorial comment by the NyayVidhan Editorial Desk. It is not part of the Court's judgment and is not legal advice.

Precedents Relied Upon

Union of India and Others v. R.C. Jain and Others (1981) 2 SCC 308
Relied Upon Discussed at ¶ 5.5
Relied on, as the High Court had, for the rule that an expression not defined in an Act cannot take its definition from another Act; applied to refuse the Central Excise Act definition of manufacture for Section 5A.
Jagatram Ahuja v. Commissioner of Gift Tax, Hyderabad (2000) 8 SCC 249
Relied Upon Discussed at ¶ 5.7
Para 23 quoted: words defined in one statute, as judicially interpreted, do not guide the construction of the same words in another unless the statutes are in pari materia or one expressly adopts the other's meaning.
Maheshwari Fish Seed Farm v. T.N. Electricity Board and Another (2004) 4 SCC 705
Relied Upon Discussed at ¶ 5.8
Para 16 quoted: the common-parlance meaning of a term cannot be fixed by definitions in statutes not in pari materia, which often carry extended or artificial meanings; supports reading manufactured in its common parlance sense.