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PETITIONER: GOODYEAR INDIA LTD.

       Vs.

RESPONDENT: UNION OF INDIA AND ORS.

DATE OF JUDGMENT:       24/02/1997

BENCH: SUJATA V. MANOHAR, K.T. THOMAS

ACT:

HEADNOTE:

JUDGMENT:        [With SLP(C) No. 6236/79 and TC(C) No. 30/89]                       J U D G M E N T THOMAS.J.      The question  involved in  this appeal is whether tyres of the size 1800 and above manufactured for fitment to heavy moving  vehicles  such  as  dumpers  and  earth  movers  are exigible to  excise duty as "tyres for motor vehicles". This appeal by  special leave is in challenge of the order passed by the  Central Government  in exercise  of their revisional powers under  section 36(2)  of the  Central Excise and Salt Act 1944 (for short ’the Act’) decided against the appellant holding that  such tyres are also "tyres for motor-vehicles" as envisaged  in Item  No.16  of  the  Central  Tariff  (1st Schedule to the Act).      Appellant company  has  been  manufacturing  tyres  and tubes of  varying sizes which are excisable under Item No.16 of the  Central Excise  Tariff. The  said item,  during  the relevant period, contains the following descriptions: Item No.16 - TYRES ------------------------------------------------------------ Item   Tariff                    Rate of Duty No.    Description ------------------------------------------------------------ 16.    Tyres "Tyre" means a pneumatic tyre in the manufacture of which rubber is used and includes the inner tube, the tyre flap and the outer cover of such a tyre 1. Tyres for motor vehicles       60% ad valorem 2. For cycle (other than motor cycles):-      (a)  Tyres                    60 p. per tyre                                    or 15% ad                                    valorem whichever                                    is higher      (b)  Tubes                    30 p. per tube                                    or   15% ad

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                                  valorem                                    whichever is                                    higher.      3. All other tyres            20% ad valorem ------------------------------------------------------------      Appellant adopted the stand that tyres of the size 1800 and above  do not  fall within  the category  of "tyres  for motor vehicles"  and hence the proper classification of such tyres should  be under  the residuary  sub-item 3 "all other tyres". Excise  duty was  collected from  the appellant  for such tyres  treating  them  as  tyres  for  motor  vehicles. Appellant made  claims for  refund of the excess amount with the Assistant  Collector of  Central Excise,  Faridabad. All such  claims  were  rejected  by  the  Assistant  Collector. However,  on   appeals  preferred   by  the  appellant,  the Appellate Collector  of Central  Excise, New Delhi, reversed the  orders   of  the   Assistant  Collector  upholding  the contention of  the  appellant.  But  Central  Government  in exercise of the revisional powers under section 36(2) of the Act set  aside the  orders of  the  Appellate  Collector  of Central  Excise   and  restored   those  of   the  Assistant Collector. Hence, this appeal.      There is  no dispute  that tyres of size 1800 and above are intended  to be  fitted to  heavy moving  vehicles  like dumpers etc.  If  such  heavy  moving  vehicles  are  "motor vehicles" appellant  cannot escape from the liability to pay the higher  duty at  60% ad valorem. Learned counsel for the appellant contended that "motor vehicles" are those vehicles which are  made to  run on the roads and not those which are made for  other uses. On the other hand, learned counsel for the Revenue  argued that since dumpers etc. are also used to move on  the roads,  they too  must be  regarded  as  "motor vehicles" for the purpose of exigibility to excise duty.      The subject  "motor vehicle"  is not defined in the Act or in  the Rules  prescribed thereunder,  nor even  in  Item No.16 However,  it is  defined in  Item No.34 of the Central Tariff wherein  motor vehicles  are also subjected to excise duty at  different layers.  We may point out that both sides agreed that the definition contained in Item 34 can usefully be imported  for deciding   what  is a motor vehicle even as for Item 16. We, therefore, reproduce the said item below: Item No.34 - Motor Vehicles ------------------------------------------------------------ Item   Tariff                       Rate of Duty No.    Description ------------------------------------------------------------ 34.  Motor Vehicles- "Motor Vehicles" means all mechanically propelled vehicles adapted for use upon roads, and includes a chassis and a trailer, but does not include a vehicle running upon fixed rails- (1)  Auto-cycles, motor cycles    10% ad valorem scooters, auto-rickshaws and any other three wheeled motor vehicles (2)  Motor vehicles of not          25% ad valorem more than 16 HP by Royal Automobile; Club (RAC) rating (3)  Motor cars of more             40% ad valorem than 16 HP by Royal Automobile Club (RAC)

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rating constructed or adapted to carry not more than 9 persons (3A)  Tractors, including           15% ad valorem agricultural tractos (4) Motor vehicles, not             15% ad valorem otherwise specified Explanation- For  the purposes  of this  item, where a motor vehicles is  mounted, fitted    or  fixed  with  any  weight lifing,  earth   moving  and  similar  specialised  material handling equipment, then such equipment, other than the chassis, shall not be taken into account. ------------------------------------------------------------      Learned  counsel  for  the  Revenue  contended  on  the strength of the above "Explanation" that additions fitted to a motor  vehicle for  equipping it  to be  used  for  weight lifting or  earth moving etc. work would no render the basic motor vehicle different from a motor vehicle.      A Bench  of two judges of this Court has considered the identical question  in  Dunlop India Ltd. vs. Union of India [1994 Suppl.  (2) SCC  335].  Learned  Judges  approved  the interpretation made  by Government  of India  on  the  words "motor vehicles"  in Item  No. 16  mainly  on  two  premises discerned form  the description  given in  Item No.34 of the Tariff. First  is  that  "agricultural  tractors"  are  also included in  Item No.  34 and second is that the Explanation in item No. 34 throws much light upon the precise meaning to be attached to "motor vehicles". Regarding the first premise learned Judges have observed thus:      "If it  is held  that  agricultural      tractors also  are adapted  for use      upon roads notwithstanding the fact      that they are principally meant for      being   operated    and   used   on      agricultural lands,  it can equally      be said  that dumpers, coalhaulers,      earth movers  etc. are also adapted      for   use   upon   roads’,   though      principally they  are meant  to  be      operated and  used on  construction      sites."      We  do   no  think   that  inclusion  of  "agricultural tractors" in  the list  in item  No.  34  can  have  such  a decisive impact  on understanding  the scope  of  the  words "motor vehicles". We bear in mind that sub-item (3A) was not in the  original list  in item No.34. (That sub-item and the Explanation in  the item were later added by the Finance Act 1964).      Similarly, with  the addition  of the  Explanation  the position was  only clarified  that when  a motor  vehicle is fitted with any weight-lifting equipment, such motor vehicle shall be  counted de  hors those fitments made thereto. That apart, the use of the Explanation arises only in cases where a motor  vehicle is  fitted with  such equipment.  Hence the Explanation by  itself is  not of use to determine what is a motor vehicles envisaged in item No.16.      A close  reading of  the definition  "motor vehicle" in Item 34 reveals that the striking ingredient thereof is that it should have been "adapted for the use upon roads". Merely because the  areas on which such heavy movers traverse might sometimes include roads also is not enough to hold that they were "adapted  for use  upon roads".  Such use  of the heavy mover on the road may only be anciliary or incidental to the main use  of it.  Emphasis in  the definition must be on the words "use  upon road"  as  those  words  would  denote  the

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principal  or  dominant  use  and  not  where  it  may  move incidentally.      Sri Joseph  Vellapally, learned  Senior  Counsel  cited before us  Maddox vs.  Storer [1962  (1) All England Reports 831] to  support the  contention that the word "adapted" can be used  disjunctively as  an alternative to "contructed" in which case  it can only have one meaning, viz., if the thing was not  originally constructed  for the particular use then it has  been altered  and made  fit for  that purpose.  Lord Parker C.J. who delivered the judgment in the said case made a clear  observation that "when, however, one finds the word ’adapted’ used  on  its  own  then  one  must  took  to  the context." In  Bourne vs.  Norwich Crematorium Ltd. [1967 (2) All E.R.  576] Stamp  J. has  reminded that  "English  words derive colour  from those  which surround them and sentences are not  mere collections  of words  to be  taken out of the sentence, defined  separately by reference to the dictionary or decided cases."      We are,  therefore, of  the view that tyres of the size 1800 and  above would fall within the residuary sub-item III in item  No.16 of  the  Central  Excise  Tariff  during  the relevant period.  Accordingly  we  set  aside  the  impugned orders  of   the  Central  Government  passed  in  revision. However, the  question of  entitlement to  refund  shall  be decided by  the Assistant  Collector concerned in accordance with the  law laid  down by  the Constitution  Bench of this Court  in  Mafatlal  Industries  Ltd.  vs.  Union  of  India [1996(9) SCALE  457] and the FORMAT prepared pursuant to the directions given therein.