Holding

Tyres of size 1800 mm and above for heavy moving vehicles are not "tyres for motor vehicles" and therefore fall under the residuary sub‑item 3 "all other tyres".

Summary

Goodyear India Ltd manufactured tyres of size 1800 mm and above for heavy moving vehicles such as dumpers and earth‑movers. Excise duty was levied on these tyres as "tyres for motor vehicles" at 60% ad valorem. The company claimed a refund, arguing that such tyres should be classified under the residuary sub‑item 3 "all other tyres" (20% duty) because the vehicles they fit are not "motor vehicles" within Item 34 of the Central Excise Tariff. The Assistant Collector rejected the claim, the Appellate Collector reversed in favour of the appellant, and the Central Government, exercising its revisional power under Section 36(2) of the Central Excises and Salt Act, set aside the reversal. The Supreme Court held that the definition of "motor vehicle" requires the vehicle to be primarily adapted for use on roads; heavy moving vehicles use roads only incidentally, so they are not motor vehicles. Consequently, the tyres fall under sub‑item 3 and the Government’s revisional order was set aside, with the refund issue to be decided by the Assistant Collector per the Mafatlal guidelines.

Issues considered

Whether tyres of size 1800 mm and above fitted to heavy moving vehicles are "tyres for motor vehicles" under Item 16 of the Central Excise Tariff.
Whether heavy moving vehicles such as dumpers and earth‑movers qualify as "motor vehicles" under Item 34 of the Central Excise Tariff.
Entitlement of the appellant to a refund of the excess excise duty collected.

Legislation cited

Central Excises and Salt Act, 1944s. 36(2)

Subjects

central excisetyre classificationmotor vehicle definitionexcise dutyrefundheavy moving vehiclestariff interpretation

Judgment

+
GOODYEAR INDIA LTD. ETC. A
v:
UNION OF INDIA AND OTHERS

FEBRUARY 24, 1997

[A.M. AHMADI, CJ., SUJATA V. MANOHAR B
AND K.T. THOMAS, JJ.]

Central Excises and Salt Act, 1944-Section 36(2)-ltems 16(3) and 34
of the Central Excise Tariff-Whether tyres of the size 1800 and above
manufactured for fitment to heavy moving vehicles are exigible to excise duty C
as "tyres for motor vehicles"-Held : such tyres meant for heavy moving
vehicles like dumpers and earth movers-Do not fall within the definition of
"motor vehicle" as per item 34 of the Central Excise Tariff-Covered by item
16(3) "all other tyres"-Not exigible to excise duty as "tyres for motor vehicles"
Claim for lower rates of duty upheld-However, the question of entitlement
to refund directed to be decided by the Assistant Collector in accordance with D
the deiision on Mafat/a/ Industries Ltd.

The appellant company had been manufacturing tyres of the size of
1800 and above for fitment to heavy moving vehicles such as· dumpers and
earth movers. Excise duty was collected from the appellants for such tyres E
treating them as tyres for motor vehicles. Appellant made claim for refund
of the excess amount with the Assistant Collector, Central Excise on the
ground that such tyres do not fall within the category of "tyres for motor
vehicles" as envisaged by item No. 16 of the Central Excises, 1st schedule
of the Central Excises and Salt Act, 1944 and hence the proper classifica-
tion of such tyres should be under residuary sub-item 3 "all other tyres". F
But the claim was rejected. However, on appeal, the appellate Collector
reversed the orders of the Assistant Collector upholding the contention of
the appellant. But the Central Government in exercise of the revisional
power under section 36(2) of the Act set aside the order of the Appellate
Collector. Being aggrieved, the appellant filed the present appeal. G
Allowing the appeal, this Court

HELD : 1.1. A close reading of the definition "motor Vehicle" in item
34 of the Central Excise Tariff, schedule 11-B of the Central Excises and
Salt Act, 1944 reveals that the striking ingredient thereof is that it should H
445
446 SUPREME COURT REPORTS [1997] 2 S.C.R.

A have been "adapted for the use upon roads". Merely because the areas on
which such heavy movers traverse mightsometimes 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 ancilliary or incidental to the
main use of it. Emphasis in the definition must be on the words "use upon
B roads" as those words would denote the principal or dominant use and not
where it may move incidentally. [450~0-E]

Dunlop India Ltd. v. Union of India, [1994] Suppl. 2 SCC 335,
distinguished.

C Maddox v. Storer, (1962) 1 All E.R. 831 and Bourne v. Norwich
Crematorium Ltd., (1967) 2 All E.R. 576, referred to.

1.2. The tyres of the size 1800 and above would fall within the
residuary sub-item 3 in item 16 of the Central Excise Tariff during the
relevant period. Therefore, the impugned order passed by the Central
D Government in revision is set aside. However, the question of entitlement
to refund shall be decided by the Assistant Collector concerned in accord-
ance with the law laid down by the Constitution Bench in Mafat/al In-
. dustries case and the Format prepared pursuant to the directions given
therein. [~51-A-B]

E Mafatlal Industries Ltd. v. Union of India, (1996) 9 Scale 457 = [1996)
Supp. 10 SCR 585, followed.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 640 of
1979.
F From the Judgment and Order dated 9.2.79 of the Ministry of
Finance Govt. of India, in Order in R. No. 88 of 1979.

With

G SLP (C) No. 6T36n9 and TC (C) No. 30/89.

Ravinder Narain, Ms. Amrita Mitra, Amit Bansal for JBD & Co. for
the Appellants.

Joseph Vallapally, T.V. Ratnam and C.V.S. Rao for the Respon-
H dents.
GOODYEAR INDIA Lill. v. U.0.1. [THOMAS,J.] 447

The Judgments of the Court was delivered by A

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 B
of the order passed by the Central Government in exercise of their
revisional powers under section 36(2) of the Central Excises 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 Excise Tariff (1st Schedule to the Act).
c
Appellant company has been manufacturing tyres and tubes of vary-
ing sizes which are excisable under Item No. 16 of the Central Excise Tariff.
The said item, during the relevant period, contains the following descrip-
tions :
D
Item No. 16 - TYRES

Item No. Tariff Description Rate of Duty
16. Tyres
'Tyre" means a pneumatic tyre E
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 F
2. For cycle (other than motor
cycles) :-
(a) Tyres 60 p. per tyre or
15% ad valorem
.
whichever is higher . G
(b) Tubes 30 p. per tube or
15% ad valorem
whichever is higher.
3. All other tyres 20% ad valorem
H
448 SUPREME COURT REPORTS [1997] 2 S.C.R.

A 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
B refund of the excess amount with the Assistant Collector of Central Excise,
Faridabad. All such claims were rejected by the Assistant Collector. How-
ever, on appeals preferred by the appellant, the Appellate Collector of
Central Excise; New Delhi, reversed the orders of the Assistant Collec~or
upholding the contention of the appellant. But Central Government in
exercise of the revisional powers under section 36(2) of the Act set aside
c 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
D 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
E 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
F 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,
G reproduce the said item below :

Item No. 34- Motor Vehicles
Item No. I Tariff Description Rate of Duty
H
GOODYEAR INDIA LID. v. U.0.1. [THOMAS,J.] 449

34. Motor Vehicles-"Motor Vehicles" means A
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 scooters, auto- 10% ad valorem B
rickshaws and any other three wheeled
motor vehicles
(2) Motor vehicles of not more than 16 HP 25% ad valorem
by Royal Automobile Club (RAC) rating
(3) Motor cars of more than 16 HP by Royal 40% ad valorem C
Automobile Club (RAC) rating constructed
or adapted to carry not more than 9 persons
(3A) Tractors, including agricultural tractors 15% ad valorem
(4) Motor vehicles, not otherwise specified 15% ad valorem
D
Explanation - For the purposes of this item, where a motor
vehicle is mounted, fitted or fixed with any weight lifting, earth
moving and similar specialised material handling equipment,
then such equipment, other than the chassis, shall not be taken
into account.
E
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 not render
the basic motor vehicle different from a motor vehicle.
F
A Bench of two judges of this Court has considered the identical
question in Dunlop India Ltd. v. 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 from 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
G -
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 H

0
450 SUPREME COURT REPORTS [1997] 2S.C.R.
+
A 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, coal-haulers, earth movers etc. are
also 'adapted for use upon roads', though principally they are
meant to be operated and used on construction sites."

B We do not 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 vehicle". 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).
c
Similarly, with the addition of the Explanation the position was only
clarified that when a motor vehicle is fitted with any weight-lifting equip-
ment, such motor vehicle shall be counted de hors th.ose ·fitments made
thereto. That apart, the use of the Explanation arises only in cases where
D a motor vehicle is fitted with such equipment. Hence the Explanation by
itself is not of use to determine what is a motor vehicle envisaged in item
No.16.

A close reading of the definition "motor vehicle" in Item 34 reveals
E 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
F denote the principal or dominant use and not where it may move inciden-
tally.

Sri Joseph Vellapally, learned Senior Counsel cited before us Mad-
dox v. Storer, (1962) 1 All England Reports 831 to support the contention
G 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 judg~
ment in the said case made a clear obsetvation that "when, however, one
H finds the word 'adapted' used on its own then one must took to the

...
GOODYEAR INDIA LTD. v. U.0.1. [THOMAS, J.] 451

context." In Bourne v. Norwich Crematorium Ltd., (1967) 2 All E.R. 576 A
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 B
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 v.ith the law laid down by the Constitu- C
tion Bench of this Court in Mafatlal Industries Ltd. v. Union of India, (1996)
9 SCALE 457 = [1996] Supp. 10 SCR 585 and the FORMAT prepared
pursuant to the directions given therein.

CIVIL ORIGINAL JURISDICTION : Transferred Case (Civil) No.
30of1989. D
In

Transfer Petition (Civil) No. 280 of 1984.

THOMAS, J. In view of Judgment in Civil Appeal No. 640 of 1979
the Transferred Case as also the Special Leave Petition are disposed of in
terms thereof.

H.K. Appeal allowed, T.C. and petition disposed of.

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