Goodyear
India Ltd. Vs. Union of India & Ors [1997] INSC 225 (24 February 1997)
SUJATA
V. MANOHAR, K.T. THOMAS THOMAS.J.
ACT:
HEAD NOTE:
[With
SLP(C) No. 6236/79 and TC(C) No. 30/89]
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 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) 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 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.
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