DUNLOP INDIA LTD. versus UNION OF INDIA AND ORS.

Citation: [1989] SUPP. 2 S.C.R. 370 · Decided: 01-12-1989 · Supreme Court of India · Bench: S. RANGANATHAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

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DUNLOP INDIA LTD. 
v. 
UNION OF INDIA AND ORS. 
DECEMBER I, 1989 
[S. RANGANATHAN AND M.M. PUNCHHI, JJ.] 
Central Excises and Salt Act, 1944: Sections 4 and 3~Tariff 
Item No. 16A(2)-Notifications Nos. 71of1968 and 27of 1973-Tread 
repair compound, cushion repair compound and cover compound-
Use to which these are put-Levy of excise duty-Whether exempted. 
The 1appellant-assessee has been manufacturing cushion repair 
compoud, tread repair compound and cover compound. According to 
the assessee, these were not meant either for resoling or retreading of 
tyres, but for mending injured and defective sections of tyTes. Though 
normally these goods are dutiable under tariff item No. 16A(2), the 
assessee claimed exemption from duty under Notification No. 71 of 1968 
dated 1.4.68. The Superintendent rejected the claim. 
On appeal by the assessee, the Collector observed that there was 
no evidence that the goods in question should not be used for the resol-
ing or retreading of tyres and rejected the claim. The assessee preferred 
a revision to the Central Govt. The Central Govt. while rejecting the 
Revision Petition, referred to the fact that the notification specifically 
excluded cushion compound, cushion gum and tread gum. As regards 
cover cushion compound, it observed that the composition was such 
that its nse for repair of conveyor belts was indistinguishable from the 
other use ofresoling of tyres. 
This appeal has been filed against the order of the Central Govt. 
The appellant contended that the Government had overlooked the fact 
that while tread repair, cushion compound and tread gum are items 
used for resoling or retreading of tyres, ttiat was not the use to which 
the articles manufactured by the assessee were put. Since the fact that 
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the goods manufactured by it were employed only for repairing tyres 
and conveyor belts was not disbelieved, it was argued; the assessee was 
eligible for the exemption claimed by it. 
Allowing the appeal, this court, 
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HELD: 1. The notification of 1978 only reproduces with some 
370 
DUNLOP INDIA v. U .0.1. 
371 
modifications the notification of 1964. The broad purport of both the 
notifications is to exempt rubber products other than those which are 
commonly sold under certain descriptions and are used for the resoling 
or re~reading of tyres. The circular of 1966, which can be considered as 
a contemporaneous exposition of the understanding of the Government 
while issuing the exemption notification of 1964, makes it clear that at 
that time, it was not intended to deny exemption to rubber products 
used. merely for repair purposes. The notification of 1973 was orie in 
which various amendments were carried out to. a series ofnotifications 
relating to various items and does not contain anything to suggest that it 
was only a clarification that was intended to be given and not a prospec-
tive amendment of the previous notification. [375A-CJ 
2. I The fact that the appellant is using or marketing the products 
for nse, only for reparing tyres and conveyor belts is not controverted. 
Hence the appellant assessee was entitled to exemption under the notifi-
cation. In one sense, any rubber ·compound has a composition which 
theoretically permits it to be used either for repair purposes or for 
resoling or retreading of tyres. But the assessee's claim is that the 
product marketed by it has not the physical dimensions or technical 
properties to be capable of use for retreadiug or resoling. Also, the 
notification talks of products "used for" resoling and retreading of 
tyres; and it is not so in the instant case. [37SC-EJ 
2.2 The notification imports a limitation on the exclusion from 
the exemption specified in the paranthetical clause of the notification. 
That exclusion is only in respect of compounds used for resoling or 
retreading. [375EJ 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 469 
of 1975. 
From the Order dated 31.5.1974 of the Government of India, 
Ministry of Finance, Department of Revenue and Insurance, New 
Delhi, in Order No. 615 of 1974 on Central Excise Revision 
Application. 
Dr. Y.S. Chitale, Ms. M. Ray and H.K. Dutt for the Appellant. 
V.C. Mahajan, (N.P.), P. Parmeshwaran and.R.P. Srivastava for 
the Respondents. 
K.R N ambiar for the Intervener. 
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372 
SUPREME COURT REPORTS 
[ 1989] Supp. 2 S.C.R. 
The Order of the Court was delivered by 
RANGANATHAN J. The 
appellant-assessee 
manufactures 

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