The liability to pay countervailing duty is incurred when the liquor is imported in the State of Maharashtra and the payment or collection of such duty is postponed to the date of removal from the warehouse.

Headnote:
OCTROI - COUNTERVAILING DUTY - LIABILITY - VALUE OF ARTICLE - INTERPRETATION OF STATUTES - BOMBAY PROHIBITION ACT, 1949 - BOMBAY MUNICIPAL CORPORATION ACT - OCTROI RULES - Held, the liability to pay countervailing duty is incurred when the liquor is imported in the State of Maharashtra and the payment or collection of such duty is postponed to the date of removal from the warehouse.
Fact of the Case:

The respondents, a firm registered under the Partnership Act, import Indian made foreign liquor into Greater Bombay and store the same in their bonded warehouse situated at Tejoriwalla Building, Corner of Grant Road, Bombay, in accordance with the provisions of Maharashtra Foreign Liquor (Storage in Bond) Rules, 1964. The Bombay Municipal Corporation is constituted under the Bombay Municipal Corporation Act and section 192(1) of the Act prescribes for levy of octroi tax. The petitioners challenged the inclusion of countervailing duty while assessing the value of articles under Rule 2(7)(a) in respect of import of liquors, which on import were stored in the bonded warehouse.
Finding of the Court:

The Court held that the liability to pay countervailing duty is incurred when the liquor is imported in the State of Maharashtra and the payment or collection of such duty is postponed to the date of removal from the warehouse. The Court further held that the value of the imported liquor on the date of entering within the limits of Greater Bombay, included the liability incurred for payment of countervailing duty, the liability which was incurred when the liquor was imported in the State of Maharashtra.
Issues: Whether the countervailing duty is liable to be included while assessing the value of the imported liquor.
Ratio Decidendi: The Court interpreted sections 105 and 106 of the Bombay Prohibition Act, 1949, and held that the liability to pay countervailing duty arises as soon as imported liquor enters the boundaries of the State of Maharashtra and is payable to State and not Corporation. The Court also interpreted Rule 2(7)(a) of the Octroi Rules framed by the Corporation of Greater Bombay and held that the value of the article would be determined by taking into consideration all the charges incurred or liable to be incurred by an importer.
Final Decision: Appeal allowed. The impugned judgment dated January 14, 1986 in Writ Petition No. 1844 of 1981 is set aside and the writ petition is dismissed. The respondents shall pay the costs of the appellants throughout.

JUDGMENT - PENDSE M.L., J.:—The respondents are a firm registered under the provisions of the Partnership Act and carry on business of dealing in liquors, wines and spirits. The respondents import Indian made foreign liquor into Greater Bombay and most of the imports are made from the State of Punjab. The respondents import diverse quantities of cases of Indian made foreign liquor from the manufacturers from time to time under the import passes issued under Maharashtra Import and Export of Liquor Rules, 1963. The respondents have secured licence to import the liquor and store the same in their bonded warehouse situated at Tejoriwalla Building, Corner of Grant Road, Bombay, in accordance with the provisions of Maharashtra Foreign Liquor (Storage in Bond) Rules, 1964. The Government of Bombay enacted the Bombay Prohibition Act, 1949 for the purpose of amending and consolidating the law relating to the promotion and enforcement of and carrying into effect the policy of prohibition and also the Abkari Law in the State of Bombay. Section 105 of this Act, inter alia, provides that an excise duty or countervailing duty, as the case may be, at such rate or rates as the Government shall direct may be imposed in respect of any alcoholic liquor for human consumption, when such liquor is imported, exported, transported, possessed, manufactured or sold in or from the State, as the case may be. Section 106 of the Act, inter alia, prescribes that the duties referred to in section 105 may be levied in accordance with the regulations made by the Commissioner in that behalf to regulate the time, place and manner of payment. The duty is required to be paid in the case of an excisable article imported by payment either at the time of its import; or upon issue for sale from a warehouse established or licensed under the provisions of the Act. Section 143 of the Act confers upon the State Government power to make Rules for the purpose of carrying out the provisions of the Act or any other law for the time being in force relating to revenues and in exercise of these powers, the Government has framed Rules known as Maharashtra Foreign Liquor (Storage in Bond) Rule, 1964. The expression “to store foreign liquor in Bond” under Rule 2(9) means to store, deposit or keep foreign liquor in a bonded warehouse without payment of excise duty or countervailing duty or other fees payable thereon.

2. The Bombay Municipal Corporation is constituted under the Bombay Municipal Corporation Act and section 192(1) of the Act prescribes for levy of octroi tax. The section provides that the tax at rates not exceeding those respectively specified in Schedule H, shall be levied in respect of several articles mentioned in the said Schedule on the entry of the said articles into Greater Bombay for consumption, use or sale therein. Class 1 of Schedule H deals with articles of food and drink, and Item (3) is wines and spirits and beer, and the rate of octroi leviable on these articles is 7 per cent ad valorem. Section 195-1B provides that then Commissioner of the Corporation shall with the approval of the Standing Committee frame Rules in respect of the levy, assessment and collection of octroi under the Act, but such Rules can have effect only after the Rules are confirmed by the State Government. In exercise of the powers conferred under section 195-1B, the Commissioner has framed Octroi Rules in the year 1965 providing for levy, assessment and collection of octroi on import. Rule 2 of Octroi Rules deals with the definition of various terms and the expression “import” under Rule 2(2) means conveying of any article liable to octroi into Greater Bombay from any other area outside Greater Bombay. Rule 2(5) defines expression “date of import” which means the date on which the octroi is paid and in the event of non-payment of octroi at the time of import on account of any inadvertence, error or misunderstanding, it shall mean the date on which the articles are cleared from the

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1987 Supreme(Bom) 400

The liability to pay countervailing duty is incurred when the liquor is imported in the State of Maharashtra and the payment or collection of such duty is postponed to the date of removal from the warehouse.

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