ORAL JUDGMENT (PER D.K. DESHMUKH J.) :-

1. By this appeal, the appellant challenges the order dated 20th August 1999 passed by the learned single Judge of this Court in writ petition No.1904 of 1999. The relevant facts that are material for deciding this appeal are that the appellants imported certain consignment of goods under Duty Exemption Entitlement Certificate Scheme and Project Import Scheme. When shipment arrived at Bombay Port, the goods were kept in custom bonded warehouse to avoid demurrage till the completion of formalities for availing concessional / reduced custom duty under the above referred Scheme. When the goods were removed to the custom bonded warehouse, the petitioners lodged bill of entry for warehousing and furnished bonds to custom authorities equivalent to the whole of the estimated / provisional custom duty. At the time of removal of the goods from the custom bonded warehouse, the Bombay Municipal Corporation levied octroi duty on the said goods by adding the amount of estimated provisional custom duty to the CIF value of goods. Thereafter, the goods were removed from the custom bonded warehouse but admittedly at the time of removal of goods, the petitioners were not required to pay any custom duty as they were exempted from payment of custom duty. As octroi duty was recovered from the petitioners by adding the amount of estimated provisional custom duty, the petitioners applied for refund of excess octroi duty recovered from them. That application was made to the Corporation.

The Corporation rejected that application. Therefore, the petition was filed praying for a direction to the Corporation to refund the excess octroi duty that was recovered by the Corporation. The petition was heard by the learned Single Judge of this Court alongwith two other connected petitions. The learned Single Judge by judgment dated 20th August 1999 dismissed the petitions. The present appeal is directed against that order.

2. The learned counsel appearing for appellants submits that under rule 4(c) of the Bombay Municipal Corporation (Levy of Octroi) Rules 1965 (for short, the said Rules), for recovery of octroi duty to the value of the goods shown in the invoice, the amount of custom duty is to be added in custom duty actually been paid or the consignee is liable to pay custom duty. The learned counsel submits that after the goods were received on the dock, while removing the goods to the custom bonded warehouse, under the bill of entry, the amount of custom duty which might have been required to be paid had the goods not been exempted from payment of custom duty, was indicated and the Corporation included that amount in the value of the goods shown in the bill of entry and charged octroi duty. According to the learned counsel, in terms of provisions of Rule 4(c) of the said Rules, octroi can be levied on articles liable to octroi on ad-valorem basis by adding the customs duty incurred or liable to be incurred. In the instant case, admittedly the custom duty has neither been incurred nor were the petitioners liable to pay the custom duty. The amount of custom duty could not have been added to the value of the goods. The leaned counsel submits that the learned Single Judge has misconstrued the provisions of the said Rules. The learned counsel appearing for Corporation, on the other hand, submits that octroi becomes leviable on the goods entering the limits of the Corporation i.e. the goods become liable for payment of octroi duty when the goods are received in the dock. In the present case, when the goods were received at the dock, as per he bill of entry, custom duty was payable and therefore, the Corporation was justified in adding the custom duty to the value of the goods. Reliance is placed on the provisions of rule 2(7)(a) which defines the term ’Value of the Articles’.

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