The court held that software discs qualify as scientific appliances subject to octroi duty, affirming the duty is assessed only on the single site usage value.

1. This is an appeal under S.218 - D of the Bombay Municipal Corporation Act, 1888 directed against the Judgment dated 08-02-1996 in Municipal Appeal No. 100 of 1995 on the file of Chief Judge, Court of Small Causes, Bombay. Heard both the sides.

2. The appellant is State Bank of India. The first respondent is the Municipal Corporation of Greater Bombay and the second respondent is the Assessor and Collector of the Bombay Municipal Corporation.
The facts necessary for the disposal of this appeal are as follows:
The Appellant entered into an agreement dated 29-06-1991 with Kindle Software Limited, Ireland, for supply of software for their banking work. The said M/s. Kindle Software Limited despatched the floppies or discs containing programme with manuals to the appellant which was received by air at Sahar Airport on 17-07-1991. A copy of the invoice sent by the Supplier is dated 03-07-1991.
The goods were assessed for Customs Duty by the Customs Officer. The goods were also assessed for octroi duty by the Municipal Corporation as per letter dated 18-08-1991. The appellant was directed to pay octroi duty at 4% on the entire value of the software including the license fee viz. US $ 4084475 as mentioned in the invoice dated 03-07-1991.
Being aggrieved by the levy of customs duty, the Appellant challenged the same before the Collector (Appeal), Bombay, who rejected the Appeal. Against that Order, an appeal was preferred before the Customs Tribunal (CEGAT), New Delhi, who dismissed the appeal. It appears against that Judgment, an appeal has been preferred before the Supreme Court and it is stated to be pending.
Against the order of levying of octroi duty by the Municipal Corporation, the appellant challenged the same under S.217 of the Bombay Municipal Corporation Act (hereinafter referred to as "the said Act") by filing an appeal before the Chief Judge of Small Cause Court. After hearing both the sides, the learned Additional Chief Judge of the Small Cause Court dismissed the appeal by the impugned judgment. Being aggrieved by that Judgment, the Appellant has come up with the present appeal.

3. Shri Atul Setalwad, the learned Senior Counsel appearing for the appellant contended that the software discs and the manuals are not liable for octroi duty at all since they are not covered by any of the items in the schedule of the October Rules. Alternatively, it was argued that only the tangible discs and the manuals are liable for duty and not the value of the discs with the programme mentioned as license less in the agreement. Then further alternative argument is that at best, the duty can be levied for use at single site and not for use countrywide. On the other hand, Shri Bharucha appearing for Corporation supported the impugned judgment and contended that the software discs are liable to octroi duty on the basis of the total valuation as mentioned in the invoice dated 03-07-1991. Both the learned Counsel invited the attention of the Court to the provisions of the said Act, Octroi Rules and some decision on the point under consideration.

4. In the light of the arguments addressed before me, the points that fall for determination are :
(1) Whether the software discs and manuals are not liable for octroi duty at all as contended by the appellant ?
Alternatively,
(2) Whether only tangible discs and manuals are liable for octroi duty as per their value without taking into consideration the value of the software programme ?
Alternatively
(3) Whether the computer diskett