PETITIONER:
SHROFF & CO., ETC.

 Vs.

RESPONDENT:
MUNICIPAL CORPORATION OF GREATER BOMBAY ANDANOTHER, ETC.

DATE OF JUDGMENT12/08/1988

BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
RANGNATHAN, S.

CITATION:
 1988 SCR Supl. (2) 406 JT 1988 (3) 406
 1988 SCALE (2)348

ACT:
 Bombay Municipal Corporation Act, 1888-Sections 192,
194-Octroi-Levy and collection of.
%
 Bombay Municipal Corruption Levy of Octroi Rules, 1965-
Rules 2 (5), 2 (7) (a)-Countervailing duty-Whether
includible in assessable value for imposition of octroi.
 Bombay Prohibition Act, 1940-Sections 2 (4), 2 (20), 2
(36), 26, 105, 106 and 192-Manner of levy of excise duty-
Duty attracted at the point of important.

HEADNOTE:
 The appellant were registered partnership firms carrying
on business of dealing in wines and spirits and were
licensed to import and store liquors in their bounded
warehouse at Bombay. They were also holders of licence
issued under the Maharashtra Foreign Liquor (Import and
Export) Rules, 1963 framed under the Procedure Act of 1949
of the State Government.
 The Maharashtra Foreign Liquor (storage in Bond) Rules,
1964, under which, an importer could import liquor and store
8the sums in a warehouse without payment of countervailing
duty,were amended on 28th July, 1976 and 28th June, 1983, to
impose Octroi on the assessable value which includes
customs duty paid on import of liquor.
 The appellants filled a writ petition in the High Court,
challenging the inclusion of the countervailing duty in the
assessable value for octroi on the ground that the said duty
was not incurred `till the date of removal of the goods from
the place of import'.
 A Single Judge of the High Court allowed the writ
petition. The respondent field letters Patent Appeals
against the decision of the Single Judge. The Division Bench
of the High Court by the impugned judgment held that
countervailing duty was includible in the assessable value
for the imposition of octroi.
 PG NO 406
 PG NO 407
 Dismissing the appeal, the Court.
 HELD: Per Subyasachi Mukharji, J.
 Countervailing duty is imposed for the purpose of
setting off or compensating some other duty so as to place
the home producer on an equal footing with the importer of
foreign goods. The essence of countervailing duty is to set
off the effect of non-payment of tax on manufacture meant to
protect the indigenuous production. [417H; 418A]
 Bringing goods with intention to use and not in transit
is decisive and any imposition on that would form part of
the duty which could he imposed at the time of entry and
could be included in the Octroi. [427C]
 For goods in transit section l94A of the Bombay
Municipal Corporation Act, 1888 provides an exemption in
accordance with the octroi Rules. Section 105 of the Bombay
Prohibition Act. 1949, read with Sections 2 (14), 2 (20) and
2(36) makes the position clear that the taxable event in the
case of excise duty would be manufacture or production and
in the case of countervailing duty. import within the State.
[427C-E]
 The Maharashtra Foreign Liquor (Storage in Bond) Rules,
1964 were framed subsequent to the Act of 1949. The charge
and incidence of countervailing duty under the Act and the
relevant Notification of 1949 were aLready subsisting. By
subsequent framing of the storage in Bond Rules, incidence
or charge cannot be deflected or altered. Under Rule 2 (2)
administrative facility is granted for deferred payment to
the assessee. The words "without payment of duty" indicate
that duty has become chargeable and the incidence was
complete; if. however, the assessee complies with the Rules,
he is given a facility to defer payment. This clearly shows
that duty has become payable already. This is only
consistent with the fact that the charge or incidence has
already been attracted on th taxable event taking place,
namely, the manufacture or production in the case of excise
duty or import in the State in the case of countervailing
duty. The fact that a bond has to be executed means the
goods, to be stored, have already been the subject matter of
duty or charge. If they have been so, there is no question
of bonding them with an undertaking to make payment of duty
at the time of removal or before removal from bond. Normal
rule is pre-payment of duty at the time or before the
import. The purpose of the import is decisive. If goods are
brought for the purpose of commerce or trade, these are
imported. [427G-H; 428A-C; 430A-B]
 PG NO 408
 Countervailing duty also does not form part of the
incidental charges. Countervailing duty is contained in Rule
2(7)(a) of the Octroi Rules. This Rule uses the words
"excise duties" as also the words "all other incidental
charges." Section 105 of the Bombay Prohibition Act, 1949
itself talks of excise duties so as to include both excise
duty as well as countervailing duty. Therefore, the normal
connotation of the words "excise duties" would take in
countervailing duty also. Apart from that charges include
taxes. l430C, E-F]
 Countervailing duty is an incident of importation and as
such it was includible as an octroi even prior to 28th June,
l983. [431 A]
 Per S. Ranganathan, J. (concurring)
 The language of section 105 which imposes the charge, of
section 106 which talks of payment and of the rules, leaves
no doubt that the duty is attracted at the point of import
(i.e. physical entry of the goods into the taxing territory)
and that only the payment of duty is deferred, in case the
goods imported are removed to a bonded warehouse, to a later
point of time, for purposes of convenience of collection. It
will not be appropriate to construe the provisions in such a
manner as imposing a liability on some persons (who have no
bonded warehouse) at one point of time and on the others, at
a different point of time. If the liability to pay the duty
itself were referrable to a later point of time, the
insistence on a bond in the terms prescribed would appear to
he redandant. The provision that where the facility is
availed of, the assessee would pay duty at the rate
prevalent at the later point of time (often higher than at
the point of import but not necessarily so) is rather a
logical consequence of the privilege of deferment given to
the assessee. [432C-E]
 So far as the two periods after 28th July, 1976 were
concerned, there could be no doubt that this was included.
The specific inclusion of the word "countervailing" duty and
broader reference to duties "incurred or liable to be
incurred" in the 1983 amendment, only further clarifies the
position prevalent even prior to 28.7.1983. The words
"incidental charges" have a very wide meaning particularly
in a context where duties and tax are referred to and the
idea seems to be to include all items that will he taken
into account by an importer as part of his cost. In regard
to the period till 28.7.l978, the position should be the
same for the first period also. [432F-H; 433A]
 M/s J. E. Bilimoria & Sons, Nagpur v. Corporation of the
 PG NO 409
City of Nagpur, Special Civil Application No. 779 of 1971,
decided on 23.12.1976 by Bombay High Court; Kalyani Stores
v. The State of Orissa and Others, [1966] 1 SCR 865; M/s.
Mohan Meakin Breweries Ltd. Ghaziabad v. State of U. P. and
Others, [1979] U.P.T.C. 284; Mc Dowell & Company Limited v.
The Commercial Tax Officer, [ l9S5] 3 SCR 791; State of
Bombay v. M/s. S.S. Miranda Limited, [1960] 3 SCR 397; The
Central India ,Spinning and Weaving and Manufacturing
Company Ltd., The Empress Mills, Nagpur v. The Municipal
Committee, Wardha, [1958] SCR 1102, 1114; Brown v. State of
Marylund, [1827l 12 Wheat 419, 442; Corpus Juris Volume 62
page 729; Canada Sugar Refining Company Ltd. v. The Queen,
[1898] Appeal Cases 735; Wilson v. Chambers and Company
Proprietary Limited, 38 Commonwealth Law Reports 131;
Halsbury's Laws of England, fourth Edition, Volume 12,
paragraph 889, p. 313; Mohan Meakin Breweries Ltd. v. Excise
and Taxation Commissioner, Chandigarh & Others, [1976l
Suppl. SCR 510 at 517; In re Bill to amend Section 20 of the
Sea Customs Act, 1878 and Section 3 of the Central Excises
and Salt Act, 1944, [1964] 3 SCR 787; R. C. Jall v. Union of
India, [1962] Suppl, 3 SCR 436; M/s. Chatturam Horilram Ltd.
v. C.I.T. Bihar & Orissa, [1955] 2 SCR 290 at 297-298; The
Gramophone Company of India v. Birender Bahadur Pandey,
[1984] 2 SCR 664; D.G. Couse & Co. v. State of Kerala,
[1990] 1 SCR 804 at 815 and State of Orissa v. Chakobhai
[1961] I SCR 719 at 726, referred to.

JUDGMENT: