Octroi classification turns on the nature of goods at entry, so rectified spirit fell under the lower-rated category.

For octroi classification, the decisive factor is the nature of the goods at the time of entry into municipal limits, and entries in the schedule must be read in their ordinary and common sense. Rectified spirit, though capable of later use in liquor manufacture, does not ordinarily fall within foreign imported liquor or wine merely because of possible future use. It is properly classified under the separate entry for methylated, denatured and rectified spirit, which attracted the lower rate. The higher municipal levy applicable to liquor and wine was therefore not sustainable, and the challenge to that classification succeeded.

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Issues: Whether rectified spirit brought within municipal limits for octroi purposes was liable to be assessed as foreign imported liquor or wine, or whether it fell under the entry for methylated, denatured and rectified spirit.

Analysis: The relevant factor for octroi is the nature of the goods at the point of entry, because the taxable event is entry into the municipal limits. Entries in the schedule must be read in their ordinary and common sense, having regard to the scheme of the classes and the classification intended by the framers. On that approach, rectified spirit cannot ordinarily be understood as foreign imported liquor or wines made in India, and the fact that it may be capable of use in the manufacture of liquor does not alter its character at entry. The schedule separately provided a lower rate for methylated, denatured and rectified spirit and a higher rate for liquor and wine.

Conclusion: Rectified spirit was dutiable only at the rate prescribed for methylated, denatured and rectified spirit and not as foreign imported liquor or wine. The decision was against the municipality and in favour of the respondents.

Final Conclusion: The municipal levy at the higher octroi rate was not sustainable, and the petition challenging that position failed.

Ratio Decidendi: For octroi, classification depends on the ordinary meaning and character of the goods at the time of entry, not on their possible later use.

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