Octroi valuation cannot include customs duty not payable on entry, even if a future contingency may later create liability.

For octroi charged ad valorem, assessable value must be fixed at the moment goods enter municipal limits, and only duties or levies actually incurred or legally payable at that time can form part of the value. Customs duty that was not payable on entry, because the importer was covered by an exemption notification, could not be added merely because a future contingency might later create liability. The possibility of subsequent recovery or practical difficulty in collection did not justify including a duty not then payable in the octroi valuation.

---

---

Issues: Whether, while determining the assessable value of imported goods for octroi charged ad valorem, customs duty that was not payable at the time of entry but might become payable on a future contingency could be added to the value of the articles.

Analysis: Octroi becomes payable on entry of the goods into the municipal limits, and the value of the article under the relevant octroi rule has to be ascertained at that point of time. The definition of value includes customs duty and other specified levies actually incurred or liable to be incurred, but only in relation to the taxing event and the legal liability existing when the goods cross the octroi barrier. Since the importer was covered by an exemption notification and no customs duty was payable at the time of entry, the duty could not be treated as a present component of value merely because a future breach might create a liability. The possibility of later recovery, or the municipality's apprehension of practical difficulty in collection, did not authorise loading a duty not then payable into the assessable value.

Conclusion: Customs duty not payable at the time of entry could not be included in the octroi valuation, and the loading of such duty into the assessable value was unlawful.

---