TaxTMI 
TaxTMI 
1988 (8) TMI 371
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....2. The appellants are registered partnership firms carrying on business of dealing in wines and spirits and are licensed to import and store liquors in their bonded warehouse at Maulana Shaukat Ali Road, Bombay. The appellants are also holders of licence issued under the Maharashtra Foreign Liquor (Import and Export) Rules, 1963 framed under the Prohibition Act of 1949 being Act No. 25 of 1949 of the State Government. As early as 1888, the Bombay Municipal Act was enacted empowering the Bombay Municipal Corporation to levy octroi on goods brought to the city. We shall refer to the provisions of the said Act as relevant to the present purpose later. In 1949 the Bombay Prohibition Act (hereinafter called "the Act") was passed. The provisions of the Act and the Rules which will be referred to hereinafter empowered the State Government to impose excise and other duties. In 1965 the Maharashtra Foreign Liquor (Storage in Bond) Rules, 1964 were enacted. Under these Rules, the importer can import liquor and store the same in warehouses without payment of countervailing duty. The Octroi Rules were amended time and again on 28th July, 1976 and 28th June, 1983 to impose octroi on the assessa....
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....a) any alcoholic liquor for human consumption, (b) any intoxicating drug or hemp, (c) opium, (d) any other excisable article, when imported, exported, trans- ported, possessed, manufactured or sold in or from the State, as the case may be: Provided that duty shall not be so imposed on any article which has been imported into the territory of India and was liable on such importation to duty under the Indian Tariff Act, 1934, or the Sea Customs Act, 1878 or on any medicinal or toilet preparation containing alcohol, opium, hemp or other narcotic drugs or narcotics." 5. Section 2(14) of the Act defines "excise duty" and "countervailing duty" as follows: "2. (14) 'excise duty' and 'countervailing duty' mean such excise duty or countervailing duty, as the case may be, as is mentioned in entry 51 in List II of the Seventh Schedule to the Constitution." 6. Section 106 of the Act provides as follows: "106. Subject to any regulations to regulate the time, place and manner of payment made by the Commissioner in this behalf, the duties referred to in section 105 may be levied in one or more of the ....
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.... the State Government deems fit to impose, the construction and working of a distillery or brewery; (d) establish or license a warehouse wherein any intoxicant hemp, mhowra flowers or molasses may be deposited and kept without payment of duty; and (e) discontinue any warehouse so established." 7. In the licence held by the appellants for storage in bond of foreign liquor there is a provision that no liquor shall be removed by them from the licensed premises for consumption within the State except on payment of excise duty and fees. 8. Section 192(1) of the Bombay Municipal Corporation Act, 1888 as amended provides as follows: "192. (1) Except as hereinafter provided, a tax, at rates not exceeding those respectively specified in Schedule H, shall be levied in respect of the several articles mentioned in the said Schedule, or so many of them or such of them as the Corporation shall from year to year in accordance with section 128 determine on the entry of the said articles into Greater Bombay for consumption, use or sale therein. The said tax shall be called an 'octroi'." 9. In other words, it provides for a tax in accordance with se....
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....ctroi into Greater Bombay from any other area outside Greater Bombay. "Place of import" has been defined in rule 2(4) to mean the docks, bunders, wharfs, railway yards, sidings, depots, air port terminus, municipal octroi posts at roads across Greater Bombay limits and such other places at which the articles arrive within Greater Bombay for the purposes of import. Section 12 of the Customs Act, 1962 imposes customs duty and provides that except as otherwise provided in that Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 or any other law for the time being in force, on goods imported into, or exported from India. 12. The learned single judge in his judgment noted that a question almost identical to the question posed above came to be considered by the Nagpur Bench of the Bombay High Court in Special Civil Application No. 779 of 1971, J.E. Bilimoria & Sons, Nagpur v. Corporation of the City of Nagpur. A Division Bench comprised of Masodhkar and Kemble, JJ., upheld the petitioners' contention by their judgment dated 23rd December, 1976. Rule 10(a) framed under the City of ....
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....word "incur" the charges to be incurred after the import, and that the Bombay rule as it is now read used the words "liable to be incurred". 14. Rule 2(7)(a) as it read before 28th July, 1976 mentioned charges incurred till the arrival of the articles at the place of import. The charge of countervailing duty incurred subsequent to the arrival of the bonded liquor at the place of import fell outside the rule as it then read. Between 28th July, 1976 and 27th June, 1983 the rule mentioned charges incurred till the articles were removed from the place of import. Inasmuch as the charge of countervailing duty was incurred after the bonded liquor had been removed from the place of import, the rule as it then read could not apply to such countervailing duty. The rule as it reads subsequent to 28th June, 1983 mentions countervailing duty but among charges incurred or liable to be incurred till the articles are removed from the place of import. According to the learned single judge, the countervailing duty is neither incurred nor is liable to be incurred until after the bonded liquor has been removed from the place of import. He was, therefore, of the view that the countervailing duty cou....
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....port Rules. Rule 3(2) of the Maharashtra Foreign Liquor (Import and Export) Rules, 1963 defines "bonded warehouse" to mean a place appointed by the State Government as a bonded warehouse for the storage in bond of Indian made foreign liquor and includes a bonded laboratory. "Importing place" has been defined under rule 3(8) to mean any place in India outside the State of Maharashtra to which foreign liquor is to be sent from the State of Maharashtra. Rule 11 of the said Rules is as follows: "11. Issue of pass.-(1) On receipt of the application made under rule 10, the Collector shall make such inquiries as he may deem necessary and if he sees no objection he may- (a) where the foreign liquor is to be imported in bond, require the importer to execute a bond, in form C, with two sureties, for the payment of the amount of duty leviable on the foreign liquor to be imported or a general bond, in form D which would remain in force for a period of three years, along with two sureties for the payment of a sum sufficient to cover the amount of duty leviable on the total quantity of foreign liquor which may be imported by him from time to time during the period of three year....
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....cate. Particulars of the consignment shall be entered by the officer-in-charge of such warehouse in the register of deposits and withdrawals which shall be kept in such form as the Director may direct. Where the consignment is of rectified spirit imported for use in a bonded laboratory, it shall be allowed to be removed to the bonded laboratory and the Prohibition and Excise Officer-in-charge of such laboratory shall after entering particulars about it in the register of receipts verify its quantity and strength. On receipt of the Chemical Analyser's report, the officer-in-charge of the bonded warehouse or laboratory shall fill in the various columns on the reverse of Part IV of the pass. The consignment shall then be allowed to be removed from the bonded warehouse under a transport pass on payment of- (a) the duty leviable under the Act, on the foreign liquor imported, (b) the fees prescribed under the Bombay Foreign Liquor and Rectified Spirit (Transport) Fees Rules, 1954, and (c) other charges, if any, payable in respect of the consignment. The officer-in-charge of the bonded warehouse shall then prepare a copy of the Part IV of the pass a....
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....r fees paid by the importer." 19. Therefore, clearance from bonded warehouses, it was contended on behalf of the respondents, envisaged payment of an incurred liability. Our attention was drawn to the observations of this Court in McDowell & Company Limited v. Commercial Tax Officer [1985] 59 STC 277; [1985] 3 SCR 791 and reliance was placed on the observations at page 814 of the report (at page 289 of STC) that these cases establish that in order to be an excise duty (a) the levy must be upon "goods" and (b) the taxable event must be the manufacture or production of goods. It was further submitted that countervailing duty is an incidental charge. Our attention was drawn to the expression "incidental" in the Words & Phrases, Permanent Edition, 20A, pages 100-101 and also to Webster's New Twentieth Century Dictionary, page 922 and Webster's Third New International Dictionary, page 1142. 20. In State of Bombay v. S.S. Miranda Limited [1960] 3 SCR 397, the respondent held a trade and import licence of foreign liquor as well as a vendor's licence under the Bombay Abkari Act. It kept liquor in a bonded warehouse. On April 2, 1948, the a....
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....d derived from transire bearing a meaning similar to transport, i.e., to go across. The dictionary meaning of the words "import" and "export" is not restricted to their derivative meaning but bear other connotations also. According to Webster's International Dictionary the word "import" means to bring in from a foreign or external source; to introduce from without; especially to bring (wares or merchandise) into a place or country from a foreign country in the transactions of commerce; opposed to export. Similarly "export" according to Webster's International Dictionary means "to carry away; to remove; to carry or send abroad especially to foreign countries as merchandise or commodities in the way of commerce; the opposite of import". The Oxford Dictionary gives a similar meaning to both these words. At page 1113 of the report, it observed as follows: "By giving to the words 'imported into or exported from' their derivative meaning without any reference to the ordinary connotation of these words as used in the commercial sense, the decided cases in India have ascribed too general a meaning to these words which it appears from the setting, context and histor....
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....hen the vessel enters a port of call on her way to her ultimate destination, the duties would be payable at that date, which is highly improbable, and contrary to the express provisions of section 31. (3) The duties are payable at one of two dates-either the date of importation or the date when they are taken out of warehouse. There is no real contrast between the date of arrival at a port of call and the date when the goods are taken out of warehouse, because if the words mean in the first case that the duty attaches when the vessel arrives at a port of call, it must equally do so whether on arrival at the port of discharge they are delivered to the importer or warehoused in bond. The true contrast is that which their Lordships have just indicated, and the words appear to them to mean-when the goods are landed and delivered to the importer or to his order, or when they are taken out of warehouse, if instead of being delivered they have been placed in bond. (4) The result is that, in the opinion of their Lordships, the words 'imported into Canada' must, in order to give any rational sense to the clause, mean imported at the port of discharge, and cannot be....
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....scharged, the act of importation is complete. On the other hand, the act of importation is not complete if a ship enter some port of call with goods on board which is not the destined port of discharge for those goods. Actual landing is not necessary, as was argued, to constitute an importation for fiscal purposes. Now, in the present case the goods were not brought to their port of destination but to Port Kembla, where the goods were to be landed with the assent of the consignees. That, in my opinion, was an importation of the goods within the meaning of the Customs Act. It is clearly the duty of an 'owner' who imports goods into Australia to enter them at the customs, and the term 'owner' includes the consignee of the goods (vide sections 37 and 4, 'owner'). Consequently, in my opinion, the defendant should have been convicted of the offence that it did not enter the goods, but there was no evidence of any intent to defraud the Revenue." 25. Our attention was drawn to certain observations in Halsbury's Laws of England, Fourth Edition, Volume 12, paragraph 889, page 313. There the law is different and value added tax on the importation of go....
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....ction 105 of the Bombay Prohibition Act, 1949 which has been set out hereinbefore read with sections 2(14), 2(20) and 2(36) makes the position clear beyond doubt 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. Section 106 of the Bombay Prohibition Act, 1949 is headed -Manners of levying excise duties". This clearly envisages administrative convenience for the point of levy in the sense of "collection". The charge or incidence correlated to the taxable event is on entry into the State by way of import. The rate applicable would normally be the rate prevailing at that time. However, a specific provision is made to get over this normal position by the proviso. The proviso would otherwise be redundant. 27. The Maharashtra Foreign Liquor (Storage in Bond) Rules, 1964 had been framed in 1964. These do not indicate whether any earlier similar rules were framed. In any event, these Rules have been framed subsequent to the Act of 1949. Thus the charge and incidence of counter- vailing duty under the Act and the relevant notifications of 1949 were already subsisting. By subsequent framing....
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....the imposition of tax. It was observed as follows: "As has been pointed out by the Federal Court in Chatturam v. Commissioner of Income-tax, War [1947] FCR 116 at 126 (quoting from the judgment of Lord Dunedin in Whitney v. Commissioners of Inland Revenue [1926] AC 37), 'there are three stages in the imposition of a tax: There is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That ex hypothesi, has already been fixed. But assessment particularizes the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay." 30. An argument was advanced on the basis of certain observations of this Court in Central India Spinning and Weaving and Manufacturing Company Ltd., The Empress Mills, Nagpur v. Municipal Committee, Wardha [1958] SCR 1102 at 1114 that there is no mixing up of goods which are in bond till these are removed from bond. The observations were made in the context of the facts of that case. There, the facts were that certain cotton bales were b....
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....ntervailing duty is clearly contained in rule 2(7)(a) of the Octroi Rules. The rule prevalent prior to 28th June, 1983 was in the following terms: "'Value of the articles' where the octroi is charged ad valorem shall mean the value of the articles made up of the cost price of the articles as ascertained from original invoice plus shipping dues, insurance, customs duties, excise duties, sales tax, vend fees, freight charges, carrier charges and all other incidental charges excepting octroi incurred by the importer, till the articles are removed from the place of import." 33. This rule used 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. In this connection reference may be made to the observations of this Court in D.G. Gouse and Co. v. State of Kerala [1980] 1 SCR 804 at 815. It was observed as follows: "The word 'tax' in its widest sense ....
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....import". For the period between July 28, 1976 and June 28, 1983, it added customs duties to the items specifically mentioned and added "all other incidental charges excepting octroi incurred by the importer till the articles are removed from the place of import". For the period after June 28, 1983, the rules specifically included countervailing duty in the list of specific items and "all other incidental charges excepting octroi duty incurred or liable to be incurred by the importer till the articles are removed from the place of import". Under the Bombay Prohibition Act, the relevant sections are section 2(14), section 26, section 105 and section 106. These and some of the rules on which reliance was placed have been referred to in the judgment of my learned brother Mukharji, J., and need not be repeated here. 38. In the light of these provisions, two issues arise for consideration. The first is the point of time at which the liability to pay countervailing duty arises. On this the appellants' argument is that, in principle, this liability is not attracted merely by the entry of goods at, or their removal from the customs barrier of the concerned territory but arises onl....