2002 (4) TMI 945

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....roi limits of Aurangabad Municipal Corporation, the respondent herein. The controversy raised in this appeal is confined to the rate of octroi duty levied on the Rectified Spirit imported by the appellant. On the Rectified Spirit imported by the appellant, the local authorities had been charging octroi duty @ 1.5% falling under Entry 37 of Class III of the Schedule "O" annexed to the Aurangabad City Municipal Corporation Octroi Rules (for short the `Rules') even before the establishment of the respondent-Corporation which came into force on 1.3.1984.  Thereafter also, it continued to collect octroi duty at the same rate. Surprisingly, the appellant received a letter dated 5th August, 1986 from the respondent stating that the ....

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....food or drink by men or                 animals and drugs 1.            ......................... 7.            Wine and spirits and beer                 ganja, bhang, opium, charas.                      5.00% Class III  Articles used for fuel, lighting, washing & industrial use. 37. Methylated and denatured spirits and industrial alcohols 1.50% Class IX&nb....

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.... octroi duty @ 5%. In opposition, on behalf of the respondent, it was submitted that the Spirit in Entry 7 includes Rectified Spirit. Alternatively, at best it could fall under residuary Entry 86 of Class IX of the Schedule but not under Entry 37 as it is not specifically included. In order to appreciate these rival contentions, we may now refer to few more facts.  From 1983, the goods imported were being declared and accepted under Entry 37 including Rectified Spirit (Ethyl Alcohol) of strength of 95% v/v and octroi duty was paid @ 1.5%.  A notice was issued on 16.10.1986 by respondent claiming octroi duty @ 5% and demanding the difference of octroy duty @ 3.5% retrospectively.  In an octroi statute, the incidence of t....

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....t, it is subsequently used in the manufacture of potable liquor but the octroi duty is leviable on the material imported into octroi limits at that stage only, which aspect is not correctly appreciated by the High Court.  The Rectified Spirit undergoes numerous processes in the distillery of the appellant after importing it on payment of octroi duty before being converted into potable liquor. Class I of the Schedule speaks of "articles used for food or drink by men ...........".  It would only mean that the articles which were used directly on the import within the local area of the respondent and not articles coming into being after further processing because the octroi duty is leviable on goods actually brought into the local....