- (1.) The question that arises for consideration in this appeal is whether the customs duty paid by the appellant could be included for determining valuation for purposes of charging octroi under Rule 17(a) of the Maharashtra Municipalities (Octroi) Rules, 1968 made under sub-section (2) of section 321 read with proviso to sub-section (1) of section 105 of the Maharashtra Municipalities Act, 1965.
(2.) The appellant is a public limited company. It manufactured nylon and polyester yarn. Between September, 1983 and August, 1984 it imported goods liable to octroi. The Corporation authorities claimed that the appellant was liable to include the customs duty paid by it in the valuation of the goods as it was a component of the value of the said goods for the purpose of Rule 17(a). The appeal filed by the appellant before the Civil Judge failed. The order was challenged by way of writ petition under Article 226 of the Constitution. The High Court negatived the claim. Rule 17(a) is extracted below : "17. Provisions to determine value where octroi is leviable ad valorem.-(a) If the original invoice is produced by the importer and accepted by the Octroi Officer the value of the goods means the value made up of the cost price of the goods as ascertained from that invoice plus freight charges, carrier charges, shipping dues, insurance, excise duties, sales tax, vend fee and all other incidental charges incurred by the importer till the arrival of the goods within the octroi limits." Since the words "customs duty" are not mentioned in the rule, it gave rise to an argument before the High Court and in this Court whether it could be included while determining the value under Rule 17. The High Court relying basically on the decision of this Court in (Shroff & Co. v. Municipal Corpn. of Greater Bombay)1, 1989 Supp. (1) S.C.C. 347, held that even though the customs duty was not mentioned in the rule yet it was liable to be included while determining the value under Rule 17. The learned Counsel for the appellant urged that since the words "customs duty" do not find place in Rule 17, they could not be included for determining valuation under the rule. Reliance was also placed on (Goodyear India Ltd. v. State of Haryana)2, (1990)2 S.C.C. 71 : J.T. 1989 (4) S.C. 229 and (McDowell & Co. Ltd. v. CTO)3, (1977) 1 S.C.C. 441 and it was urged that in case the provision in taxing statute was susceptible to two constructions, then the one favouring the assessee should be accepted.
(3.) In Shroff case, 1989 Supp. (1) S.C.C. 347 it was held by this Court that countervailing duty being imposed for the purpose of compensating excise duty, it was includible in the expression 'duty'. The Court further held that expression 'incidental' used in the rule expanded its ambit and extended it to such duty that was an incident of importation. It was explained that the words "incidental charges" have a very wide meaning, particularly in the context where duties and taxes are referred to and the idea seems to be to include all items that will be taken into account by an importer as part of his cost.;