{"id":255840,"date":"1991-11-22T00:00:00","date_gmt":"1991-11-21T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/tata-engineering-and-vs-municipal-corporation-of-the-city-on-22-november-1991"},"modified":"2017-04-26T23:56:32","modified_gmt":"2017-04-26T18:26:32","slug":"tata-engineering-and-vs-municipal-corporation-of-the-city-on-22-november-1991","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/tata-engineering-and-vs-municipal-corporation-of-the-city-on-22-november-1991","title":{"rendered":"Tata Engineering And … vs Municipal Corporation Of The City … on 22 November, 1991"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Tata Engineering And … vs Municipal Corporation Of The City … on 22 November, 1991<\/div>\n
Equivalent citations: 1992 AIR 645, 1991 SCR Supl. (2) 445<\/div>\n
Author: V I Ramaswami<\/div>\n
Bench: Ramaswami, V. (J) Ii<\/div>\n
           PETITIONER:\nTATA ENGINEERING AND LOCOMOTIVECOMPANY LTD. AND ANR.\n\n\tVs.\n\nRESPONDENT:\nMUNICIPAL CORPORATION OF THE CITY OF THANE AND ORS.\n\nDATE OF JUDGMENT22\/11\/1991\n\nBENCH:\nRAMASWAMI, V. (J) II\nBENCH:\nRAMASWAMI, V. (J) II\nAHMADI, A.M. (J)\nRAMASWAMY, K.\n\nCITATION:\n 1992 AIR  645\t\t  1991 SCR  Supl. (2) 445\n 1993 SCC  Supl.  (1) 361 JT 1991 (6)\t322\n 1991 SCALE  (2)1111\n\n\nACT:\nMaharashtra Municipalities (Octroi) Rule, 1968:\n    Rule  25 (3) (d)--Octroi--Levy of-Goods imported  within\nmunicipal  limits  and\tstored in  Warehouse  for  temporary\ndetention and eventual exports--Goods sold within  municipal\nlimits\t for  export  and  consumption\t outside   municipal\nlimits---Held\toctroi\t not  leviable--Taxable\t  event\t  of\noctroi--What is.\n    Rules  28,29 and  30--Octroi---Refund  of-Non-compliance\nwith  procedure-Effect of--Compliance with procedure  not  a\ncondition precedent for eligibility of\trefund----Compliance\nwith  procedure shall be tested having regard to the  nature\nof transaction and the object of procedure.\n    Doctrine  of unjust enrichment--No evidence\t to  suggest\nthat  octroi levied was recovered from\tcustomers-Refund  of\noctroi would not lead unjust enrichment.\nRule  24--Octroi--\"Breaking the bulk\"--Procedure to be\tfol-\nlowed-Rule 24 held not inconsistent with Rule 62 of  Chapter\nVIII  of  the schedule to the  Bombay  Provincial  Municipal\nCorporation Act, 1949  Object of Rule 24(2) explained.\n    Rule  28(2) (b)---Refund of\t octroi-Requirements  of-Re-\nquirement of exporting goods out of municipal limits  within\nsix  months of import-Proof of--Equitable  principle  \"first\nexport was of goods first imported\"---Applicability of.\n\n\n\nHEADNOTE:\n    The appellant-company was carrying on business of  manu-\nfacture\t and  sale of motor vehicles, spare parts  of  motor\nvehicles  and  excavators. Their  manufacturing\t units\twere\nlocated\t outside  the  municipal limits\t of  the  respondent\ncorporation.  Pursuant\tto  the permission  granted  by\t the\nRespondent Corporation under Rule 10(2) of\n446\nthe  Maharashtra  Municipalities (Octroi)  Rules,  1968\t the\nappellant company was maintaining a bonded warehouse  within\nthe  municipal\tlimits of  the\tRespondent-Corporation.\t The\nmotor  vehicles parts and excavators parts brought from\t the\nCompany's  own factories as well parts imported from  abroad\nwere  stored in this warehouse. These products were  brought\nin bulk and thereafter taken or sent out from the  Municipal\nlimits in smaller packings depending on the requirements  of\nthe customers in various parts of the country.\n      The  appellants  were  also  granted  current  account\nfacilities  without the requirement of immediate payment  of\noctroi at the Octroi Naka. Accordingly, the appellants\twere\ncarrying  out their activities of imports and exports  under\nthe current account procedure with facility of unpacking the\nbulk, repacking and exporting.\n     Under  the Octroi Rules the octroi\t becomes  refundable\nwhen  the  goods  in respect of which octroi  was  paid\t are\nexported  out of octroi limits within 6 months of their\t im-\nport. During the period 1st    January, 1983 to 31st  March,\n1984  the appellant-Company made 1182 claims for  refund  of\noctroi\twhich  were  rejected  by  the\tCorporation  on\t the\ngrounds:  (1) the Company had \"sold\" the spare parts  within\nthe  octroi  limits of the Corporation in  contravention  of\nRule  25(3) (d) of the Maharashtra  Municipalities  (Octroi)\nRules, 1968; (2) the procedure prescribed for export and the\nclaim of refund had not been strictly followed.\n     The appellants filed a writ petition under Article\t 226<\/a>\nin  the High Court of Bombay contending that the  action  of\nthe Municipal Corporation in refusing refund was unconstitu-\ntional\tand  illegal. The Division Bench of the\t High  Court\ndismissed the writ petition. The Company filed an appeal  in\nthis Court against the decision of the High Court.\n     In\t appeal to this Court it was contended on behalf  of\nthe  appellant (i) since the sales were not for\t consumption\nor use within the octroi limits and that the parts were sold\nto  parties outside the octroi limits and also for  consump-\ntion or use outside such limits the rejection of the  claims\nby  the Respondent-Corporation on the ground that the  sales\nwere  within the municipal limits in contravention  of\trule\n25(3)  (d)  of the Rules is illegal; (ii) Under Rule  62  of\nChapter VIII of the Schedule to Bombay Provincial  Municipal\nCorporation Act, 1949, prior intimation of the intention  to\n'break the bulk' is enough and there is no necessity for the\ncompany to get the sanction\n447\nof  Superintendent  of\tOctroi\tor break  the  bulk  in\t the\npresence  of an officer deputed for the purpose as  required\nunder sub-rule (2) of Rule 24 of the Maharashtra Municipali-\nties (Octroi) Rules, 1968; Rule 24(2) of the Octroi Rules is\ninconsistent with Rule 62 and to the extent of inconsistency\nit shall be deemed to be not applicable.\n    On behalf of the respondent Corporation it was contended\n(i) that the meaning of words \"sales therein\" in the defini-\ntion of octroi in the Acts and in Entry 52 of List II of VII\nSchedule  to the Constitution could not be limited to  sales\nof  the goods for purposes of consumption or use within\t the\nmunicipal  limits; (ii) there was a change in the  ownership\nof the goods since a sale in law had taken inside the octroi\nlimits\tthough\tthe purchaser was residing and\tcarrying  on\nbusiness  outside the octroi limits and under the  sale\t the\ngoods  were  intended  to be and in fact  exported  for\t the\npurpose\t of consumption and use outside the  octroi  limits;\n(iii)  that  while Rule 62 (c) deals with  prior  intimation\nRule 24(2) deals with the sanction and breaking of the\tbulk\nin  the presence of an officer deputed for that purpose\t and\nboth the rules can stay together and operate and there is no\ninconsistency; (iv) since the appellants have recovered\t the\namounts paid by them by way of octroi duty from their  deal-\ners  or customers they are not entitled to refund;  ordering\nof refund would amount to allowing the appellants to unjust-\nly  enrich themselves at the cost of the public to whom\t the\nburden had already been passed.\nAllowing the appeal, this Court,\n    HELD:  1.  In the case of impost of octroi\tthe  taxable\nevent  is  the entry of goods which are meant  to  reach  an\nultimate  user or consumer in the area. Mere physical  entry\ninto  the  octroi limits would not attract levy\t of  octroi.\nWhen the goods are brought in not for consumption within the\narea but for temporary detention and eventual export, octroi\nis  not leviable. The octroiable event in such a case  shall\nbe  deemed  not to have happened. This\tis  particularly  so\nbecause in the case of goods not consumed or used within the\noctroi\tarea but exported there is a constitutional bar\t for\nthe  levy  of  octroi. In view of  the\tconstitutional\tbar,\noctroi is not leviable if the goods are not brought into the\noctroi\tarea for purposes of consumption or use in the\tarea\nbut for export and in fact exported by the importer  himself\nor  the sale by him occasions the export. [458-B-C,  472  H,\n473-A, 475-E]\n    1.1 Having regard to the nature and incidence of  octroi\nunless\tthe  octroiable goods are consumed or  used  or\t are\nmeant to reach an\n448\nultimate  user or consumer in the octroi area no  octroi  is\nleviable.  The words 'sale therein' in the  words  'consump-\ntion,  use or sale therein' in the definition  octroi  means\nsale  of  octroiable goods to a person for  the\t purpose  of\nconsumption  or\t use by such person in the octroi  area.  If\nsale was intended for consumption or use in the octroi\tarea\nwhether\t the purchaser actually consumed inside\t or  outside\noctroi area is irrelevant. Therefore octroi rules cannot  be\nread as enabling the municipality to levy and collect octroi\neven  in  cases where the goods have not been  imported\t for\nconsumption or use. [475-C, 474-B]\n    Burmah  Shell Co. v. Belgaum Municipal<\/a>, ll963I Suppl.  2\nS.C.R. 216; Hira Lal Thakur Lal Dalai v. Brash Broach Munic-\nipality, [1976] Suppl. SCR 82; Municipal Council of  Jodhpur\nv.  Parekh Automobiles Ltd. & Ors<\/a>., [1990] 1 S.C.C. 367\t and\nH.M.M.\tLtd. v. Administrator<\/a>, [1989] 4 S.C.C.\t640,  relied\non.\n    Khandelwal Traders Akola v. The Akola Municipal Council<\/a>,\nAIR 1985 Born. 218, approved.\n    1.2 Since the goods were sold by the Company to  outside\npurchasers and the goods under the transactions of sale were\nintended  to  be  exported and were in\tfact  exported,\t for\nconsumption  or use outside the municipal limits  no  octroi\nduty was leviable and the octroi duty paid on entry into the\nmunicipal  limits  was, therefore, liable  to  be  refunded.\nAccordingly the rejection of the refund claims on the ground\nthat  Rule 25(3) (d) had not been strictly complied with  is\nillegal and could not be sustained. [457 G-H]\n    2.\tOnce octroi is not leviable the deposit made by\t the\nimporter  pending  export is in the nature of  a  trust\t and\nrefundable in the event of the export of the goods.  [473-G-\nH]\n    2.1\t Under the octroi scheme, when the goods in  respect\nof  which  octroi is paid are exported, the  octroi  becomes\nrefundable. Right to refund arises because the goods are not\nconsumed  inside the area but exported and the\ttax  becomes\nnot leviable. [458-C]\n    2.2\t If  there is no consumption or use, octroi  is\t not\nattracted  and\tif  any levy has been made  and\t the  amount\ncollected, the same becomes legally refundable even when the\ngoods are exported in parts and in smaller packages. [472-H]\n  3.  The rules merely regulate the system on  which  refund\nshall\n449\nbe allowed. In a given set of facts, whether the rules\thave\nbeen  complied with will have to be tested having regard  to\nthe  nature  of the particular transaction and\twhether\t the\nobject\tof the procedure provided is otherwise fully  satis-\nfied. [458-D, 473 H, 474-A]\n    3.1\t The object of requiring intimation or sanction\t and\npresence of an officer when breaking the bulk in the  scheme\nof  octroi levy and refund is to ensure that dutiable  goods\ndo  not escape the assessment and refunds are made  only  in\nrespect of goods exported. In other words the whole require-\nment  relates  to the identification of the goods.  In\tthat\nsense  if the same is otherwise complied with the  right  to\nrefund cannot be denied. [474 A-B]\n    3.2\t Rules\t24 to 30 of the\t Maharashtra  Municipalities\n(Octroi) Rules, 1968 and the forms in the system of levy  of\nOctroi are intended to regulate the procedure for collection\nidentification\tof dutiable goods and correlation  of  goods\nexported with the goods imported for the purpose of  refunds\nof octroi collected. [475-D]\n    The rules do not contain any specific provision that  an\napplicant for refund who has failed to follow the  procedure\nwould be disentitled to claim the refund. [473-G]\n    3.3\t Compliance  with the procedure\t prescribed  in\t the\nRules for filing claims of refunds are not conditions prece-\ndent for the right or eligibility for refund or the liabili-\nty to refund but are provisions regarding proof of export of\nthe  goods imported and are not meant to be  exhaustive\t ei-\nther.  They  are to be interpreted and\tunderstood  in\tthat\nsense. [475 E-F]\n    Municipal  Committee Khurari v. Dhannalal Nethi &  Ors<\/a>.,\n[1969] 1 S.C.R. 166; Kirpal Singh Duggal v. Municipal Board,\nGhaziabad<\/a>, [1968I 3 S.C.R. 551, applied.\n    3.4\t Since\tthe rejection of the claims for\t refund\t was\nmerely\ton  the ground that either form 4 and  original\t in-\nvoices\twere not produced or columns 5 and 6 of Form  11  or\nthe  corresponding  columns in Form 12 had not\tbeen  filled\nwith  reference to an original invoice or Form 4 or  deposit\nreceipt and the refusal to issue export pass certificates on\nthose very grounds are untenable the orders of rejection are\ninvalid. 1475 G-H]\n   4. The object of the Rules fixing a period of  limitation\nfor\n450\nexport\thowever\t is different. The export cannot be  put  in\nperpetual doubt and the goods may be considered to have come\nto  a repose if they were not exported within  a  particular\nperiod provided in the rules. [475-F]\n    4.1 However an equitable principle could be followed  in\nthis regard and it may be presumed that the goods which came\nin first have gone out first. If the goods are mixed up\t and\nunidentifiable due to breaking bulk and repacking in smaller\nand  assorted packages before export the principle that\t the\nfirst export was of the goods first imported, subject to any\nevidence  available to the contrary, may be applied and\t the\nsix months period prescribed under Rule 28(2) (b) for export\nmay be determined accordingly. [475 A-B, H, 476-A]\nClayton's case, 1814-23 All. E.R. 1, applied.\n    5.\t There is no inconsistency between Rule 62 and\tRule\n24(2). The intimation contemplated in Rule 62 imply that the\nbreaking  the bulk shall be done with the knowledge  of\t the\noctroi\tauthorities.  But it cannot be said that  the  rules\nfurther\t provide that after intimation the breaking  of\t the\nbulk shall be done in the presence of the officers and after\nsanction that would in any case be inconsistent.  Therefore,\nboth the rules can stand together. [471 F-G]\n    6.\t There in no evidence that any of the articles\tsold\nby  the Company is subject to any price control by the\tGov-\nernment or that the Company had charged any octroi separate-\nly in the bills. Documentary evidence do not also show\tthat\nany  octroi  was  separately charged and  collected  by\t the\nCompany.  Therefore the question of unjust  enrichment\tdoes\nnot arise. [476 F-H]\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4702 of
\n1991.\n<\/p>\n
    From the Judgment and Order dated 26.8.88 of the  Bombay
\nHigh Court in W.P. No. 2264 of 1984.\n<\/p>\n
    T. Andharujina, F.H. Talyarkha, R.F. Nariman, R. Narain,
\nAshok Sagar and Ms Amrita Mitra for the Appellants.
\nK.K.  Singhvi,\tB.N. Singhvi and Anil K. Gupta for  the\t Re-
\nspondents.\n<\/p>\n
The Judgment of the Court was delivered by
\n451<\/span>
\nV. RAMASWAMI, J. Leave granted.\n<\/p>\n
    The\t First\tappellant–Tara Engineering  and  Locomotive
\nCompany\t Limited  (hereinafter called the ‘Company’)  is  a.
\ncompany registered under the Indian Companies Act<\/a>, 1913\t and
\nthe second appellant is one of its Directors. The Company is
\ncarrying on business of manufacture and sale of motor  vehi-
\ncles and spare parts of motor vehicles and excavators. Their
\nmanufacturing  units are at Pune and Jamshedpur outside\t the
\nThane  Municipal  Corporation  limits. They  have  a  bonded
\nwarehouse  within the municipal limits in which\t they  bring
\nand  stock  motor vehicles parts’and excavators\t parts\tfrom
\ntheir own factories at Pune and Jamshedpur. They also  bring
\nin parts manufactured by their ancillaries within India\t and
\nalso parts imported from aboard. These products or parts are
\nbrought\t in bulk and thereafter taken or sent out  from\t the
\nMunicipal  limits in smaller packings depending on  the\t re-
\nquirements of the customers in various parts of the country.
\nIt  is\tstated\tthat the parts imported\t or  purchased\tfrom
\nothers and brought in are relatively very small in  quantity
\nand  the major portion of the activity related to their\t own
\nfactory produced parts.\n<\/p>\n
    On\tand  from 1 st October, 1982 with  the\tnotification
\nunder Section 3 of the Bombay Provincial Municipal  Corpora-
\ntion Act, 1949, the Thane Municipal Council became a Munici-
\npal Corporation (hereinafter called the Corporation).  Prior
\nto the constitution of the Corporation it was a municipality
\nand were governed by the Thane Municipal Council constituted
\nunder the Maharashtra Municipality Act, 1965. Prior to 1  st
\nOctober, 1982 the Thane Municipal Council had granted to the
\nCompany current account facilities in respect of payment  of
\noctroi\tunder the Maharashtra Municipalities Act,  1965\t and
\nthe  Maharashtra  Municipalities (Octroi) Rules,  1968\tmade
\nthereunder.  The Municipal Council had also granted  permis-
\nsion  under  Rule 10 (2) to the Company\t for  maintaining  a
\ngodown\tor warehouse of their own. Their is no dispute\tthat
\neven after the coming into existence of the Thane  Municipal
\nCorporation  the appellants were permitted to have  a  ware-
\nhouse  of  their  own and keep a  current  account  facility
\nwithout\t the requirement of immediate payment of  octroi  at
\nthe  Octroi Naka. In terms of granting those facilities\t the
\nCompany\t had made as security a cash deposit of Rs. 7  lakhs
\nwith the Corporation and had also given a Bank Guarantee for
\nan  equivalent amount as agreed to between the\tCompany\t and
\nthe  Corporation. However, there is some dispute as to\twhat
\nwere the formalities that were dispensed with in the  matter
\nof claiming refund of the octroi when the goods were export-
\ned. But suffice it to say at this stage that the  appellants
\nwere permitted to carry out their activities of imports\t and
\nexports under the current account procedure with a  facility
\nof unpacking the bulk, repacking and exporting.\n<\/p>\n
452<\/span><\/p>\n
    During the period 1st January, 1983 to 31st March,\t1964
\nit  is stated that the appellants had made 1182\t claims\t for
\nrefund. All these claims were rejected by the letters of the
\nCorporation  dated  31.8.1983,\t12.1.  1984,  5.4.1984\t and
\n6.4.1984.  They were rejected on the following two  grounds:
\n(1) the Company had “sold” the spare parts within the octroi
\nlimit  (which is co-terminus with the Corporation limit)  in
\ncontravention of Rule 25 (3) (d) of the Maharashtra  Munici-
\npalities  (Octroi)  Rules,  1968  (hereinafter\tcalled\t the
\n“Rules”),  (2) the procedure prescribed for export  and\t the
\nclaim  of  refund had not been strictly followed.  The\tnon-
\ncompliance with)the procedure prescribed referred to in\t the
\nsecond ground according the Corporation were: (i) Form 4  of
\nthe Octroi Rules and the original invoices were not  submit-
\nted,  or (ii) Forms 11 and 12 filed were incomplete and\t all
\nthe required information were not given or (iii) certificate
\nof  the Octroi exit Naka Officer had not been obtained.\t The
\nrejection of the claim was either on one or more than one or
\nall the grounds mentioned above. The appellants filed a writ
\npetition  under Article 226<\/a> in the High Court of  Judicature
\nat Bombay contending that the action of the Municipal Corpo-
\nration\tin refusing refund is unconstitutional\tand  illegal
\nand  for  certain other reliefs. The Division Bench  of\t the
\nHigh Court which heard the same dismissed the writ  petition
\non  the 26th August, 1988. It is against this judgment\tthat
\nthe present appeal has been filed.\n<\/p>\n
    It appears that during the hearing of the writ  petition
\nthe  learned counsel appearing for the Corporation  did\t not
\ncounter\t the  contention of the Company that  the  rejection
\nunder Rule 25 (3) (d) was not correct and the learned Judges
\nhave also recorded the same in the judgment. But the learned
\ncounsel\t for the respondent before us stated that it is\t not
\ncorrect to say that he had conceded any point and that since
\nhe  could  not argue that point in view of the\tdecision  of
\nanother Division Bench of the same High Court in  Khandelwal
\nTrader Akola v. The Akola Municipal Council, AIR 1985 Bombay
\n218  which  was binding on the Bench which  heard  the\twrit
\npetition  and also in view of certain observations  of\tthis
\nCourt  in Burmah Shell Company v. Belgaum Municipal<\/a>,  [1963]
\nSuppl. 2 SCR 216 and Hiralal Thakorlal Dalai v. Brash  Broch
\nMunicipality<\/a>,  [1976]  Suppl. SCR 82 he did  not  press\t the
\npoint.\tWe have therefore, permitted the point to be  argued
\nin this appeal.\n<\/p>\n
    Before we discuss the points in controversy we may state
\nthat in the counter-affidavit filed in the writ petition the
\nrespondents have admitted that the Company was enjoying\t the
\ncurrent\t account  facility prior to 1.10. 1982 and  the\t re-
\nspondent-Corporation had also given the said facility to the
\nCompany even after 1st October, 1982 on their making a\tcash
\ndeposit of Rs. 7 Lakhs and furnishing a Bank Guarantee for a
\nlike sum as security
\n453<\/span>
\nfor grant of that facility. The respondent had also admitted
\nthat the Company had been given permission under Rule 10 (2)
\nto  maintain  their  own godown from  12th  December,  1982.
\nBroadly\t stated under the current account facility  granted,
\nno octroi duty is recoverable in cash from the appellants at
\nthe  entry octroi naka point. However, the Company  was\t re-
\nquired\tto  submit a statement of goods imported in  Form  5
\nbefore the 10th of the following month. The officers of\t the
\nrespondent  after scrutiny of the statement so filed  deter-
\nmine the octroi duty payable thereon and debit the amount in
\nthe  current  account kept and send a demand notice  to\t the
\ncompany.  The Company is required to pay the amount  to\t the
\nCorporation within 15 days of the determination of duty.
\n    The first submission of Mr. Andharujina, learned counsel
\nfor the appellants was that the sales were not for  consump-
\ntion or use within the octroi limits and that the parts were
\nsold  to  parties  outside the octroi limits  and  also\t for
\nconsumption  or\t use outside such limits and  therefore\t the
\nrejection  of the claims on the ground that the spare  parts
\nwere  sold within the municipal limits and that it  amounted
\nto a contravention of Rule 25 (3) (d) of the Rules is  ille-
\ngal. Mr. K.K. Singhvi, the learned counsel for the  Corpora-
\ntion  on the other hand contended that the meaning of  words
\n“sales therein” in the definition of octroi in the Acts\t and
\nin Entry 52 of List II could not be limited to sales of\t the
\ngoods for purposes of consumption or use within the  munici-
\npal limits.\n<\/p>\n
    When  an importer wants to export dutiable goods  tempo-
\nrarily detained by him in his own godown he shall present an
\nintimation-cumapplication for written permission in Form  11
\nto  the Superintendent of Octroi to export such goods.\tRule
\n25 (3) (d) states that no such intimation shall be  accepted
\nunless:\n<\/p>\n
.LM15
\n\t      “the exporter and the importer of these  goods
\n\t      are one and the same person and such  articles
\n\t      have not undergone change of ownership”\n<\/p>\n
.LM0
\n    The case of the Corporation was that there was a  change
\nin the ownership of the goods since a sale in law had  taken
\nplace  inside  the octroi limits though\t the  purchaser\t was
\nresiding and carrying on business outside the octroi  limits
\nand under the sale the goods were intended to be and in fact
\nexported for the purpose of consumption and use outside\t the
\noctroi limits.\n<\/p>\n
Section\t 127 of the Bombay Provincial Municipal\t Corporation
\nAct,1949  and  the corresponding S. 105 of  the\t Maharashtra
\nMunicipalities\tAct,1965 authorises the Muncipality to\tlevy
\n“Octroi”. Both these Acts define
\n454<\/span>
\noctroi\tas  meaning  a tax on the entry of  goods  into\t the
\nmunicipal  area “for consumption, use or sale therein”.\t The
\nMaharashtra  Municipalities (Octroi) Rules 1968\t made  under
\nthe  Maharashtra Municipalities Act, 1965, provides for\t the
\nlevy,  collection  and refunds of octroi duty on  the  goods
\nspecified  in the schedule thereunder and the procedure\t for
\nthe  same. These Rules were in force in\t Thane\tMunicipality
\nbefore Thane was declared as “City” under the Bombay Munici-
\npal  Corporations Act<\/a> LIX of 1949. However these  Rules\t are
\ncontinued  in the Thane Municipal Corporation by  virtue  of
\nparagraph 5 of Appendix IV to the Act LIX of 1949.
\n    The\t legislative  entry relating to\t the  constitutional
\npower  to levy this tax is found in List II Entry 52 of\t the
\n7th Schedule to the Constitution which reads:\n<\/p>\n
\t      “52. Taxes on the entry of goods into a  local
\n\t      area for consumption, use or sale therein”.<\/p><\/blockquote>\n
    The\t Bombay\t Municipal Boroughs Act, 1925 which  was  in
\nforce prior to the enactment of the Maharashtra\t Municipali-
\nties Act, 1965 also contained a similar provision in section
\n73<\/a>  enabling the Municipalities covered by that Act to\tlevy
\n“Octroi\t on  animals  or goods or both\tbrought\t within\t the
\noctroi\tlimits for consumption or use therein”. This  provi-
\nsion was amended by Amending Act<\/a> 35 of 1954 by\tsubstituting
\nthe  words “use or sale” for the words “or use” with  effect
\nfrom May 5, 1954. In other words before 1954 the word “sale”
\nwas  not included in the provision of octroi on goods  which
\nthe Municipality was authorised to impose. After the  amend-
\nment  the  Municipality could levy octroi on  goods  brought
\nwithin\tthe  octroi  limits “for consumption,  use  or\tsale
\ntherein”. This provision came up for consideration in Burmah
\nShell  case (supra). Two of the categories  of\ttransactions
\nwhich  were considered in this case related to\ttransactions
\nunder  which (1) goods were sold by the Company through\t its
\ndealers\t or by itself and consumed within the octroi  limits
\nby persons other than the Company and (2) goods sold by\t the
\nCompany\t through its dealers or by itself inside the  octroi
\nlimits\tto  other persons but consumed by them\toutside\t the
\noctroi limits. The Company contended that the tax could\t not
\nbe  collected on goods which were merely sold but  not\tcon-
\nsumed inside the octroi limits. In connection with this con-
\ntention this Court considered the meaning of words “consump-
\ntion, use or sale therein” and observed:\n<\/p>\n
\t      “It is not the immediate person who brings the
\n\t      goods into a local area who must consume\tthem
\n\t      him-self, the act of consumption may be  post-
\n\t      poned or may be performed by someone else\t but
\n\t      so  long as the goods have been  brought\tinto
\n\t      the local
\n\t      455<\/span>
\n\t      area for consumption in that sense, no  matter
\n\t      by whom, they satisfy the requirements of\t the
\n\t      Boroughs Act and octroi is payable”.
\n\t      ”\t …..\tThe goods must be regarded as having
\n\t      been  brought in for purposes  of\t consumption
\n\t      when  a person brings them either for his\t own
\n\t      use or consumption, or to put them in the\t way
\n\t      of  others  in the area, who are\tto  use\t and
\n\t      consume”.\n<\/p><\/blockquote>\n
\t      And concluded holding:\n<\/p><\/blockquote>\n
\t      “In our opinion, the Company was liable to pay
\n\t      octroi  tax on goods brought into\t local\tarea\n<\/p><\/blockquote>\n
\t      (a) to be consumed by itself or sold by it  to
\n\t      consumers\t direct and (b) for sale to  dealers
\n\t      who in their turn sold the goods to  consumers
\n\t      within  the  municipal  area  irrespective  of
\n\t      whether such consumers bought them for use  in
\n\t      the  area\t or  outside it.  The  Company\twas,
\n\t      however,\tnot liable to Octroi in\t respect  of
\n\t      goods which it brought into the local area and
\n\t      which was re-exported”.\n<\/p><\/blockquote>\n
The  ratio  is\tthus not a mere sale  inside  that  attracts
\noctroi\tbut  a sale intended for consumption  of  the  goods
\ninside the octroi area though ultimately the person to\twhom
\nit  was\t sold  for consumption does not\t consume  the  goods
\ninside but does the same outside the limit.
\n    After  consideration  of the judgment  in  Burmah  Shell
\nCompany’s case (supra) the Gujarat High Court in one of\t the
\ncases arising for refund of octroi duty paid, took the\tview
\nthat  octroi  leviable on goods brought\t within\t the  octroi
\nlimits\t‘for consumption, use or sale therein’ and that\t the
\nword ‘sale’ could not be given the narrow meaning of a\tsale
\nfor  consumption to the ultimate consumer within the  octroi
\nlimits. Accordingly if the goods were sold within the octroi
\nlimits\tby  the importer even if it resulted in\t export\t and
\nconsumption  was also outside the octroi limit, octroi\tduty
\npaid  is  not refundable. This decision came  up  in  appeal
\nbefore this Court and the decision of this Court is reported
\nin  Hiralal  Thakorlal Dalai v. Brash  Broach  Municipality<\/a>,
\n[1976]\tSuppl. SCR 82. On facts that case related to a\tcon-
\nsignment  sale and the goods were despatched to\t destination
\noutside\t octroi\t limits for consumption there.\tA  plea\t for
\nreview\tof  the\t decision in Burmah  Shell  Company  s\tcase
\n(supra)\t was also made in this case. However a\tConstitution
\nBench rejected the request for reconsideration and held that
\nthe word “sale” in the colloquium of the words “consumption,
\nuse  or sale therein” means sale for consumption within\t the
\noctroi limits. The ratio of these two decisions was  consid-
\nered by the Bombay High Court in Khandelwal Traders  Akola’s
\ncase  (supra), which was referred to in the  Judgment  under
\nappeal. It was held in this case also
\n456<\/span>
\nthat  where a dealer imports goods within the octroi  limits
\nnot for ultimate consumption or sale for consumption  within
\nthe limits but for the purpose of export and obtain  permis-
\nsion for export he is not liable to pay octroi on such goods
\nnotwithstanding\t that  in the larger sense for\tpurposes  of
\nexport he sells the goods within the octroi limits, that  is
\nto  say\t even  where the situs of the sale  could  be  fixed
\nwithin\tthe octroi limit. The matter is now put\t beyond\t any
\npale of doubt by the latest decision of this Court in Munic-
\nipal  Council,\tJodhpur v. M\/s. Parekh\tAutomobiles  Ltd.  &
\nOrs., [1990] 1 SCC 367. Rule 13 (4) of the Rajasthan Munici-
\npal  Octroi  Rules,  1962 which was one\t of  the  provisions
\nconsidered in this case provided that
\n\t      “In  cases provided for in sub-rule (3)  (that
\n\t      is   who\t is  given   the   account   current
\n\t      facility)amount  of octroi duty payable  shall
\n\t      be based on the total amount of the octroi  as
\n\t      shown  by\t the  entry passes  less  the  total
\n\t      amount of goods transported outside the munic-
\n\t      ipal limits as shown by the transport passes:
\n\t      Provided\tthat  in computing the\toctroi\tduty
\n\t      payable under subsection (4), the goods trans-
\n\t      ported  outside the municipal limits shall  be
\n\t      lessened only if such goods have not been sold
\n\t      within  the municipal limits and if they\thave
\n\t      been  exported  out of such  limits  within  a
\n\t      period  of six months from the date  of  their
\n\t      import in such limits”.\n<\/p>\n
    Relying on this provision the municipality in that\tcase
\ncontended that if the sale had taken place within the octroi
\nlimits though the sale was not for consumption or use within
\nthe  octroi limits, duty was payable and no refund could  be
\nclaimed.  The learned Single Judge who heard the  matter  in
\nthe  High  Court did not permit the importer  to  raise\t the
\nquestion  that the sale took place only outside\t the  octroi
\nlimits of Jodhpur and proceeded on the footing that the sale
\nof  product in question took place within the octroi  limits
\nof Jodhpur. He however accepted the contention of the Indian
\nOil  Corporation (importer) that the sale to the dealer\t was
\nfor  the  purpose of export and the dealer  did\t export\t the
\ngoods outside the octroi limits and that, therefore, even if
\nthe  sale was said to have been effected within\t the  octroi
\nlimits\tno octroi was leviable. Since admittedly  the  goods
\nhad  been sold in Jodhpur octroi limits only for  their\t on-
\nwards  transmission  for use and consumption in\t Dangia\t was
\noutside\t the octroi limits he held that no octroi  duty\t was
\npayable. This view of the learned Single Judge was confirmed
\non appeal by the Division Bench of the High Court. On appeal
\nthis Court confirmed this view and held that the Indian\t Oil
\nCorporation (importer) who had the current account  facility
\nand gov-\n<\/p>\n
457<\/span><\/p>\n
erned  by the terms of rule 13 was entitled to go on  paying
\noctroi\tduty “on to basis of the goods brought by it  within
\nthe  municipality  less the goods  transported\toutside\t the
\nmunicipality even where the transport outside the municipal-
\nity may be in pursuance of a sale within the municipality so
\nlong  as such sale is in pursuance of an intention that\t the
\ngoods  should  be  consumed or used  outside  the  municipal
\nlimits”.\n<\/p>\n
    In\tthe present case the sales were to person  who\twere
\ncarrying  on business outside the limits of the\t Corporation
\nand  the  goods were also intended to be  consumed  or\tused
\noutside such limits and in fact the goods were also  export-
\ned.  The  ratio\t of the decisions  above  referred  clearly,
\ntherefore, governs this case, even if it were to be  assumed
\nthat  the  sale in the general sense took place\t inside\t the
\nmunicipal limits.\n<\/p>\n
    However  we may state that it was the contention of\t the
\nlearned counsel for the appellant that the sale in fact took
\nplace  outside the municipal limits and in support  of\tthis
\ncontention  he relied on the following facts  among  others.
\nThe spare parts were consigned by the Company to out station
\npurchasers. The goods were transported by the Company  them-
\nselves\tacross the octroi limits. The consignment  or  lorry
\nreceipt\t mentioned  the\t consignee as self.  The  bills\t for
\ncollection were sent through Bank and the goods were not  to
\nbe delivered to the consignee until the payment was made  by
\nthe consignee through the Bunk. Right of disposal  expressly
\nreserved with the vendor. On the other hand on behalf of the
\nCorporation it was contended that orders were both  received
\nand accepted in Thane, goods were despatched from Thane\t and
\nchallans  were also made in the name of the buyers  and\t the
\nproperty  in the goods passed within Thane. The sale had  in
\nfact  taken place within municipal area. In fact he  further
\ncontended that being a question of fact we are not  entitled
\nto  go\tinto  the same in view of the finding  of  the\tHigh
\nCourt. It is not necessary for us, however, to consider this
\naspect and we would for the purpose of this case proceed  on
\nthe  assumption that technically the sale in law  had  taken
\nplace inside the municipal limits.\n<\/p>\n
    Since  the\tgoods were sold by the\tCompany\t to  outside
\npurchasers  and\t the goods under the transactions  of  sale,
\nwere intended to be exported and were in fact exported,\t for
\nconsumption  or use outside the municipal limits  no  octroi
\nduty was leviable and the octroi duty paid on entry into the
\nmunicipal  limits  was, therefore, liable  to  be  refunded.
\nAccordingly the rejection of the refund claims on the ground
\nthat Rule 25 (3) (d) had not been strictly complied with  is
\nillegal\t and  could not be sustained. Such of  those  claims
\nwhich were rejected only on the grounds of contravetion of
\n458<\/span>
\nRule 25 (3) (d) shall now be taken up by the respondent\t and
\npassed for payment.\n<\/p>\n
    In the case of impost of octroi the taxable event is the
\nentry of goods which are meant to reach an ultimate user  or
\nconsumer  in the area. Mere physical entry into\t the  octroi
\nlimits would not attract levy of octroi. When the goods\t are
\nbrought\t in  not  for consumption within the  area  but\t for
\ntemporary  detention  and  eventual export,  octroi  is\t not
\nleviable.  But\tin order to ensure, in\tsuch  circumstances,
\nthat the goods are exported and to prevent evasion of octroi
\non goods consumed inside the octroi limit, Rules provide for
\ndeposit of a certain sum of money or the actual octroi\tduty
\npayable subject to a right to get a refund of the same\twhen
\nthe  goods are exported. When the goods in respect of  which
\noctroi\twas paid are exported, the octroi became  refundable
\nand  that  is the very scheme of the ‘ levy of\toctroi.\t The
\noctroiable  event  in such a case shall be deemed  not\thave
\nhappened.  Right to refund arises because the goods are\t not
\nconsumed  inside the area but exported and the\ttax  becomes
\nnot leviable. The rules merely regulate the system on  which
\nrefunds\t shall be allowed. The procedure prescribed and\t the
\nneed to adhere to the procedure shall have to be  considered
\nin  the light of these legal incidence and nature of  octroi
\nduty.\n<\/p>\n
    Before we deal with the question whether the Company had
\nnot  followed any of the procedure prescribed and the  right
\nof  the Corporation to deny refund of octroi on\t non-compli-
\nance with any of those provisions in the Rules, it is neces-
\nsary  to broadly set out the different types  of  procedures
\nprescribed,  depending on different purposes of imports\t and
\nexports,  contemplated under the Rules. This may be  broadly
\nclassified  into  five categories, (i)\tgoods  imported\t for
\nConsumption,  use or sale in the municipal area, (ii)  goods
\nimported not for consumption, use or sale within the munici-
\npality but for immediate export, (iii) goods intended to  be
\ntemporarily  detained within the municipality in the  bonded
\nwarehouse maintained by the Corporation and eventual export;\n<\/p>\n
(iv)  goods intended for temporary detention in the  private
\nlicensed  bonded  wharehouse of the  importer  and  eventual
\nexport;\t and  (v) goods imported by any\t person,  mercantile
\nfirm  or  body\twhich has been permitted  by  the  municipal
\nCorporation  to keep an current account. In the first  case,
\nsince  octroi is attracted on arrival of the dutiable  goods
\nat  the Octroi Naka the importer pays the amount  of  octroi
\nassessed  by the octroi officer and takes the  goods  inside
\nthe municipal limits. In the second case, the importer gives
\na  declaration-cum application that the goods are not  being
\nimported  in  the municipal limits for consumption,  use  or
\nsale  but  are\tintended for immediate\texport\toutside\t the
\noctroi limits. He is required to deposit an amount in
\n459<\/span>
\naccordance with the scale fixed under clause (b) of sub-rule
\n(1)  of\t Rule (5). On such deposit being made a\t receipt  is
\ngiven in the form prescribed by the Entrance Naka  Inspector
\nand  a\twritten permission-cum-transit pass  issued  by\t the
\nOctroi Officer. On arrival of the goods at the exit Naka and
\non surrender of the written permission-cum-transit pass\t the
\ndeposit amount is refunded. In the third category of  cases,
\nthe  importer makes an application to the Octroi officer  at
\nthe  Entrance Naka for a written permission to deposit\tsuch
\ngoods at the bonded warehouse maintained by the Corporation.
\nThe  Octroi Officer then makes an entry on  the\t application
\nthat  the importer is allowed to proceed with the  goods  to
\nthe  bonded warehouse. The Officer in-charge of\t the  bonded
\nwarehouse will receive the goods and keep them in the bonded
\nwarehouse until exported. When the importer wants to  export
\nthe goods he is required to apply for a written\t permission-
\ncum-export  pass in the prescribed form and also deposit  an
\namount equal to the octroi leviable therein. On such deposit
\nmade a written permissioncum-export pass is issued. When the
\ngoods  are  taken out of the municipal\tlimits\tthe  Officer
\nIncharge of the Exit Naka endorses the export pass  certify-
\ning  the  export and the refund of the\tdeposit\t is  claimed
\nthereafter producing the certificate issued by the Exit Naka
\nOfficer. In the fourth category, the importer gives a decla-
\nration\tin  Form 4 that the goods are  meant  for  temporary
\ndetention with him at his own warehouse for eventual export.
\nAfter verification of the particulars furnished in that form
\nwith  the  invoices and other documents produced he  is\t re-
\nquired\tto deposit at the Entry Octroi Naka point itself  an
\namount\tequal to the amount of full octroi duty\t thereon  as
\ndeposit. A receipt is given by the Octroi Inspector  stating
\nthat the said amount “on account of deposit” has been recov-
\nered.  When he wants to export the dutiable  goods  detained
\nwith  him he presents an intimation-cum-application in\tForm
\n11  for written permission to export the goods. He  is\talso
\nrequired to produce the goods at the Central Octroi  officer
\nalong  with  the application. On satisfaction that  all\t the
\nconditions prescribed have been fulfilled and after  verifi-
\ncation\tof the goods a written permission-cum-refund  export
\npass  in Form No. 12 is given to the importer. On  presenta-
\ntion of these documents the Octroi officer at the Exit\tNaka
\ngives  a certificate that the goods mentioned  therein\thave
\npassed octroi limits and with that the refund application is
\nmade and refund obtained.\n<\/p>\n
    The\t instant  case falls under the fifth  category.\t The
\nCompany\t has been permitted by the Municipal Corporation  to
\nkeep  the dutiable goods in a bonded warehouse of their\t own
\nwith a current account facility. The rules which were relied
\non by the Respondent and some of which are said to have\t not
\nbeen complied with by the Company may be set out:\n<\/p>\n
\t\t   “10. Maintenance of Bonded Warehouses. –\n<\/p><\/blockquote>\n
\t      460<\/span><\/p>\n
\t      (1)    x\t x   x
\n\t      (2)   A  Council may permit  any\timporter  to
\n\t      maintain a private Bonded Warehouse for  keep-
\n\t      ing goods which are imported by such  importer
\n\t      for  temporary detention and  eventual  export
\n\t      and grant a licence to such importer for\tthat
\n\t      purpose subject to the conditions and restric-
\n\t      tions  laid down in such licence. A fee  shall
\n\t      be  charged  for\tsuch licence  at  the  rates
\n\t      specified\t in  the bye-laws  relating  to\t the
\n\t      grant of such licence.”\n<\/p><\/blockquote>\n
\t      “14.  Declarations  to be\t made  by  importer,
\n\t      etc.- (1) On arrival of any dutiable goods  at
\n\t      the Octroi Naka, the Octroi Officer shall call
\n\t      upon the importer or the driver of the Vehicle
\n\t      or  conveyance or the person incharge  of\t the
\n\t      pack-animal  or  other  persons  bringing\t the
\n\t      goods-\n<\/p><\/blockquote>\n
\t       (a)  X  X  X  X\n<\/p><\/blockquote>\n
\t       (b)  X  X  X  X
\n\t      (C)  X  X\t X  X\n<\/p><\/blockquote>\n
\t\t   (d)\tto make a declaration in Form 4,  in
\n\t      respect  of the goods intended  for  temporary
\n\t      detention with himself and eventual export;\n<\/p><\/blockquote>\n
\t\t   (e)\tto make a declaration in Form 5,  in
\n\t      respect of the goods imported by, or on behalf
\n\t      of, any person, mercantile firm or body  which
\n\t      has  been permitted by the Council to keep  an
\n\t      account current under Section 142<\/a>;
\n\t      “15. Procedure for assessment and recovery  of
\n\t      octroi. –\n<\/p><\/blockquote>\n
\t      (4)  On  receipt of a declaration\t in  Form  5
\n\t      under  the  last preceding  rule,\t the  Octroi
\n\t      Officer  shall ascertain whether the  name  of
\n\t      the  person, mercantile firm or body on  whose
\n\t      behalf the goods are being imported is on\t the
\n\t      list  of persons, firms or bodies\t allowed  to
\n\t      keep an account current, and if so, check\t the
\n\t      goods with the details entered in the declara-
\n\t      tion  and\t fill up the certificate  below\t the
\n\t      declaration  and issue a pass in Form  6.\t The
\n\t      Octroi Officer shall forward all such declara-
\n\t      tions together with a list in duplicate there-
\n\t      of  to the Central Octroi Officer for  further
\n\t      action  in accordance with the  provisions  of
\n\t      Section 142<\/a>.\n<\/p><\/blockquote>\n
\t      “24.Procedure   for  temporary  detention\t  of
\n\t      dutiable goods meant for eventual export, with
\n\t      importer\thimself. – (1) Where dutiable  goods
\n\t      intended\tfor temporary detention\t within\t the
\n\t      octroi
\n\t      461<\/span>
\n\t      limits and eventual export are to be  detained
\n\t      by  the importer at his residence or a  Bonded
\n\t      Warehouse licensed under sub-role (2) of\trule
\n\t      10  within the octroi limits, he may do so  on
\n\t      giving a declaration to the Octroi officer  in
\n\t      Form  4, and on payment of an amount equal  to
\n\t      the  amount  of  full octroi  due\t thereon  as
\n\t      deposit either in cash or in the form of\tBank
\n\t      Guarantee at the Entrance Naka.
\n\t      (2)  In  case the importer cannot\t export\t the
\n\t      goods without breaking bulk or without  assem-
\n\t      ble  and testing in the case of machinery,  he
\n\t      shall  do the same only with the\tsanction  of
\n\t      the  Superintendent of Octroi in the  presence
\n\t      of an officer deputed for this purpose by\t the
\n\t      said Superintendent. Such goods, if  necessary
\n\t      shall  be formed into packages, which  may  be
\n\t      sealed and marked by the Officer so deputed.
\n\t      “25.Procedure  for  export of  dutiable  goods
\n\t      temporarily detained with importer. – (1) When
\n\t      the  importer wants to export  dutiable  goods
\n\t      detained with him, he shall present an intima-
\n\t      tion-cum-application for written permission in
\n\t      Form  11\tto the Superintendent of  Octroi  to
\n\t      export  such goods, giving necessary  details;
\n\t      and produce such goods for verification on any
\n\t      working  day  during the hours  fixed  by\t the
\n\t      Chief Officer at the Central Octroi Office  or
\n\t      at  any other Branch Office, as may be  estab-
\n\t      lished by the Council for the purpose.
\n\t      (2)   A  separate\t  intimation-cum-application
\n\t      shall  be\t given by each importer or  his\t own
\n\t      goods.   One  such   intimation-cumapplication
\n\t      shall be sufficient for a single\tconsignment.
\n\t      When  such consignment contains goods of\tdif-
\n\t      ferent  descriptions,  full details  shall  be
\n\t      given separately in the  intimation-cum-appli-
\n\t      cation.  Not  more  than\tone  intimation-cum-
\n\t      application  for\texport can be  given  by  an
\n\t      importer\tfor  goods passing through  an\tExit
\n\t      Naka in a day.\n<\/p><\/blockquote>\n
\t      (3)  No such intimation-cum-application  shall
\n\t      be accepted unless-\n<\/p><\/blockquote>\n
\t\t (a)  it  is complete in  all  respects\t and
\n\t      signed by the importer himself or by a  person
\n\t      authorised by him in writing in this behalf;\n<\/p><\/blockquote>\n
\t\t (b) it is supported by the receipt for\t the
\n\t      deposit  paid  at the time of  import  and  is
\n\t      accompanied  by the original invoice, if\tany,
\n\t      filed at the time of import;\n<\/p><\/blockquote>\n
\t      462<\/span><\/p>\n
\t\t   (c) the goods produced for inspection and
\n\t      intended\tto be exported are, subject  to\t the
\n\t      provisions of sub-rule (2) of the last preced-
\n\t      ing rule, identical with what they were at the
\n\t      time of import.\n<\/p><\/blockquote>\n
\t\t   (d)\tthe  exporter and  the\timporter  of
\n\t      these  goods are one and the same\t person\t and
\n\t      such  articles  have not undergone  change  of
\n\t      ownership.\n<\/p><\/blockquote>\n
\t      Note.  – The requirement of clause  (c)  shall
\n\t      not  be  applicable in the  case\tof  dutiable
\n\t      goods to which sub-rule (3) or (4) of the last
\n\t      preceding rule applies.\n<\/p><\/blockquote>\n
\t      (4) On receipt of such intimation-cum-applica-
\n\t      tion and on arrival of the goods intended\t for
\n\t      export, at the Central Octroi Office or Branch
\n\t      Office,  the Superintendent of Octroi  or\t any
\n\t      officer authorised by him shall-\n<\/p><\/blockquote>\n
\t\t   (a)\tsatisfy himself that all the  condi-
\n\t      tions prescribed above are fulfilled;\n<\/p><\/blockquote>\n
\t\t  (b)  verify that the goods  actually\tpro-
\n\t      duced  for inspection are as described in\t the
\n\t      intimation-cum-application and in the relevant
\n\t      import  invoice,\tif  any, or  in\t the  import
\n\t      declaration in Form 4, and seal and mark\tsuch
\n\t      goods whenever deemed necessary; and\n<\/p><\/blockquote>\n
\t\t  (c) issue a written  permission-cum-refund
\n\t      export  pass  in\tForm 12\t after\tobtaining  a
\n\t      specimen\tsignature  of the  importer  or\t his
\n\t      authorised agent on such pass.\n<\/p><\/blockquote>\n
\t      (5) The importer accompanied by an escort,  if
\n\t      provided\tby the Council, shall then take\t the
\n\t      goods  beyond  the octroi limits\tthrough\t the
\n\t      Exit  Naka  within the time limit and  by\t the
\n\t      route  specified in the pass. Before  crossing
\n\t      the  Exit Naka, the impoter shall present\t the
\n\t      goods  to the Octroi Officer at the Exit\tNaka
\n\t      for inspection, with the pass. The time  limit
\n\t      shall be fixed with due regard to the distance
\n\t      of  the  Exit  Naka from\tthe  Central  Octroi
\n\t      Office or the Branch office, but in no case it
\n\t      shall  exceed 12 hours from the time of  issue
\n\t      of the permission-cumrefund export pass.
\n\t      (6)  The Octroi Officer at the Exit  Naka,  on
\n\t      presentation  of\tsuch goods as  well  as\t the
\n\t      pass, shall satisfy himself that-\n<\/p><\/blockquote>\n
\t\t  (a)  the  pass as well as  the  goods\t are
\n\t      presented within the specified time limit;\n<\/p><\/blockquote>\n
\t      463<\/span><\/p>\n
\t       (b)the seals or marks, if any, are inact; and\n<\/p><\/blockquote>\n
\t      (c)  the goods actually tally with those\tmen-
\n\t      tioned in the pass.\n<\/p><\/blockquote>\n
\t      On being so satisfied, he shall make  relevant
\n\t      entries  in  the register maintained  for\t the
\n\t      purpose,\tobtain\tsignature  of  the  importer
\n\t      thereon,\tsign a certificate as given  on\t the
\n\t      pass,  deliver  the same to the  importer\t and
\n\t      allow  the  goods to pass\t beyond\t the  octroi
\n\t      limits.\n<\/p><\/blockquote>\n
\t      28.  Provision  for refund  of  deposit.-\t (1)
\n\t      When  any goods for which a deposit  has\tbeen
\n\t      paid under rule 24 at the time of their import
\n\t      are exported, the amount of deposit  recovered
\n\t      shall,  subject to the provision\tof  sub-rule
\n\t      (2), be refunded.\n<\/p><\/blockquote>\n
\t      (2) The refund shall be admissible, if all the
\n\t      conditions below are satisfied.-\n<\/p><\/blockquote>\n
\t\t (a)  The refund is applied for\t within\t one
\n\t      month from the date of e x port.\n<\/p><\/blockquote>\n
\t\t (b)  The  goods  are exported\tout  of\t the
\n\t      octroi limits within a period of six months of
\n\t      their import.\n<\/p><\/blockquote>\n
\t\t (c) The application for refund is supported
\n\t      by  a duly certified  written  permission-cum-
\n\t      refund export pass.\n<\/p><\/blockquote>\n
\t\t(d)  All the conditions in sub-rule  (3)  of
\n\t      rule 25 are fulfilled.\n<\/p><\/blockquote>\n
\t\t(e)  The amount claimed as refund  is  with-\n<\/p><\/blockquote>\n
\t      drawn  within  three months from the  date  of
\n\t      intimation  to  the importer  to\treceive\t the
\n\t      amount.\n<\/p><\/blockquote>\n
\t\t(f)  The goods exported were declared to  be
\n\t      intended\tfor  temporary\tdetention  with\t the
\n\t      importer\tand eventual export at\tthe time  of
\n\t      import:\n<\/p><\/blockquote>\n
\t      Provided\tthat the said period of\t six  months
\n\t      shall not apply to goods imported by the\tFood
\n\t      Corporation of India established under section
\n\t      3<\/a> of the Food Corporation Act, 1964.\n<\/p><\/blockquote>\n
\t      29.  Procedure for refund. – (1) The  Applica-
\n\t      tion  for refund of deposit shall be  made  in
\n\t      Form 13 by the importer himself or by his duly
\n\t      authorised agent in this behalf in writing  on
\n\t      any  working  day during the hours  fixed\t for
\n\t      money  transactions  by  the  Council  at\t the
\n\t      Central  Octroi Office within one\t month\tfrom
\n\t      the date of the actual export. If the last day
\n\t      for claiming refund falls on a public  holiday
\n\t      such application shall be accepted on the next
\n\t      working day.\n<\/p><\/blockquote>\n
\t      464<\/span><\/p>\n
\t      (2)  Such application shall be accompanied  by
\n\t      the  duly certified relevant  written  permis-
\n\t      sion-cure-refund export pass and shall contain
\n\t      reference to the connected export\t intimation-
\n\t      cum-application already given by the importer.
\n\t      There shall be a separate application for each
\n\t      written permission-cure-refund export pass.
\n\t      (3) If the refund application is in order\t and
\n\t      satisfies all the conditions specified in\t the
\n\t      last preceding rule, the amount of the  refund
\n\t      shall  be correctly determined subject to\t the
\n\t      limitation  prescribed in the next  succeeding
\n\t      rule”.\n<\/p><\/blockquote>\n
\t      30. Value, weight, etc. of goods for  purposes
\n\t      of  refund.-  When the refund  is\t claimed  in
\n\t      respect  of  goods on which duty\tis  leviable
\n\t      ad-valorem,  the\tvalue for  the\tpurposes  of
\n\t      refund  shall be the value as per\t invoice  on
\n\t      the strength of which the duty was  originally
\n\t      paid  together with such cost of carriage\t and
\n\t      other incidental charges that were then deter-
\n\t      mined.  Where the value was determined in\t the
\n\t      absence of invoice on the basis of market rate
\n\t      prevalent\t on  the day of import,\t that  value
\n\t      only  should be considered and not the  market
\n\t      price prevalent in the local market on the day
\n\t      of export”.<\/p><\/blockquote>\n
\t\t\t\t     FORM 4
\n\t\t\t     (Rules 14, 24 and 25)
\n    Declaration\t in respect of the dutiable  goods  imported
\ninto  the  Municipal octroi limits, which are  intended\t for
\ntemporary detention with the importer and eventual export.
\nTo
\nThe Octroi Officer,
\nOctroi Naka No.\t …………..\n<\/p>\n
…………  Municipal Council.\n<\/p>\n
  I,   ………………..(insert full name and address  of
\nthe importer) hereby declare that the below mentioned  goods
\nare  meant  for\t temporary detention with  me  at   ……..
\n(specify  address at which to be kept) for  eventual  export
\noutside\t the  octroi limits. I am willing to pay  an  amount
\nequal  to the amount of full octroi due thereon\t as  deposit
\neither\tin  cash or in the form of Bank\t Guarantee  and\t may
\nclaim  refund  according  to the rules if  these  goods\t are
\nexported  outside limits within six months from the date  of
\ntheir  import.\tThe  below mentioned details  are  true\t and
\naccording  to  the original invoice, true copy of  which  is
\nfiled  herewith. The said invoice covers all the  goods\t im-
\nported by me as per Bill of Entry\/Railway Receipt\/Goods
\nTransport\t  Memo\/Air\t   consignment\t\tNote
\nNo.  ……….dated  ……..\n<\/p>\n
465<\/span><\/p>\n
Sr. No\t No.and\t Description  Weight  Value  Senders  Rem-<\/p>\n
\nNo  &date descri-   of the     or    plus all  name&  arks\n     of\t ption of    goods     goods incidental address\n  import  packages\t\t    charges\tin full\n document\t\t\t    which are to\n\t\t\t\t    given seper-\n\t\t\t\t       ately\n1    2\t    3\t      4\t      5\t\t6\t  7\t  8\n<\/pre>\n
Full residential\/business address of the importer.
\nDate  ……….  Signature of the Importer
\n    I  have checked the above particulars with\tthe  invoice
\nand verified the goods, which are found to be correct.\tTrue
\ncopy  of  the invoice appended is verified and found  to  be
\ncorrect. The weight or quantity or value, together with\t the
\nincidental   charges  declared,\t is  correct.  The   taxable
\nweight\/quantity\/value of the goods is  …….\tand the rate
\nof octroi  ……..\n<\/p>\n
Date…….\t\t\t\t   Inspector\/Clerk.\n<\/p>\n
   The amount of Rs.  ……..on account of deposit has been
\nrecovered under receipt No.  ……….\t dated\t………..\n<\/p>\n
Date .........\t\t\t\t   Inspector\/Clerk.\n\t\t     FORM5\n\t       (Rules 14 and 15)\n<\/pre>\n
    Declaration in respect of the dutiable goods imported on
\nbehalf\tof person, firm, or body allowed to keep an  account
\ncurrent.\n<\/p>\n
To,
\n   The Cetroi Officer,
\n   Octroi Naka No.  ………\n<\/p>\n
   Municipal Council.\n<\/p>\n
I,……………..   (insert the full name and\t address  of
\nthe importer) hereby declare that the below mentioned  goods
\nare  being  imported  into the Municipal  Octroi  limits  on
\nbehalf of  …………..  (insert the name of persons, firm
\nor  body  allowed to keep an account current) and  that\t the
\nbelow  mentioned value and weight\/quantity of the  goods  is
\ntrue  and correct and is according to the original  invoice,
\ntrue copy of which is filed herewith. The said invoice fully
\ncovers\tall  the goods imported by me today as per  Bill  of
\nEntry\/Railway Receipt\/Goods Transport Memo\/Air Consignment
\nNote No.  ………  dated  ……….,\t I further undertake
\nto  produce  the said invoice for your\tinspection  whenever
\ndemanded by you within one year from today.\n<\/p>\n
466<\/span><\/p>\n
To be filled in by the importer\t\t   To be filled in
\n\t\t\t\t\t    at the Central
\n\t\t\t\t\t    Octroi Office\n<\/p>\n
1.Sr.No.\n<\/p>\n
2. Bill of Entry ‘Railway Receipt’ Goods Transport Memo\/ Air
\nConsignment Note.\n<\/p>\n
3. Number description of packages.\n<\/p>\n
4. Goods.\n<\/p>\n
6.  Value  plus\t incidental charges which are  to  be  given
\nseperately.\n<\/p>\n
7.Rate of Ovctroi.\n<\/p>\n
8. Amount of Octroi recoverable.\n<\/p>\n
Date…….Signature of the importer\t   Dues entered in
\nI have checked the above particulars\t   Account Current
\nwith the invoice and verified the goods,    Date  ……….
\nwhich are found to be\t correct. True\t   Octroi
\ncopy of the invoice\t appended is\t   Superintendent
\nverified and found to be correct.\n<\/p>\n
The weight or quantity or value, together
\nwith the incidental charges declared,
\nis correct. Issued pass No …dated …\n<\/p>\n
Date ……………  Inspector\/Clerk
\nFORM6 (Rule 15)
\nPass  for goods imported on behalf of person, firm  or\tbody
\nallowed to keep an account current
\n ….Municipal\t  Council:…….Municipal   Council\tBook
\nNo.   …..  Entrance Naka No.\t…..: Book No.\t …..\t En-
\ntrance Naka No.\t …..\n<\/p>\n
Counterfoil of pass\tPass for goods
\n\t\t       imported by in account current  ….<\/p>\n
\t\t       (Name of Person, firm or body)
\nDescription\t    No. and\t  Description\tWeight,
\n\t\t   Description\t  of the\tquantity
\n\t\t    of packages\t  goods\t\tor value
\n\t\t    1\t\t  2\t\t3
\nDated  ……….\t       Dated  ……….\n<\/p>\n
Entrance Naka Inspector\/Clerk  Entrance Naka Inspector\/Clerk
\n467<\/span>
\n\t\t    Form 11
\n\t       (Rules 25 and 26)
\nIntimation-cum-application for written permission for Export
\nof Goods Temporarily detained with the Importer
\nTo
\nThe Superintendent of Octroi,
\n ……….  Municipal Council.\n<\/p>\n
Sir,
\nI…………………..  (insert the full name and  address
\nof  the importer) hereby declare my intention to export\t the
\ngoods to………….through Naka No. ……..\tas  detailed
\nbelow. The certified copy of original invoice\/invoices under
\nwhich  these  goods were imported are appended\therewith.  I
\nhave  produced\tthe goods for  actual  verification.  Kindly
\ngrant me the permission to carry the goods to the said Naka.
\nSI.  Description  Quantity  Date of  Import  Deposit  Gross
\nNo.   of the   (Number of  Import  invoice  receipt weight
\n       goods\t bags or   & No. of  No. and number &
\n\t\t cases)\t   entrance   date    date
\n\t\t\t    Naka
\n1      2\t    3\t      4\t\t5\t 6\t 7
\nValue Amount to be   Number of\t  Name and    How    Remarks
\n      refunded\t  Refund Export\t address of  exported
\n\t\t  pass granted\tthe consignee
\n8\t9\t     10\t\t  11\t\t12\t 13
\nDate ………..\t\t       Signature of Importer
\nVerified  the  contents and the weight as  above  and  found
\ncorrect.\n<\/p>\n
Countersigned.\n<\/p>\n
Octroi Officer.\t    Signature of the Refund Inspector\/Clerk.
\nReceipt No…….\n<\/p>\n
468<\/span><\/p>\n
FORM
\nRule 25)
\nWritten Permission-cum-Refund Export Pass
\nReceipt No…………..      Date ……………  19
\nSl. Month  Name and  Name and\tDescription  Quantity  Gross
\nno. and\t address of address of\t of the\t  (number of  weight
\n  date\tthe impoter the consignee  goods   bags or cases)
\n1   2\t    3\t\t 4\t     5\t\t   6\t 7
\nValue Deposit\tHow    Exist Date & time by  Whether Remarks
\n      to be    exported Naka which the goods   goods
\n      refunded\t\tNo.  should reach the  sealed or
\n\t\t\t      Export Naka     escort given
\n8\t9\t10\t 11\t   12\t      13       14
\n*Fee  for Written Permission-Cum-Refund Pass  Rs   ………
\nMiscellaneous Receipt No………., dated……….,
\nSignature of the importer     Signature of Octroi Officer
\nI hereby certify that the goods mentioned above have  passed
\noutside\t the  octroi limits this day the……….   of\t the
\nmonth……….\t 19    Time………..\t  a.m.\/p.m.  in\t  my
\npresence  Railway  receipt……..\/Vehicle  No.\t   ………
\nThe  seals, if any, thereon were intact when the goods\twere
\npresented to me for verification.\n<\/p>\n
Date  ………..\t Signature of the Exist Naka Officer
\n\t\t\t  Naka No.  ………..\n<\/p>\n
*This  fee should be levied in accordance with the  bye-laws
\nframed under section 338<\/a> for granting permission to take the
\ngoods from the Central Octroi Office or Branch Office to the
\nExist Naka.\n<\/p>\n
\t\tFORM13
\n\t      (Rule 29)
\n     Application for Refund of Deposit
\nTo
\nThe Superintendent of Octroi,
\n ……….  Municipal Council.\n<\/p>\n
469<\/span><\/p>\n
Sir,
\n  I,  …………….the resident of……….hereby  apply
\nfor  refund  of\t deposit as  per  enclosed  Written  Permis-
\nsion-cum-Refund\t Export Pass No.  ……….dated……….,
\nas   the   goods  mentioned  in\t the  pass   were   exported
\non…..under my intimation-cum-application, dated……….,
\nI   therefore,\t request  you  to  grant   the\t refund\t  of
\nRs.  ………and oblige.\n<\/p>\n
Enclosure:\n<\/p>\n
Date……….\t\t\t     Signature of Importer
\n    On a reading of these rules it appears to be that  Rules
\n24,  25\t and 28 in terms would apply only to  cases  failing
\nunder category four, stated above. The declaration in Form 4
\nreferred to in Rule 24 and deposit of the amount  equivalent
\nto octroi duty payable at the entry point, production of the
\ngoods for verification at the Central Octroi Office are\t all
\nconsistent with its being applicable to a case where  dutia-
\nble goods are imported for temporary detention and  eventual
\nexport\tby  a person having a bonded warehouse\tof  his\t own
\ncontemplated  in  Rule 14 (1) (d) and not Rule 14  (1)\t(e).
\nHowever,  Rules\t 29 and 30 are general in terms and  may  be
\ninvoked in both the cases falling under Rule 14 (1) (d)\t and\n<\/p>\n
(e). Sub-rule (3) of Rule 29 refers to the compliance of the
\nconditions  in Rule 28 and that is how it may be  said\tthat
\nthe  provisions of Rule 28 are attracted to the cases  of  a
\nperson having a bonded warehouse and the facility of account
\ncurrent.  However, the Rules have to be read and applied  in
\nsuch  way that they do not conflict with but are  consistent
\nwith  the facility of current account given to the  Company.
\nForm  5 which is applicable to a case falling under Rule  14
\n(1)  (e) does not require the Company (importer) to  give  a
\ndeclaration at the time of arrival of the goods at the entry
\nNaka point that the “goods are meant for temporary detention
\nwith”  the  Company at its warehouse  “for  eventual  export
\noutside\t the octroi limits”. The Company need not also\tmake
\nany  deposit with the Naka Inspector at the point of  entry.
\nAn  amount equivalent to the octroi duty payable in  respect
\nof  the goods is only entered in the account  current  after
\nthe  goods  have reached the warehouse and verified  by\t the
\nOctroi\tOfficer. Form 4is not applicable to the case of\t the
\nCompany which has got a current account facility. The Compa-
\nny, is, therefore, bound to give a declaration only in\tForm
\n5, and need not give a declaration as in Form 4 nor is there
\nany  obligation to deposit an amount equivalent to the\tfull
\noctroi\tduty  with the Octroi Inspector at  the\t Entry\tNaka
\nPoint. Further reference to original invoices\/in Forms 4 and
\n5  is only for the purpose of checking the  particulars\t en-
\ntered  into  in the forms. The production of an\t invoice  is
\nnot, having regard to the
\n470<\/span>
\npurpose\t of such production, to be insisted blindly. If\t the
\nparticulars furnished in the form including  weight\/quantity
\nor value could be established satisfactorily by other  docu-
\nments,\twe have no doubt that will be sufficient  compliance
\nwith  the Rules. Column 5 of Form 11 also refers to  invoice
\nand  the  date of invoice. This is again  to  correlate\t the
\ngoods  exported with the goods imported. If the identity  of
\nthe  goods could be established by evidence other  than\t the
\nproduction  of invoices that should satisfy the\t Rules.\t The
\ninvoice as such has no bearing on the liability of the goods
\nfor octroi or the right of the Company for refund.
\n    So\tfar as the production of the original  invoices\t are
\nconcerned,  the learned counsel for the Company pointed\t out
\nthat  the  goods are brought from  their  own  manufacturing
\nunits  at  Pune and Jamshedpur and it will only be  a  stock
\ntransfer and this requirement of producing original  invoice
\ncould not be complied with and is not applicable. Under\t the
\ncurrent\t account procedure the invoices, if any and all\t the
\nother documents are verified when the goods reach the  ware-
\nhouse  with  reference\tto the\tdescription  of\t the  goods,
\nweight\/quantity, value and other particulars and it is\tonly
\nafter  verification the octroi duty leviable  is  determined
\nand amount is debited in the account current and the  demand
\nalso is issued.\n<\/p>\n
    The\t learned counsel for the appellant also referred  to
\ncertain\t documents to show that for every category of  arti-
\ncle,  the  Company has given a distinctive  number  and\t the
\ngoods  are  easily identifiable and the number of  items  or
\nquantity  imported are all record in the register  and\tcom-
\nputerised  for\teasy verification. It is  these\t identifying
\nnumbers\t of the articles that are mentioned in\tthe  intima-
\ntion-cure-application for written permission for export.  He
\nalso relied on the fact that the Company has no\t manufactur-
\ning unit within the Thane Municipality. Similarly, Column  6
\nof  Form  II also could not be complied with as\t it  is\t not
\napplicable to a person who is having current account facili-
\nty. So far as the value is concerned the learned counsel for
\nthe  appellants have fairly stated that the  respondent\t was
\ntaking 72% of the list price of the articles for determining
\noctroi\tpayable, for which he has no objection. In fact,  he
\nhas  suggested\tthat since the Company publishes  the  price
\nlist periodically and that which shows the current price  at
\nany point of time may be taken as the basis for such  valua-
\ntion.\n<\/p>\n
    The\t Octroi\t Exit Naka Officer had refused to  give\t the
\ncertificate  of export pass on the ground that the  particu-
\nlars in Columns 5 and 6 of Form 11 could not be verified  as
\nthe  original  invoices and the deposit\t receipts  were\t not
\nproduced.  Since these columns could be filled only  to\t the
\nextent possible by a person having an account current facil-
\nity  and there is no dispute about the export of  the  goods
\nmentioned  therein the refusal to give the export pass\tcer-
\ntificate. by the Exit Naka Officer could not be sustained.\n<\/p>\n
471<\/span><\/p>\n
    The\t next point to be considered is the procedure to  be
\nfollowed when the importer wants to “breaking the hulk”\t and
\nrepack\tthe goods in smaller quantities and also the  proce-
\ndure  relating to filling up Forms 11 and 12 and the  refund
\napplications  in such circumstances. Rules 24  (2.)   states
\nthat  for breaking the bulk and repacking in  smaller  pack-
\nages, sanction of the Superintendent of Octroi is  necessary
\nand  the “breaking bulk” shall also be done in the  presence
\nof  an officer deputed for this purpose. Rule 62 of  Chapter
\nVIII  of  the Schedule to the  Bombay  Provincial  Municipal
\nCorporation Act, 1949 provides that subject to the  standing
\norders\tnot  less than 90% of the octroi paid on  any  goods
\nshall  be  refunded if such goods are  exported\t beyond\t the
\nlimits of the city within six months of payment:\n<\/p>\n
\t\t    “provided that…… (C) in the case  of
\n\t      goods  which  have  been\t broken\t bulk  prior
\n\t      intimation  has  been given  to  the  officers
\n\t      specified\t in  this  behalf  in  the  standing
\n\t      orders and the place or places of storage have
\n\t      been reported to him from time to time”.<\/p><\/blockquote>\n
    Paragraph  5  of Appendix IV to this Act which  we\thave
\nnoticed\t earlier  states  that the rules  flamed  under\t the
\nMunicipal  Act\tshall “in so far as it is  not\tinconsistent
\nwith the provisions of this Act, continue in force”. Rule 62
\nof  Chapter VIII forms part of the Act. The learned  counsel
\nfor  the appellant, therefore, contended that Rule 62  shall
\nprevail\t and prior intimation of the intention to  ‘breaking
\nbulk’  shall  be enough and there was no necessity  for\t the
\nCompany to get the sanction of the Superintendent of  Octroi
\nor break the bulk in the presence of an officer deputed\t for
\nthe  purpose as required under sub-rule (2) of Rule  24.  In
\nother words according to the learned counsel Rule 24 (2)  of
\nthe  Octroi  Rules is inconsistent with Rule 62\t of  Chapter
\nVIII  of  the Schedule to the Act and to  the  extent.._  of
\ninconsistency  it shall be deemed to be not  applicable.  On
\nthe  other hand the learned counsel for the respondent\tcon-
\ntended that Rule 62 (c) deals with prior intimation and Rule
\n24  (2) deals with the sanction and breaking of the bulk  in
\nthe presence of an officer deputed for that purpose and both
\nthe  rules  can stay together and operate and  there  is  no
\ninconsistency.\tWe are not impressed with the argument\tthat
\nthere  is an inconsistency between Rule 62 and Rule 24\t(2).
\nThe intimation contemplated in Rule 62 imply that the break-
\ning the bulk shall be done with the knowledge of the  octroi
\nauthorities.  But it Cannot be said that the  rules  further
\nprovide that after intimation the breaking of the bulk shall
\nbe  done in the presence of the officers and after  sanction
\nthat would in any case be inconsistent. Both the rules\tthus
\ncan stand together.\n<\/p>\n
    In\tH.M.M.\tLimited v. Administrator<\/a>, [1989] 4  SCC\t 640
\nthis  Court had occasion to consider the effect of  non-com-
\npliance with this require-\n<\/p>\n
472<\/span><\/p>\n
ment  of  a similar provision, on the right to\tget  refund.
\nShortly stated the facts in that case were these: The appel-
\nlant  brought  into the municipal limits  Horlicks  in\tbulk
\ncontainers  (large  steel drums) for being  packed  in\tunit
\ncontainers (glass bottles) at the packing station in  Banga-
\nlore  and thereafter exported outside the municipal  limits.
\nIn respect of the milkfood so exported in glass bottles\t the
\nappellants sought refund of octroi on the ground that  there
\nwas no consumption, use or sale within the municipal  limits
\nand  the  goods were exported. Rule 24 of the  Octroi  Rules
\nthat were in force in Bangalore city provided:\n<\/p>\n
\t      “24…0n all articles on which octroi duty has
\n\t      been paid and which are subsequently  exported
\n\t      beyond  the  octroi  limits  without  breaking
\n\t      bulk, refunds shall, subject to the  following
\n\t      rules,  be  granted  at  the  rate  originally
\n\t      charged  at the time of import; provided\tthat
\n\t      no  such refunds shall, except in the ease  of
\n\t      timber  imported\tand re-exported\t in  log  be
\n\t      granted unless such goods are exported  within
\n\t      three months from the date on which octroi was
\n\t      levied”.\n<\/p><\/blockquote>\n
    Relying on this provision it was contended by the Munic-\n<\/p><\/blockquote>\n
ipality that breaking the bulk amounted to “use” within\t the
\nmunicipal limits attracting levy of octroi and no refund was
\npermissible.  The refund application had also not been\tmade
\nwithin\tthree  months  from the date  on  which\t octroi\t was
\nlevied. It was admitted that the appellants had not followed
\nthat  procedure prescribed in Rule 24. This Court held\tthat
\nmere transferring of a bulk product in small containers like
\npackets\t or bottles for the purpose of sale does not  amount
\nto  use of the goods in the sense the word is used in  rela-
\ntion  to levy of octroi. It was further held that the  words
\n“without breaking bulk” is not an expression of art and that
\nmeant only transferring the product from the drums by break-
\ning the seal of the drums, to the bottles for the purpose of
\nexporting  or for taking them out of the  municipal  limits,
\nand  that would not amount to either use or  consumption  of
\nthe  Horlicks powder within the municipal limits  attracting
\nthe levy of octroi.\n<\/p>\n
    The ratio of the judgment clearly is that merely on\t the
\nground that the goods are not exported in bulk as originally
\nimported, the levy does not become valid or that the import-
\ner who exported the goods loses his right to a refund of the
\noctroi\tpaid.  The goods neither loose\ttheir  identity\t nor
\ncease to be identifiable. Once we reach the conclusion\tthat
\nthere is no consumption or use, octroi is not attracted\t and
\nif any levy has been made and the amount collected, the same
\nbecomes legally refundable even when the goods are  exported
\nin parts and in smaller packages. This is particu-\n<\/p>\n
473<\/span><\/p>\n
larly  so because in the case of goods not consumed or\tused
\nwithin the octroi area but exported there is a constitution-
\nal bar for the levy of octroi.\n<\/p>\n
    In this connection we may also refer to another decision
\nreported in Municipal Committee, Khurari v. Dhannalal  Sethi
\n& Ors<\/a>., [1969] I SCR 166. The rules considered in that\tcase
\nalso provided that an application for refund was to be\tmade
\nin  the prescribed form and that the exporter after  filling
\nin  the\t particulars had to present his application  at\t the
\noffice\tappointed for that purpose. There were\tother  rules
\nwhich provided an elaborate procedure to be followed at\t the
\ntime  of  export of the goods. These rules  related  to\t the
\noctroi\tofficers satisfying himself that the  goods  brought
\nfor  export agree with those mentioned in  the\tapplication,
\npresentation of the claim within the prescribed time,  iden-
\ntifying of the goods exported with those imported and  other
\nmatters. This Court held that:\n<\/p>\n
\t      “these  rules do provide a procedure which  an
\n\t      exporter\twishing to claim refund has to\tfol-
\n\t      low.  But\t the question is whether in  a\tcase
\n\t      where  an\t exporter  has not done\t so,  is  he
\n\t      disentitled from claiming the refund. The real
\n\t      difficulty in the way of the appellant Commit-
\n\t      tee is that though the rules lay down a proce-
\n\t      dure  which such an applicant has\t to  follow,
\n\t      they  do not provide at the same time that  an
\n\t      applicant for refund who has failed to  follow
\n\t      the procedure laid down in r.r. 35 to 39 would
\n\t      be  disentitled  to claim the refund.  In\t the
\n\t      absence  of such a provision coupled with\t the
\n\t      categorical  language of r. 27 giving a  right
\n\t      to  an  exporter of dutiable  goods  to  claim
\n\t      7\/8th of the duty paid on such goods on  their
\n\t      import,  it  becomes difficult to\t uphold\t the
\n\t      denial by the appellant Committee of the right
\n\t      of respondents 1 and 2 such a refund. We\tare,
\n\t      therefore, of the opinion that in the  present
\n\t      state  of\t the  rules, the  appeal  must\tfail
\n\t      though for reasons different from those  given
\n\t      by the Board of Revenue and the High Court”.<\/p><\/blockquote>\n
    It\tmay  be pertinent to mention  that  the\t Maharashtra
\nMunicipalities (Octroi) Rules, 1968 also do not contain\t any
\nspecific  provision  that an applicant for  refund  who\t has
\nfailed to follow the procedure would be disentitIed to claim
\nthe refund. It may be noted that the amount collected  which
\nis  equivalent to the octroi duty payable on the  goods,  on
\nentry  into  the  octroi limits while in  detention  in\t the
\nwarehouse is only as a deposit pending export of the  goods.
\nThe  other  aspect is that once octroi is not  leviable\t the
\ndeposit made by the importer pending export is in the nature
\nof a trust and refundable in the event of the export of\t the
\ngoods.\tFurther in a given set of facts, whether  the  rules
\nhave been complied with will have
\n474<\/span>
\nto  be tested having regard to the nature of the  particular
\ntransaction and whether the object of the procedure provided
\nis  otherwise  fully  satisfied.    ` Rule  28\talso  merely
\nstates that the refund shall be admissible if all the
\nconditions  in\tsub-rule 2 of that Rule are  satisfied.\t The
\nobject\tof requiring intimation or sanction and presence  of
\nan  officer when breaking the bulk in the scheme  of  octroi
\nlevy  and  refund is to ensure that dutiable  goods  do\t not
\nescape\tthe assessment and refunds are made only in  respect
\nof  goods  exported. In other words  the  whole\t requirement
\nrelates to the identification of the goods. In that sense if
\nthe  same  is otherwise complied with the  right  to  refund
\ncannot be denied. These rules cannot be read as enabling the
\nmunicipality to levy and collect octroi even in cases  where
\nthe goods have not been imported for consumption or use.  As
\nheld  by  this\tCourt in Kirpal Singh  Duggal  v.  Municipal
\nBoard,\tGhaziabad<\/a>,  [1968] 3 SCR 551 the  octroi  rules\t are
\nintended  to regulate the system on which the refunds  shall
\nbe  allowed and paid. What are merely matters  of  procedure
\nwhich  the municipality was entitled to\t require  compliance
\nwith  in  granting  refund cannot be  treated  as  condition
\nprecedent  for\tthe entitlement of the\trefund\titself.\t The
\nConstitution prohibits levy of tax except in accordance with
\nlaw. When the goods are not imported for consumption or\t use
\nwithin\tthe octroi area the municipality ceases to have\t any
\nconstitutional right to levy octroi. If the goods  therefore
\nhave merely entered into the octroi limits and passed out of
\nthe same no octroi duty is attracted.\n<\/p>\n
    The\t concept  of octroi as held by this Court  in  Burma
\nShell  s case (supra) may include “the bringing in of  goods
\nin  a local area so that the goods come to a repose  there”.
\nIt is this concept that is reflected in Rule 28 (2) Co) when
\nit requires evidence that the goods were exported out of the
\noctroi\tlimits\twithin a period of six months of  their\t im-
\nports. The learned counsel for the appellants Mr. Andharuji-
\nna  had\t expressed certain difficulties\t in  satisfying\t the
\nCorporation that the goods imported were exported within the
\nperiod\tof  six months as provided in the rules in  view  of
\ncertain peculiar circumstances in this case. He pointed\t out
\nthe  goods received in bulk are small small items and  there
\nare  about 16000 distinctive types of articles and when\t the
\nbulks are broken and each of the categories items are  mixed
\nup  together  it becomes difficult for him  to\tindividually
\nidentify  when\tthe goods were received and when  they\twere
\nexported. However, he was sure that the goods were  exported
\nbefore\tsix  months. When this difficulty  was\tpointed\t out
\nduring\tthe pendency of the appeal, as an interim  direction
\nthis Court by Order dated 1.5. 1989 directed the parties  to
\nproceed on the basis that the goods which came in first had
\ngone  out  first unless some factors  or  features  indicate
\notherwise.  This is not equitable principle unknown to\tlaw.
\nEven  as  early as in 1816 with reference to money  paid  on
\naccount to a creditor, in Clayton’s case (1814)
\n475<\/span>
\n23  All. E.R. Rep. P. 1, it was held that in the absence  of
\nan agreement to the contrary, in the case of current account
\ncontaining  debit and credit entries there is a\t presumption
\nthat  the  first item on the credit side of the\t account  is
\nintended  to be applied in the payment of the first item  on
\nthe debit side of the account. This is an equitable  princi-
\nple  which could be followed in the instant case and it\t may
\nbe presumed that the goods which came in first have gone out
\nfirst and the six months period could be determined on\tthat
\nbasis. In any case in view of the interim direction given by
\nthis  Court on May 1,1989 that may be usefully\tbe  followed
\nfor the future also in this case.\n<\/p>\n
    To sum up: Having regard to the nature and incidence  of
\noctroi\tunless the octroiable goods are consumed or used  or
\nare  meant  to\treach an ultimate user or  consumer  in\t the
\noctroi\tarea no octroi is leviable. The words ‘sale  therein
\nin the words “consumption, use or sale therein in the  defi-
\nnition octroi means sale of octroiable goods to a person for
\nthe  purpose  of consumption or use by such  person  in\t the
\noctroi area. If sale was intended for consumption or use  in
\nthe  octroi  area whether the  purchaser  actually  consumed
\ninside or outside octroi area is irrelevant. Rules 24 to  30
\nand  the forms in the system of levy of octroi are  intended
\nto regulate the procedure for collection, identification  of
\ndutiable  goods and correlation of goods exported  with\t the
\ngoods imported for the purpose of refunds of octroi collect-
\ned. In view of constitutional bar octroi is not leviable  if
\nthe goods are not brought into the octroi area for  purposes
\nof consumption or use in the area but for export and in fact
\nexported  by the importer himself or the sale by  him  occa-
\nsions  the export. Compliance with the procedure  prescribed
\nin the Rules for filing claims of refunds are not  condition
\nprecedent  for\tthe right or eligibility for refund  or\t the
\nliability  to refund but are provisions regarding  proof  of
\nexport of the goods imported and are not meant to be exhaus-
\ntive  either. They are to be interpreted and  understood  in
\nthat  sense.  The  object of the Rules fixing  a  period  of
\nlimitation  for\t export\t however is  different.\t The  export
\ncannot\tbe put in perpetual doubt and the goods may be\tcon-
\nsidered\t to have come to a repose if they were not  exported
\nwithin\ta particular period provided in the rules.  Applying
\nthese principles to the instant case, on facts the rejection
\nof  refund applications on the ground that Rule 25  (3)\t (d)
\nhad not been complied with was illegal. Since the  rejection
\nof  the\t claims\t for refund was merely on  the\tground\tthat
\neither\tForm  4 and original invoices were not\tproduced  or
\ncolumns\t 5 and 6 of Form 11 or the corresponding columns  in
\nForm  12 had not been filled with reference to\tan  original
\ninvoice\t or  Form 4 or deposit receipt and  the\t refusal  to
\nissue  export pass certificates on those very grounds  which
\nwe have stated are untenable the other orders of  rejections
\nare also invalid. If the goods are mixed up and unidentifia-
\nble
\n476<\/span>
\ndue  to breaking bulk and repacking in smaller and  assorted
\npackages  before export the principle that the first  export
\nwas  of\t the goods first imported, subject to  any  evidence
\navailable to the contrary, may be applied and the six months
\nperiod prescribed for export may be determined accordingly.
\n    When  these appeals were pending by way of\tinterim\t ar-
\nrangement this Court by order dated 25.4.1990 directed\tthat
\nin order to obviate the difficulty of identifying the  goods
\nat the time of export by reason of the breaking of  the)bulk
\nand  in order avoid doubts, the respondent  Corporation\t may
\ndepute their officer or officers on all working days at\t the
\nwarehouse  of the Company to supervise the breaking  of\t the
\nbulk  subject to the Company reimbursing the entire  monthly
\npayments and other allowances to be paid to the said officer
\nor officers as per bill or pay slips sent by the Corporation
\nto  the Company. We think that this procedure could be\tcon-
\ntinued\tand followed in future also so that while  the\tpur-
\nposes of the rules are served the free trade and commerce of
\nthe Company which is stated to have a large turnover is also
\nnot affected.\n<\/p>\n
    The\t learned counsel for the respondent  then  contended
\nthat the appellants have recovered the amounts paid by\tthem
\nby  way of octroi duty from the dealers or the customers  to
\nwhom  they had sold the goods and therefore they are in\t any
\ncase not entitled to get a refund. The argument was that  if
\nrefund is ordered it would amount to allowing the appellants
\nto  unjustly enrich themselves at the cost of the public  to
\nwhom  the burden had already been passed. This\targument  is
\nbased  on the ground that in the selling price\tthe  company
\nhad merged the octroi duty originally paid as deposit and if
\na refund is made the company would be getting an  additional
\namount\tover  and above normal price which they\t would\thave
\ncharged\t but for the fact that they were initially asked  to
\ndeposit\t octroi. There is no evidence that any of the  arti-
\ncles sold by the Company is subject to any price control  by
\nthe  Government or that the Company had charged\t any  octroi
\nseparately in the bills, Invoices and the other documents of
\nsale  to  the outside purchasers produced before us  do\t not
\nalso  show that any octroi was separately charged  and\tcol-
\nlected\tby  the\t Company. It may be mentioned  that  in\t the
\nrejoinder  filed by the appellant in the writ petition\tthey
\nhave  specifically  denied  that they  “have  recovered\t the
\namount\tpaid by them by way of octroi duty from the  dealers
\nto whom they had sold the goods or that the dealers in\tturn
\nhave recovered the octroi duty from the customers”. In\tview
\nof this the question of unjust enrichment does not arise.\n<\/p>\n
477<\/span><\/p>\n
    This  appeal is accordingly allowed on the above  terms.
\nThere will ‘however be no order as to costs.\n<\/p>\n
T.N.A.\t\t\t\t\t\t      Appeal\nallowed.\n478<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Tata Engineering And … vs Municipal Corporation Of The City … on 22 November, 1991 Equivalent citations: 1992 AIR 645, 1991 SCR Supl. (2) 445 Author: V I Ramaswami Bench: Ramaswami, V. (J) Ii PETITIONER: TATA ENGINEERING AND LOCOMOTIVECOMPANY LTD. AND ANR. Vs. RESPONDENT: MUNICIPAL CORPORATION OF THE CITY OF THANE […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-255840","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nTata Engineering And ... vs Municipal Corporation Of The City ... on 22 November, 1991 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/tata-engineering-and-vs-municipal-corporation-of-the-city-on-22-november-1991\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tata Engineering And ... vs Municipal Corporation Of The City ... on 22 November, 1991 - 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