Municipal Corporation Of City Of Thane vs M/S Vidyut Metallics Ltd. & Anr

2. Short facts giving rise to the present appeals are that the respondent No.1 is a Company registered under the Indian Companies Act, 1913 having its registered office and factory at Bombay-Agra Road, Wagle Estate, Thane. The Company is engaged in the process of manufacturing safety razor blades of various qualities and types. For the said purpose, the Company was importing stainless steel strips and bringing them to its factory within the octroi limits of the Corporation. According to the Corporation, since 1968, the Company had been importing stainless steel strips to its factory and it was paying octroi at the rate of 1% under Item No. 77 of the Schedule to the Maharashtra Municipalities (Octroi) Rules, 1974 (hereinafter referred to as 'the Rules'). The Company was also maintaining a current account with the Corporation under Section 142 of the Maharashtra Municipalities Act, 1965 (hereinafter referred to as 'the Act').

4. Since the appellant-Corporation was not satisfied with the explanation submitted by the respondent-Company, it issued additional bills which the respondent-Company was liable to pay. Being aggrieved by the claim of the Corporation, the Company preferred appeals in the Court of IIIrd Joint Civil Judge, Senior Division, Thane which were registered as Municipal Appeal Nos. 3 to 6 of 1979. The learned Judge, by an order dated January 29, 1988 dismissed the appeals filed by the Company holding that Item No. 77 expressly referred to 'stainless steel' which was applicable and Item No. 71 could not be attracted to the goods brought by the appellant-Company within the Municipal limits and the Company was liable to pay octroi at the rate of 1%.

6. On January 9, 2002, notice was issued by this Court. On July 8, 2002, leave was granted and the matters have been placed before us for final hearing.

11. At an earlier occasion also, the Corporation sought to levy octroi by considering the goods in question under Item No. 77. It is no doubt true that between 1968 and 1974, the Company itself treated the goods imported by it under Item No. 77 and paid octroi at the rate of 1%. On going through the Octroi Rules, however, it realized that the correct Item was 71 and not 77 and started paying octroi at the rate of 0.5% from April, 1974. The Corporation also accepted the amount paid by the Company. Only in 1979, additional bill was issued and demand was raised. The Company, therefore, filed an appeal against the additional demand and Chief Judicial Magistrate, Thane by an order dated November 20, 1986, allowed the appeal and set aside the additional demand. In that case, the Court observed that Item No. 77 related to Non-ferrous matters whereas Item No. 71 applied to Ferrous matters. One R.B. Deb who was the Quality Control Manager of the appellant-Company having Master degree and sufficient knowledge in Physics, Chemistry and Mathematics was examined as a witness by the Company. He stated that he was familiar with chemistry of metals. According to the Court, therefore, he was an 'expert'. Mr. Deb deposed that the Company was manufacturing 'Safety Razor Blades' from stainless steel strips of certain specification. He also stated that stainless steel strip was steel having chromium content of more than 12% and steel was a ferrous metal and its chemical symbol was "Fe". According to him, ferrous metals were rich in iron, i.e. the principal constituent was iron whereas non-ferrous metals were those without content of iron. He asserted that Company was importing ferrous material in stainless strips. According to him, stainless strip was a species from the larger group called Iron and Steel which was a genus. If the Item was covered under category of ferrous metal, octroi duty chargeable would be as per Item No. 71 and not 77. The Court, relying on his evidence, held that the Company was right in treating the goods under Item 71 of the Schedule to the Octroi Rules and octroi duty payable by it was proper. As already referred to above, Revisional Court confirmed the order passed by the Trial Court and even Writ Petition was dismissed by the High Court.

77. The revision petitions were, therefore, allowed and the order passed by the learned Judge was set aside. The High Court also dismissed writ petitions. The said order is challenged by Thane Municipal Corporation in this Court.