Supreme Court - Daily Orders
Ahmednagar Municipal Corporation vs Kinetic Engineering Ltd. . on 27 April, 2015
Bench: A.K. Sikri, Rohinton Fali Nariman
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4663 OF 2004
AHMEDNAGAR MUNICIPAL CORPORATION & ANR. ... Appellants
VERSUS
KINETIC ENGINEERING LTD. & ORS. ... Respondents
O R D E R
The respondent herein is having its factory unit in Ahmednagar and at the relevant point of time, it was manufacturing the mopeds under the trade name “Luna”. Since the factory is situated in Ahmednagar, it comes within the jurisdiction of Municipal Council of Ahmednagar which is the appellant before us.
The State of Maharashtra has enacted The Maharashtra Municipal Councils, Nagar Panchayats & Industrial Townships Act, 1965. Under this Act, Maharashtra Municipalities (Octroi) Rules, 1968 (hereinafter referred to as Rules) have been framed.
Under these Rules, Octroi is charged for various types of goods, as mentioned therein which enter particular Signature Not Verified municipalites. We are concerned here with Entry No. 75 Digitally signed by Meenakshi Kohli Date: 2015.05.18 16:32:46 IST Reason: which deals with vehicles and rates as under: - C.A.NO.4663/ 2004 1
“75 Vehicles Max. Rate Min. Rate
(a) Motor cars, motor 4.00 0.50
cycles, Chassis and
lorries and spares thereof
(b) Bicycle, perambulators 4.00 0.50
carriages, all kinds of
vehicles and their
components and spares.
On 01.10.1987, the respondent informed the
appellant-municipality that they were manufacturing and
selling Mopeds and its spare parts and for this purpose, they were required to import a large number of components from the ancillary manufacturers and different vendors into the Ahmednagar Municipal limit for which Octroi duty was to be paid. In this letter, it was also stated that since October, 1984, the Municipality had been erroneously charging the duty at the rate of 2 per cent instead of 1 per cent which the respondent had been paying under protest and shall be making necessary application for refund. It was further stated in this communication that since Moped manufactured by the respondent was neither a motor car nor a motor cycle nor a chassis or goods truck and therefore does not fall under Entry No. 75(A). They claimed that the said components being imported into the Ahmednagar Municipality would fall in Entry No. 75(B) and therefore, were liable to Octroi duty at the rate of 2 per cent instead of 4 per cent demanded by the appellant.
The appellant, after receiving the aforesaid letter of C.A.NO.4663/ 2004 2 the respondent, sought clarification from the Urban Development Department of the State of Maharashtra vide its letter dated 10.12.1987. Some deliberations took place at the Governmental level and interim decision was taken to charge duty at the rate of 2 per cent till the final decision is taken on the subject. Thereafter, the Government took the view that since Moped is an automotive vehicle, it would be covered in Entry No. 75(A) and therefore, Octroi duty at the rate of 4 per cent was payable. After its decision was conveyed to the appellant, the appellant sent the letter dated 14.01.1992 to the respondent demanding duty at the rate of 4 per cent and also directing the respondent to pay the differential amount for the intervening period, as the respondent was allowed to pay the Octroi duty at the rate of 2 per cent earlier pending final decision in the matter.
On receipt of this communication, the respondent filed the writ petition in the Aurangabad Bench of the High Court of Bombay. The contention of the respondent was that the import of Moped components was not covered by Entry No. 75(A) but under Entry No. 75(B) and therefore, was exigible to the duty at the rate of 2 per cent. The High Court has allowed the writ petition of the petitioner. On going through the judgment of the High Court, it gets revealed that the High Court has not decided the issue as to whether C.A.NO.4663/ 2004 3 the components would be covered under Entry No. 75(A). On the other hand, it has concluded that since “Mopeds” are not covered by “Motor cycles” as a type of vehicle, the components and spares thereof cannot be charged with Octroi under Entry No. 75(A) but the same is to be charged under Entry No. 75(B) as Mopeds fall under the description “all kinds of vehicles and their components and spares” which is the description contained in Entry No. 75(B). Challenging this judgment, special leave petition was filed in which leave was granted by this Court on 30.07.2004. This is how the instant appeal comes up for disposal.
We have already extracted Entry No. 75(A) as well as Entry No. 75(B). It is the submission of Mr.K.V.Vishwanathan, learned senior counsel appearing for the appellant, that the High Court was wrong in concluding that the import of components meant for the purpose of Moped fall within the expression “all kinds of vehicles and their components and spares”. His submission was that Entry No. 75(B) refers to non-motorised vehicles which would be cleared from the vehicles mentioned therein namely Bicycle, Perambulators, carriages, whereas Mopeds are motorised vehicles. He referred to 'Hindustan Sanitaryware & Industries Ltd. & Lakshmi Cement v. Collector of Customs, Calcutta' [2000 (10) SCC 224]. To this extent, the contention of Mr.Vishawanathan appears to be correct. C.A.NO.4663/ 2004 4 However, in order to succeed in this appeal and to claim the duty at the rate of 4 per cent, it is incumbent upon the appellant to establish that the components imported by the respondent are covered by Entry No. 75(A). We find that the type of vehicles mentioned in Entry No. 75(A) are motor cars and motor cycles. It also includes chassis and lorries and spares thereof. Even if we proceed on the presumption that Mopeds are motor cycles, we find that in the present case the respondent was bringing into the Ahmednagar Municipality the components of all the Mopeds which according to the respondent were used for manufacturing of the Mopeds and possibly some of these components were sold as spares as well. The case made out by the respondent in the High Court was that since these were components which were imported, they cannot be treated as spares which is the item mentioned in Entry No. 75(A) to attract 4 per cent duty.
In these circumstances, the poser is as to whether the components which were imported by the respondent can be covered by the expression “spares”. We are enable to take such a view. As already noted above, Entry No. 75(B) uses both the expressions, viz., components as well as spares. Therefore, Rule-making Authority itself has given different connotations to the components and spares in the same Entry. C.A.NO.4663/ 2004 5 This will lead to the irresistible conclusion that the components are different from spares. It may be explained that insofar as components are concerned, they go as inputs into the manufacturing of the main product, viz., the 'Moped'. On the other hand, spares are used to replace those components which become defective after they are put to use for some time. In the instant case, the goods were declared as components and the dominant purpose of using these goods was as components of Mopeds. This was not questioned by the appellant authorities and they do not dispute the correctness of this statement.
Having regard to the aforesaid discussion, therefore, though we do not agree with the High Court that the goods will fall in Entry No. 75(B) but at the same time, we find they do not fall under Entry No. 75(A) either. In such circumstances, normally the goods cleared on payment of Octroi duty will fall under residual Entry, viz., Entry No.
86. Ironically, under the said Entry, the Octroi duty to be paid is less than 2 per cent. However, since the respondent had cleared the goods invoking Entry No. 75(B) on their own and paid duty at the rate of 2 per cent, we need not go into these aspects. Suffice is to state that since we find that the goods cleared are not covered by Entry No. 75(A), the appeal of the appellant has to fail on this ground alone.
During the pendency of the writ petition filed by the C.A.NO.4663/ 2004 6 respondent before the High Court, an interim order was passed to deposit 50 per cent of the differential amount. Pursuant thereto, a sum of Rs. 1,70,00,000/- was deposited by the respondent with the appellant. While allowing the writ petition, the High Court had directed the refund of that amount to the respondent within four weeks. Since there was a stay of the aforesaid direction during the pendency of this appeal, we now direct the appellant to refund that amount within 12 weeks. Till the amount is refunded, as directed above, the Bank Guarantee furnished by the appellant shall be kept alive.
The appeal stands disposed of.
........................., J.
[ A.K. SIKRI ] ........................., J.
[ ROHINTON FALI NARIMAN ] New Delhi;
April 27, 2015.
C.A.NO.4663/ 2004 7
ITEM NO.102 COURT NO.11 SECTION IIIA
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s). 4663/2004
AHMEDNAGAR MUNICIPAL CORPORATION & ANR. Appellant(s)
VERSUS
KINETIC ENGINEERING LTD. & ORS. Respondent(s)
(with appln. (s) for permission to file additional documents and office report) Date : 27/04/2015 This appeal was called on for hearing today. CORAM :
HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN For Appellant(s) Mr. K. V. Vishwanathan, Sr. Adv. Mr. Sanjay Kharde, Adv. Mr. V. S. Bedre, Adv.
Mr. Preshit Surshe, Adv. Mr. Mehul M. Gupta, Adv. Ms. Chandan Ramamurthi, Adv.
For Respondent(s) Mr. Shyam Divan, Sr. Adv. Mr. Pratap Venugopal, Adv. Mr. S. A. Gunedecha, Adv. Ms. Surekha Raman, Adv. Ms. Supriya Jain, Adv. Mr. Purushottam Kumar Jha, Adv. Mr. Gaurav Nair, Adv. Ms. Niharika, Adv.
M/s. K. J. John & Co.
UPON hearing the counsel the Court made the following O R D E R The appeal stands disposed of in terms of the signed order.
(Nidhi Ahuja) (Suman Jain)
COURT MASTER COURT MASTER
[Signed order is placed on the file.]
C.A.NO.4663/ 2004 8