RAYMOND LTD Vs. THANE MUNICIPAL CORPORATION

JUDGEMENT

(1.) Heard learned Advocates for the parties. The petitioners challenge the communication to the petitioners by the respondent Corporation under the letter dated 5th November, 1998 on the ground that the same is contrary to the provisions of the Maharashtra Municipalities (Octroi) Rules, 1968, herein after called as "the said rules".

(2.) Few facts relevant for the decision are that the petitioners carry on business inter alia of manufacturing manmade as well as blended woolen fabrics and have one of their factory situate at Thane, within the State of Maharashtra. In the course of manufacture of the final product, it has to undergo various stages of manufacturing. The petitioners import raw wool, and polyester tow/ fiber from different parts of the country. The said goods form the basic raw material for manufacturing the ultimate product of fibric. The actual process comprises of three stages. In the first stage, the raw material is processed and the raw wool is converted into wool top, polyester top and then into polyester wool top. The second stage comprises of conversion of the said product into yarn and/or threads. However, for the purpose of completion of this second stage, the petitioners do not have the necessary machinery with them, and they entrust the job work in that regard to different industrial undertakings including Mohan Woolen Mills limited, having its factory at Hunsur, in the state of Karnataka. For that purpose the product on completion of its first stage is transported beyond the limits of Thane Municipal corporation to the factory of Mohan Woolen mills Limited where said product is processed and converted into yarn, which forms the raw material for production of final product i. e. , the manmade as well as blended woolen fabric and for that purpose at the third stage, the yarn produced by Mohan Woolen Mills Limited is again imported into the limits of Thane municipal Corporation for further processing by the petitioners. Such products either as raw materials or final products imported within the limits of the Corporation are subject to payment of octroi duty at its entry point. The provisions regarding imposition of octroi duty are governed by the said rules. Under the said rules, there are various provisions which provide for concessional rates alongwith the usual rates of the octroi duty and the circumstances under which the importer is entitled for concessional rate of octroi duty.

(3.) According to the petitioners all along the petitioners were allowed to avail of the benefit of concessional rate of 1. 25% instead of usual 4% of octroi duty, on the raw materials imported by the petitioners either at the first stage or at the third stage of the manufacture of the final product. However, suddenly in the year 1998, and in particular, on 5th November, 1998 the respondent corporation insisted for payment of full octroi duty i. e. , at the rate of 4% on the raw materials imported by the petitioners for the third stage of processing. The said claim continued to be made for the period from August, 1998 to january, 1999. After 1998 the provision regarding the liability to pay octroi duty in the case of goods imported underwent considerable changes, with which we are not concerned in the present petition. The period relevant for the consideration is from August 1998 to January, 1999.