JUDGMENT - V.A. MOHTA, J.:---In these six petitions the only point is---whether Explanations I and II to Rule 10 introduced under the Assessment, Collection and Refund of the Cess (Octroi duty) etc. (Amendment) Rules, 1984, are the ultra vires of the City of Nagpur Corporation Act, 1948, ("the Corporation Act"). The petitioners are importers of foreign liquor in the City of Nagpur for sale, consumption or use therein. They are holders of a bond licence under the provisions of the Maharashtra Foreign Liquor (Storage in Bond) Rules, 1964, ("the Bond Rules") framed under the Bombay Prohibition Act, 1949 ("the Prohibition Act"). By that licence they are authorised to import the liquor and to store it in the authorised bond warehouses situated within the City without payment of the excise duty. The petitioners' contention is that excise duty on such goods is neither actually paid nor is the liability to pay incurred till their arrival at the entrance Naka and hence the said duty cannot be legally added in terms of the Corporation Act while computing the value of the goods for the purposes of charging octroi duty and the Explanations I and II to Rule 10 providing for such addition are void. 2. Excise duty on liquor for human consumption is chargeable by the State in view of Entry 51 of List II of the Constitution. Sections 105 and 106 of the Prohibition Act lay down the manner of levying the excise duty on liquor. Bond rules provide for the grant of licence if desired to store foreign liquor in a bonded warehouse, without payment of duty. The Maharashtra Foreign Liquors (Storage and Supply) Regulations of 1964 ("the Regulations") provide for the manner in which the foreign liquor shall be stored in a bonded warehouse. Sections 105 and 106 of the Prohibition Act, read as under :--- "105. (1) An excise duty or counterveiling duty, as the case may be, at such rate or rates as the State Government shall direct may be imposed either generally or for any specified local area on--- (a) any alcoholic liquor for human consumption. (b) any intoxicating drug (or hemp). (c) opium, (d) any other excisable article, When imported, exported, transported, possessed, manufactured or sold in or from the state, as the case may be. (b) any intoxicating drug (or hemp). (c) opium, (d) any other excisable article, When imported, exported, transported, possessed, manufactured or sold in or from the state, as the case may be. Provided that duty shall not be so imposed on any article which has been imported into the territory of India and was liable on such importation to duty under the Indian Tariff Act, 1934, or the Sea Customs Act, 1878, or on any medicinal or toilet preparation containing alcohol, opium, hemp or other narcotic drugs or narcotics. Explanation.---Duty may be imposed under this section at different rates according to the places to which an excisable article is to be removed for consumption or according to varying strengths or quality of such article. 106. Explanation.---Duty may be imposed under this section at different rates according to the places to which an excisable article is to be removed for consumption or according to varying strengths or quality of such article. 106. Subject to any regulations to regulate the time, place and manner of payment made by the Commissioner in this behalf, the duties referred to in section 105 may be levied in one or more of the following ways :--- (a) in the case of an excisable article imported--- (i) by payment either in the State at the time of its import or in the State or territory of export at the time of its export, or (ii) by payment upon issue for sale from a warehouse established or licensed under the provisions of this Act; (b) in the case of an excisable article exported by payment in the State at the time of its export, or in the State or territory of import; (c) in the case of excisable articles transported--- (i) by payment in the district from which they are transported, or (ii) by payment upon issue for sale from a warehouse established or licensed under the provisions of this Act; (d) in the case of spirit or beer manufactured in any distillery established or any distillery or brewery licensed under this Act- (i) by a rate charged upon the quantity produced in or issued from the distillery or brewery, as the case may be, or issued from a warehouse established or licensed under this Act, or (ii) by rate charged in accordance with such scale of equivalents calculated on the quantity of materials used or by the degree or attention of the wash or word, as the case may be, as the State Government may prescribe; (e) in the case of intoxicating drugs manufactured in the State by payment upon the quantity produced or manufactured or issued from a warehouse established or licensed under this Act: Provided that where payment is made upon issue for sale from a warehouse established or licensed under this Act, such payment shall be at the rate of duty in force at the date of issue from the warehouse : Provided further that where one and the same person is permitted- (i) to manufacture or import and to sell, or (ii) to manufacture and export, country liquor, or any intoxicant, such duty may be levied in consideration of the joint privileges granted, as the Collector deems fit." 3. Entry 52 of the State List in the Constitution permits the State to recover taxes on the entry of the goods into a local area for consumption, use or sale therein. Section 114 of the Corporation Act empowers the Corporation to impose certain-mandatory as well non-mandatory taxes. Section 114(1)(e) deals with octroi duty and reads thus:--- "a cess on animals or goods brought within the City for sale, consumption or use therein." Section 115 refers to the procedure for imposing the taxes. Rule 10(a) of the Octroi Rules sanctioned by the Government on 16th May, 1966 reads as under: "Where the duty is chargeable on weight, gross weight including that of the packages or container shall be adopted. Where the duty is chargeable ad valorem, the value thereof shall be the cost price to the importer plus all incidental charges such as custom duty, insurance, excise duty, sales tax and freight and such other charges incurred by the importer, till the arrival of the goods at the entrance Naka, if these have not already been included in the cost price." By 1984 Rules the following explanations came to be added--- Explanation.---I. The cost price shall not, in any case be less than the amount declared for the purposes of assessment of customs duty, Insurance, Excise duty or Sales Tax, as the case may be : II. Where goods are imported into Octroi limits for being taken to a Bonded Warehouse, whereby the levy of customs or Excise Duty is deferred by the Central or State Government until goods are released from Bond, Octroi duty on such goods shall be charged on provisional basis at the entrance Naka on the cost price of the goods plus incidental expenses. When such goods are released from the Bonded Ware house, the Octroi duty shall be reassessed on the basis of the value of the goods plus customs or Excise duty over the provisional assessment shall be recovered from the importers at the time of release." The excise duty was, in fact, not paid by the importer to the manufacturer till the arrival of the goods of the entrance naka, is an admitted position. Real question is whether liability to pay it was incurred or not. The dictionary meaning of the word, "incurred" as per Webster's Dictionary (Page 487) is : To run against. Real question is whether liability to pay it was incurred or not. The dictionary meaning of the word, "incurred" as per Webster's Dictionary (Page 487) is : To run against. To become responsible for the subject to as some undesirable consequence or inconvenience; become liable to; contract, as a debt". It is well settled that incidence of excise duty is essentially linked with manufacture and the taxing event is the manufacture of the goods. The liability to pay excise duty thus arises as soon as the goods are manufactured, though as a measure of convenience that collection may be deferred to some later stage. In this connection, useful reference may be made to the following observations in the case of (M/s. Mc Dowell and Company Limited v. Commercial Tax Officer)1, (1985)3 Supreme Court Cases 230. "Admittedly, the bills issued by the appellant did not include the excise duty. As already found, payment of excise duty is a legal liability of the manufacturer ; its payment by the purchaser is on account of the manufacturer. According to normal commercial practice, excise duty should have been reflected in the bill either as merged in price or being shown separately. As a fact, in the hands of the buyer the cost of liquor is what is charged by the appellant under its bill together with excise duty which the buyer has directly paid on seller's account. The consideration for the sale is thus the total amount and not what is reflected in the bill. We are, therefore, clearly of the opinion that excise duty though paid by the purchaser to meet the liability of the appellant, is a part of the consideration for the sale and is includible in the turnover of the appellant. The purchaser has paid the tax because the law asks him to pay it on behalf of the manufacturer." After considering several authorities, it was held in the above case that excise duty paid by the purchaser direct to the excise authorities under the rules or arrangement or contract would have to be included in the turn over of the liquor manufacturer and not of the purchaser, and that liability to pay excise duty was a part of consideration for the price of the goods purchased by the importer. No doubt the value of the goods for the purpose of octroi duty will be the value at the time of entry in the octroi limits and not the subsequent changes. It is difficult to see how the excise duty can be added in the value only because the concession to defer the payment at the time of removal from bond warehouse is granted for the sake of convenience as per the Bond Rules. The liability is incurred at much earlier stage of arrival at Naka and indeed is a part of the purchase price. If in this back ground Explanations are added to clarify the position and to remove lacuna, if any, it is difficult to see as to how they are ultra vires of the Corporation Act. 4. Now the precedents on the subject. In the case of (M/s. Star Tobacco House v. Municipal Council, Cuttack and others)2, 1977 Taxation Law Reports 2184, it has been held that bye-law No. 13 framed by the Cuttack Municipal Council under the Orissa Municipal Act containing the expression "value" did not include excise duty not actually paid at the time of assessment of octroi duty. It is observed :--- "It would not include post-manufacturing profit arising from post-manufacturing operation with regard to the articles, nor would it include any excise duty to which the goods are liable but which has not been paid. It may be that afterwards, when such excise duty is payable, the value of the articles of the owner would automatically go up; but that would happen only in future." The decision proceeds to add : "There is no other provision in the bye-laws which requires fresh assessment of octroi in respect of such articles by revaluing the same by taking into account excise duty either paid or payable thereon subsequently. Thus, it is quite clear that excise duty payable is not to be treated as part of the value of the articles or goods." In the case of (M/s. Mohan Meakin Breweries Limited v. Municipal Corporation of Jullunder City and others)3, A.I.R. 1979 Punjab and Haryana 142 dealing with the octroi rules under the Punjab Municipal Act, it has been held that liability to pay excise duty is incurred before the arrival of the goods at the entrance naka and, therefore, the value has to be calculated after including that liability. It is significantly observed :--- "It is undisputed that if the excise duty is paid and included in the invoice, the octroi will be chargeable on the value of liquor including the excise. The value of an article is essentially linked with the amount spent for acquiring it. It would not be very relevant if a part of the amount for acquiring an article is paid at one place and the remaining part at another. The value of the liquor imported by the Licence of Nahan, therefore, did include the excise duty paid by him irrespective of the fact that he paid the same at Nahan for procuring an import permit. The learned Single Judge in Jai Dayal's case (1971-73) Pun.L.R. (D) 138 (supra), while considering the scope of sub-rule (3) of R.V. 17 of the Municipal Account Code, concluded that if the invoice was not fake then the value of the article imported under the Municipal limits for the purpose of octroi could not exceed that given therein. With respect we are unable to agree with the narrow interpretation of the word "genuine" given by the learned Single Judge in that case. In our opinion, if the authority has reason to suspect that the value of the article given in the invoice, which may not be fake, is not real, he will be competent to make a departure therefrom and to find its true value otherwise. In Jai Dayal's case (supra), the excise duty as also the price of the liquor stood paid already when it passed the octroi barrier. The invoice was genuine but the price of the liquor shown therein was not true because it did not include excise. In such a situation, the authority under sub-rule (3) of R.V. 17 ibid can make departure from the invoice to determine the real value of the liquor for octroi. "The petitioner executed a bond for the payment of excise duty under section 16 of the Excise Act, for import of liquor to Jullunder for storing it in its bonded warehouse. We have already held that the excise duty shall be deemed to have been levied at the time of import and its actual payment deferred till it is issued from the warehouse. We have already held that the excise duty shall be deemed to have been levied at the time of import and its actual payment deferred till it is issued from the warehouse. In view of this finding, the value or potential value of the liquor shall be taken to have been increased to the extent of the excise duty payable thereon for payment of octroi. The value of the liquor shown in the invoice without the excise duty will not be real. The authority under sub-rule (3) of Rule V. 17 of the Municipal Account Code will thus be competent to ignore the invoice and assess the value of the liquor by including the excise duty payable thereupon. The first point is decided against the petitioner." With respect, we prefer the above view of the Punjab High Court. Moreover, it is pertinent to notice that one of the factors which weighed with the Orissa High Court was the absence of provision in the bye-law permitting revaluation at a stage later to arrival at Naka and before its removal from bond warehouse. In our case Explanations are meant only for this. 5. The judgment cannot be complete without reference to the earlier decision of this Court in the case of (J.E. Bilimoria and Sons v. Corporation of City of Nagpur)4, 1977 Mh.L.J. 293 which interpreted Rule 10(a) as it originally stood the way petitioner wants us to interpret. Perhaps adding of Explanations is a sequel to this judgment in general and the following observations in particular. "According to the petitioner octroi rules of 1966 framed for this purpose having its source in section 115(6) read with section 114(1)(c) of the City of Nagpur Corporation Act, 1948, does not permit any such inclusion of the prospective charge upon the goods that will be debonded for the purpose of sale or consumption. Reliance is placed on Rule 10(a) of the Octroi Rules and, the provisions of the Act and the rules relating to bonded warehouse to which we have already made a reference." In that decision validity of Explanations was not at issue. Moreover, Macdowell's case concludes the question of stage at which liability to pay excise duty is incurred and the same is binding on us. 6. It is submitted that the explanation does not enlarge the scope of the section it seeks to explain. Moreover, Macdowell's case concludes the question of stage at which liability to pay excise duty is incurred and the same is binding on us. 6. It is submitted that the explanation does not enlarge the scope of the section it seeks to explain. Principle is well settled but will not be attracted in these matters in view of what we have held above. 7. Under the circumstances, the challenge to the Explanations has to be and is hereby repelled. It is declared that explanations are valid and not ultra vires of the Corporation Act. The petitions are dismissed and rules discharged but with no order as to costs. 8. Needless to remind the petitioners of their undertakings given at the time of interim order dated 12th October to pay all arrears within a month from this judgment. -----