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1937 Supreme(SC) 78
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD THANKERTON, LORD WRIGHT, AND SIR GEORGE RANKIN.
FORD MOTOR COMPANY OF INDIA LIMITED - Appellant
Versus
SECRETARY OF STATE FOR INDIA IN COUNCIL - Respondents
On appeal from the High Court at Bombay.
Decided On : November 19, 1937.
Solicitors for appellants:Sanderson, Lee & Co. Solicitor for respondent: Solicitor, India Office.
The "wholesale cash price" for customs duty assessment under Section 30(a) of the Sea Customs Act can be the actual price the imported goods fetch, even if influenced by a monopoly, provided it is a wholesale cash price at the time and place of importation.
Headnote:(A) Indian Sea Customs Act, 1878 - Section 30 - Real value for customs duty - Wholesale cash price - Assessment of customs duty on imported motor vehicles - Whether the price charged by the importer to authorized distributors constitutes the "wholesale cash price" under Section 30(a) or whether the cost of delivery under Section 30(b) should be used - The price charged to distributors, being a cash price less trade discount, satisfies the requirements of Section 30(a) - The phrase "at the place of importation" is not limited to "ex ship" prices and includes delivery "free on rail" - The fact that the importer maintains a monopoly or a controlled distribution system does not preclude the use of the actual sale price as the wholesale cash price for "goods of the like kind and quality."
(B) Interpretation of "goods of the like kind and quality" - The clause does not require the exclusion of the actual price of the goods under assessment; if the goods themselves are sold at a wholesale cash price at the time and place of importation, such price may be used to determine the real value.
Facts of the case:
An importer of motor vehicles sold exclusively to authorized distributors in specific districts. The importer provided a price list, and distributors paid the listed price minus a 20% discount. Delivery was provided "free on rail." The vehicles arrived incompletely assembled, and an allowance was granted to the distributors for the assembly work. Customs authorities assessed duty under Section 30(a) of the Act based on the price charged to distributors minus the assembly allowance. The importer contended that no wholesale cash price was ascertainable due to their controlled market and that assessment should have been based on the cost of delivery (c.i.f. value) under Section 30(b).
Findings of Court:
The price charged to distributors was a wholesale cash price. The delivery terms "free on rail" fall within the meaning of "at the place of importation." The allowance for assembly correctly adjusted the price to the condition of the goods upon arrival. The actual price obtained for the goods can represent the price for "goods of the like kind and quality," regardless of whether the importer operates a monopoly or a controlled distribution network.
Issues: Whether the price charged to distributors was a "wholesale cash price" under Section 30(a) of the Act, whether "at the place of importation" required an "ex ship" price, and whether the actual sale price of the imported goods could be used to satisfy the "goods of the like kind and quality" requirement.
Ratio Decidendi: If a wholesale cash price for the goods themselves is available at the time and place of importation, it satisfies Section 30(a), even if the price is influenced by the importer's business organization or monopoly. The phrase "at the place of importation" should be interpreted reasonably and includes standard delivery terms like "free on rail."
Result: Appeal dismissed, with costs.
Legal Category Hierarchy
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customs law
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customs duty
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valuation of goods
- real value assessment
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valuation of goods
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customs duty
Judgement
Appeal (No. 114 of 1936) from a decree of the High Court in its appellate jurisdiction (October 4, 1935), affirming, with a minor variation, a decree of the High Court in its original civil jurisdiction (April 5, 1935).
The question for determination in this appeal was whether in assessing to customs duty under the Indian Sea Customs Act, 1878, a number of Ford motor vehicles consigned from Canada to the appellants, the Ford Motor Company of India, Ld., the wholesale price for such vehicles was ascertainable so that the duty could be assessed under cl. (a) of s. 30 of the Act of 1878, or whether the vehicles were assessable under cl. (b) of s. 30 upon the cost at which they could be landed in Bombay —namely, the invoice price, plus freight and insurance. Delivery of the vehicles was given by the appellants "free" on rail to authorized distributors who paid to the appellants the price they (the distributors) received from the public less a discount of 20 per cent. The appellants were assessed to customs duty by the Collector of Customs on the view that cl. (a) of s. 30 of the Act of 1878 applied, and that the price charged by the appellants to the distributors was a wholesale cash price, less trade discount, as specified in cl. (a).
The facts, and the terms of s. 30 (a) and (b) of the Sea Customs Act, 1878, appear from the judgment of the Judicial Committee.
The trial judge (Tyabji J.) held that the motor vehicles were in the circumstances assessable under cl.
(a) of s. 30, but that the words in the section "at the time and place of “importation” in effect necessitated that the price should have reference to the sale of the goods ex ship.
On appeal by both parties (the present respondent being the Secretary of State for India in Council) a Division Bench (Beaumont C.J. and Blackwell J.) held that the assessment made by the customs authorities was correct, and that the appellants suit for a return of duty alleged to have been overpaid should be dismissed. The appeal is reported at ( 1936) I. L. R. 60 B. 551.
1937 Oct.25, 26, 28 Sir William Jowitt K.C., and Sir Thomas Strangman for the appellants. Sect. 30 of the Sea Customs Act, 1878, must be read as a whole, and, if cl. (a) is to be applied, there must be found the wholesale cash price for which goods—not these particular goods, but goods which are of the like kind and quality—are sold, or are capable of being sold, and that sale of those corresponding goods must be viewed at the time and place of importation without an abatement or reduction. For a considerable time the appellants were allowed to import their motor vehicles under cl. (b), and they
Law. Rep. 65 Ind. App. 32 ( 1937- 1938) Ford Motor Company of India Limited v. Secretary of State
196
paid duty on the c.i.f. value, that is, the f.o.b. price which they paid to their Canadian manufacturers, plus freight and insurance. The only persons to whom the appellants sell motor vehicles in India are the appointed distributors, to whom particular districts have been allotted, and who have in advance informed the appellants of the exact number of vehicles they require. The crucial difference between
cl. (a) and cl. (b) of s. 30 is that whereas (b) is looking at the cost, (a) is directed towards sale. In these particular circumstances the price at which these vehicles are sold by the appellants to the distributors is that which is arrived at in consequence of their organization and their finding out from the distributors exactly how many vehicles they want to satisfy requirements. It is quite wrong to infer from that that there is any sort of price applicable to the genus of which these vehicles are but a species, and say that there is therefore a wholesale cash price for goods of the like kind and quality at the time and place of importation. Clause (a) is quite inappropriate in the present circumstances. The reference in s. 30 to goods "of the like kind and quality" is to ensure that in dealing with specific goods re
