John Beaumont, Kt., C.J.
1. This is an appeal from a decision of Mr. Justice Tyabji, and it raises a question as to the basis upon which the plaintiffs, Ford Motor Company of India, Limited, ought to be charged under the Sea Customs Act, 1878. Section 29 of that Act provides that-
On the importation into, or exportation from, any customs-port of any goods, whether liable to duty or not, the owner of such goods shall, in his bill of entry or shipping bill, as the case may be, state the real value, quantity and description of such goods to the best of his knowledge and belief.
2. Then Section 30 deals with the manner in which the real value has to be ascertained, and is in the following terms:-
For the purposes of this Act the real value shall be deemed to be-
(a) the wholesale cash price, less trade discount, for which goods of the like kind and quality are sold, or are capable of being sold, at the time and place of importation or exportation, as the case may be, without any abatement or deduction whatever, except (in the case of goods imported) of the amount of the duties payable on the importation thereof : or
(b) where such price is not ascertainable, the cost at which goods of the like kind and quality could be delivered at such place, without any abatement or deduction except as aforesaid.
3. It is rather curious that both sub-sections refer to price or cost of goods of the like kind and quality, and do not refer to the actual goods, the subject of the transaction in question; but it is conceded that where there is a sale falling within the terms of Sub-section (a) of specific goods, the price of those goods is the real value, and it is not necessary to consider the price of other goods of the like kind and quality. Perhaps a literal reading of the section can be complied with by saying that specific goods must be of the like kind and quality to themselves. It is clear also that Sub-section (b) "only applies where you cannot ascertain the wholesale cash price referred to in Sub-section (a). The section was recently construed and discussed by the Privy Council in the case of Vacuum Oil Co. v. Secretary of State for India (1932) L.R. 59 I. A. 258 : s.c. 34 Bom. L.R. 1057. The actual decision in that case was only that where you have a sale by the importer in bulk of goods to the actual user, the price charged is not a wholesale price, because there is no retail price in such a case, there being only a dealing direct between the importer and the consumer without the intervention of a dealer. So that the actual decision does not affect this case, in -which there is no question of there being a wholesale price. But certain dicta of their Lordships are relied upon as to the meaning of Sub-section (a), particularly the view expressed that the price must be free from any loading or any post-importation charges incurred in relation to the goods, and that the price is to be a price for goods as they are both at the time and place of importation. Their Lordships do not define what is meant by " time and place of importation "; and I think we must give a reasonable construction to the words. Plainly, time cannot refer to the precise moment of time at which goods are imported, that is unloaded from the ship. There must be a reasonable time in which a sale can take place. I think also that " place of importation" cannot mean the exact spot of land on which goods are landed, whether on the wharf or on the shore. It must cover a wider area than that; .and I should say that, generally speaking, " place of importation " means the place, whether Bombay, Madras, Karachi, or elsewhere as the case may be, at which the goods are imported. No doubt the phrase " time and place of importation " must be considered in relation to the particular facts of any given case. I agree with Mr. Coltman's argument that in dealing with commodities, the market price of which may vary from day to day, one would have to take the price ruling on the day of importation in considering the price at which goods of a like kind and quality were capable of being sold.
4. Now, the facts of the present case, so far as relevant, are these. The plaintiffs are importers into India of Ford motor cars. They acquire them from the manufacturing company in Canada. It is not, I think, necessary to discuss in any detail the terms of their dealings with the manufacturing company. They order from the manufacturing company such number of cars as they require, and the appellants are charged free on board the Canadian port. The manufacturers pay the freight and insurance in the first instance, but debit those charges against the appellants. The important matter to consider is what the dealings are between the plaintiffs and their customers in India. The evidence is that the plaintiffs are mere importers. They arrange for the sale of the cars in India through various agents. They have one principal agent in Bombay city, namely the Ford Automobiles (India) Ltd., and they have other distributing agents in other parts of India. What happens in practice is this. The various distributing agents in India inform the plaintiffs what their requirements will be for the purchase of cars, and at intervals, say once or twice a month, the plaintiffs send to Canada an order for such number of cars as their distributing agents have intimated that they are ready to take. The price which the distributors pay is not fixed, or indeed discussed, at the time when the order for a car is given; but when the car arrives in Bombay the plaintiffs fix the retail price at which the different models are to be sold in India. That price is published in a list which is available to all the dealers, and the price which the plaintiffs charge to the dealers is that retail price less twenty per cent. The evidence as to all these matters is that of Mr. Corey. He has produced unfortunately very few documents, but it is common ground that his evidence is entirely reliable. As soon as the cars arrive in Bombay, the dealers are notified, and they then have to come and pay the price which, as I said, they ascertain from the price-lists supplied to them. They have to pay that price in cash, and then they take delivery of the goods. If the dealer is in Bombay, delivery is made at his place of business. If the dealer is at some other place, then delivery is made at the appropriate railway station in Bombay, and the price-lists show that the prices are f.o.r. main ports of entry. The evidence of Mr. Corey is quite clear that the plaintiffs never deliver the -cars until they get payment, and that the goods are usually delivered within two or three days of landing. It seems to me that the sale, therefore, is at the time and place of importation. Mr. Coltman argued that the sale was not at the time of importation, because the real sale took place at the time when the dealer gave his order which resulted in the goods being ordered by the plaintiffs from Canada. But apart from the fact that Mr. Corey admitted that there was no concluded agreement at that date, it seems to me 'quite impossible in law to suggest that there was an actual contract of sale at that date. The goods were not ascertained, and probably not even manufactured, and there is no evidence that the price was agreed to, or that any method of ascertaining the price was agreed to. In my opinion, the only contract of sale which took place,-and it is only a contract for sale which is relevant for the present purpose,- was the contract which was completed when the dealers were notified of the arrival of their goods and the price to be paid, and when in pursuance of that notification they paid the price and the goods were delivered. It seems to me that that transaction amounts to a sale which took place at Bombay, the place of importation, and at the time of importation, that is to say, within a reasonable time, one or two days after the actual landing of the goods.
5. The only other question to be determined in order to bring the case under Sub-section (a) is whether the price was a wholesale cash price for the goods. It is obvious, I think, that it was a wholesale price, because there is a plain distinction here between the retail price fixed for the dealers, and that price less twenty per cent, which the dealers have to pay, the latter price being the wholesale price. There is no question of any trade discount in this case, because it was a net price, and I think the words in the section " less trade discount " mean " less trade discount, if any ". It is also quite plain that the price was a cash price, and that is not disputed. So that taking the words of the section as they stand, it seems to me that this case plainly falls within the exact words of Sub-section (a), provided that the price was the price of the goods. Mr. Coltman argues that the sale does not fall within the words of the subsection as construed by the Privy Council in the case to which I have referred, because the price includes certain post-importation charges, and is not therefore, the price only of the goods. The learned Judge in the Court below agreed with that view and held that there are two items of post-importation charges, for which some deduction must be made from the sale price in order to ascertain the wholesale cash price. To that part of the decision there are cross-objections, and I think those cross-objections must prevail. In my view, the Court has to find a sale of the goods at a wholesale cash price, and it is not legitimate to dissect the actual price paid, deduct from it such portions as may be ascertained to represent something other than the price of the goods, e.g., the cost of service, and then say that the residue left is the wholesale cash price of the goods. Non constat that the actual goods or other goods of a like kind and quality could be sold at all apart from the services.
6. The two items to which the learned Judge refers, are a charge for assembling the cars and cartage charges. As to the first, the evidence of Mr. Corey is not very clear, but on the whole I think that it comes to this, that the plaintiff-company had to deliver the cars in running order, that they were not in a position in 1929, when the transaction in suit took place, to assemble the cars themselves, and, therefore, they used to make a fixed allowance to the dealer of Rs. 13-8-0 per car to cover the cost of assembling the car. There is no dispute that that deduction was properly made from the wholesale cash price, and it seems to me that that does not affect the question as to there being a wholesale cash price. What it really comes to is that the wholesale cash price for a car in running order is reduced by a small sum by an arrangement between the two parties, because the car delivered is not in the condition specified. That does not prevent the sale being a sale of the car at a wholesale cash price. It is merely an agreed deduction made from the price on account of the goods not being in accordance with the contract requirements.
7. With regard to cartage charges, the position is this. The plaintiffs have to-deliver the car, as I have said, either at the place of business of the dealer if he carries on business in Bombay, or at the appropriate railway station if the dealer carries on business upcountry. There is no express provision as to the inclusion in the price of cartage charges. Exactly the same price is charged to everybody, whether the place of business of the dealer is near the port, or at the other end of Bombay. What it really comes to is that the contract is for the sale of a car deliverable at a particular place in Bombay, and it seems to ire that cost of getting the car to that place in Bombay is a part of the purchase price of the car. We must, in my opinion, take a business view of the transaction and determine whether the sale price is in a business sense the price of the goods or includes a charge for services rendered which prevents the price being fairly considered to be the price of the goods. Mr. Coltman did not confine his argument to post-importation charges, though he laid more emphasis on them having regard to the views expressed by the Privy Council, but in opening the case he complained that the price charged by the plaintiffs covered the overhead charges of the plaintiffs, e.g., office expenses and advertisement charges, as well as the plaintiffs' profit, and he said, with a certain amount of force, that it was rather hard to be taxed on those charges. The answer to that is that we have to construe the Act. Every normal sale between merchants must show a profit to the vendor, and, therefore, cover his overhead charges, but these are really pre-importation charges. The fact that the price also includes some slight post-importation service, such as free delivery within the place of importation, cannot in my opinion operate to prevent the sale price being held to be for the price of the goods.
8. In my opinion, the facts proved in this case show that there was a sale exactly conforming to all the requirements of Sub-section (a) of Section 30, and that being so, we are bound to hold that the assessment of the plaintiffs under that sub-section is correct, and their suit for a declaration that the basis is incorrect and for the refund of moneys paid by them on that basis fails.
9. The order of the lower Court will be varied by merely dismissing the plaintiffs' suit with costs. Apart from that the appeal fails and must be dismissed with costs. Cross-objections allowed with costs.
10. I am of the same opinion. In the case of Vacuum Oil Co. v. Secretary of State for India (1932) L.R. 59 I. A. 258 : s.c. 34 Bom. L.R. 1057, their Lordships of the Privy Council observed that a wholesale cash price may be found in the actual sales of the goods by the persons themselves who are sought to be charged, if there are no other goods of a like kind and quality. Mr. Coltman has conceded that if the goods which are the subject-matter of this appeal were in fact sold at a wholesale price, less trade discount, that sale may itself establish that goods of a like kind and quality are capable of being sold at a wholesale cash price, less trade discount. He, however, contended that the goods in question were not sold for a wholesale cash price, less trade discount, at the time and place of importation within the meaning of Section 30, Sub-section (a), of the Indian Sea Customs Act.
11. Mr. Coltman first contended that the sale between the plaintiffs and their retailers took place at the time when the orders were, according to the evidence of Mr. Corey, placed with the plaintiffs, that, is to say, some two or three months before the goods could arrive in Bombay. It is, I think, plain that the orders so placed, pursuant to which the plaintiffs themselves ordered goods from the manufacturers, were merely of the nature of agreements to buy and sell, and that they could not and did not become agreements of sale until the goods were manufactured and actually arrived in Bombay.
12. The question then arises : When did the sales between the plaintiffs and their retailers actually become effective ? Did they become effective at the time and place of importation, it not being disputed that they were sales of a wholesale character ? The evidence of Mr. Corey is that the prices were not fixed at the time the orders were placed, that the prices could be changed by the plaintiffs as they liked, that they were from time to time changed and were published in price-lists which were available to persons in the trade. According to Mr. Corey, the price became fixed on the arrival of the goods, and the retailers who had placed orders with the plaintiffs knew what the price payable by them was on arrival by looking at the published price-list, which was the price list in circulation at the time of the arrival of the goods; and according to Mr. Corey, the price becoming payable on arrival, no delivery would be effected of the goods until that price was paid. That being so, it seems to me clear that the sale became an effective sale upon the arrival of the goods, and the appropriation of those goods to the orders with the assent of both the parties, and the payment of the price by the retailers. The evidence further is that the price was paid within two or three days of the arrival, and delivery was effected on payment of the price. In Bombay delivery was effected by sending the cars to the place of business of the distributors. If delivery was to retailers in other places, delivery was effected by sending the cars to the railway station in question, the price-list showing that delivery was f.o.r. Bombay. That being the course of business, can that sale properly be described as a wholesale cash price at the time and place of importation ? Mr. Coltman has contended that the sale must be one ex-ship, and that if anything remains to be done after the goods are actually put on the wharf, the sale cannot be said to be a sale at the time and place of importation. He says that delivery had to be effected by the plaintiffs to some place other than the wharf, and that that fact prevents the transaction being a wholesale transaction for a cash price at the time and place of importation. There is, however, nothing in the judgment of their Lordships of the Privy Council in the Vacuum Oil Co. case, to which I have referred, which suggests that unless the transaction is for a wholesale cash price ex-ship, it cannot fall within Section 30, Sub-section (a); and in a decision of this Appeal Court in another case of the Vacuum Oil Company v. The Secretary of State for India (1921) I.L.R. 47 Bom. 174 : s.c. 24 Bom. L.R. 198, both Macleod C. J. and Shah J. in the course of their judgments assumed that a wholesale disposal of the goods in the town of Bombay itself would fall within Section 30, Sub-section (a). In my opinion, there is no warrant for confining that section to a transaction which is effected merely on the wharf itself. It seems to me that a reasonable construction must be placed upon the words " at the time and place of importation ". In the present case, I am of opinion that the wholesale transaction for a cash price was completed at the time the goods arrived in Bombay and at the time the price was paid, that is to say, within two or three days of the actual arrival. It was a transaction entered into pursuant to orders placed on a wholesale basis, which contemplated that the price would be fixed at a future time in accordance with the price-list prevailing at the time of the arrival; and, in those circumstances, the mere fact that the delivery was not made until two or three days after arrival, and to places in the town of Bombay, cannot, in my opinion, prevent the transaction from being a wholesale transaction for cash, at the time and place of importation.
13. Mr. Coltman has argued that Section 30, Sub-section (a), is intended to apply only to, what he calls, staple articles, such as rice, sugar and so forth, and that the goods which are the subject-matter of this case, namely, motor cars, are not of the class of goods which would fall within the sub-section. He relies on a passage in the judgment of their Lordships of the Privy Council in Vacuum Oil Co. v. Secretary of State for India, above referred to, which is in these terms (p. 266) :-
The wholesale cash price primarily in view is, they cannot doubt, that price current for staple articles, the amount of which, if not a subject of daily publication in the press, is easily ascertainable in appropriate trade circles.
Mr. Coltman has argued that you could not easily ascertain the price at which motor-cars of this description were saleable. In my opinion, that is not in accordance with the evidence. The evidence is that price-lists were published from time to time, and that they were accessible to the traders; and, in my opinion, it is quite clear on that evidence that any retailers, who were desirous of placing orders with the plaintiffs, were in a position to know what prices were prevailing at the time they placed the orders, and also knew that if there were any variations in the price-lists at the time when the goods arrived, that would be the price which they would have to pay. I can see no reason why a wholesale cash price so ascertainable should not fall within the terms of Section 30, Sub-section (a).
14. Next Mr. Coltman contended that there was no wholesale cash price at the time and place of importation in the case of the motor-cars in question, because, as he contended, that price was loaded by post-importation charges. First he referred to the cost of assembling the motor-cars on arrival; but it is to be observed that the cost of assembling the motor-cars was already included in the price itself beforehand. The plaintiffs conceded that there was an obligation upon them to deliver an assembled motor-car, but as it was inconvenient for them at that time to assemble the motor-cars themselves, with the assent of the purchasers, they made them an allowance for assembling the cars. The wholesale sale was already complete before the question of the assembling of the cars arose, and the prices had been paid. In my opinion, the fact that there was subsequently an allowance for the assembling of the cars and that the cars had to be assembled cannot prevent the price, which had already been paid, from being a wholesale cash price at the time and place of importation. In my opinion, no question of overloading the price by any post-importation expenses arises in connection with the assembling of the parts of the cars.
15. Next, Mr. Coltman contended that the price was not a wholesale cash price at the time and place of importation, because it included a part of the overhead charges of the plaintiffs, which were necessarily referable, as he said, to what took place after the cars were imported. He said there would have to be advertisements, that the plaintiffs would have to maintain their office, . and charges and expenses would thus have to be incurred, and that they were referable to the wholesale cash price as between the plaintiffs and the defendant in this case. In my opinion, there is no warrant for that argument. The course of business, as established by evidence, in my opinion, shows that the plaintiffs maintained an establishment in Bombay and received orders from various customers for the purpose of enabling them to place orders with the manufacturers in Canada; and, in my opinion, all the overhead charges which were referable to the transaction between the plaintiffs and the defendant in this case had in fact been incurred before the arrival of the goods in this country. The wholesale cash price at the time and place of importation was in fact paid on the arrival of the goods; and, in my judgment, no charges, overhead or otherwise, were incurred by the plaintiffs subsequently in reference to the transaction in question.
16. The price-lists, which were issued by the plaintiffs themselves, in my opinion, themselves afford excellent evidence of the fact that there was a wholesale cash price at the time and place of importation. Those price-lists show that the price was a net price, f. .r. at the main ports of entry. They state the prices at which the retailers were allowed to sell to their customers; they state the discount of twenty per cent; and they state the distributors' net price payable as mentioned after deducting the allowances which the plaintiffs were prepared to make to the retailers in respect of the assembling of the cars. Those price-lists themselves appear to me to show, on the face of them, a wholesale cash price; and the evidence establishes, as I have already said, that the transaction was complete on the arrival of the goods, and the price paid within two or three days thereafter.
17. The learned trial Judge was of opinion that the Customs authorities had not made to the plaintiffs appropriate allowances in respect of certain overhead charges and cartage charges. The plaintiffs complain that the learned Judge was wrong in entering into the mathematical calculations as a result of which he said that the Customs authorities ought to have fixed the appropriate customs duties. The defendants also complain, by cross-objections, that the learned Judge was not entitled to come to the conclusion that the Customs authorities ought to have made those deductions. I can myself see no warrant whatever for those deductions. Either the price at which the plaintiffs sold the goods was a wholesale cash price at the time and place of importation, or it was not. If it was, then it is permissible to conclude that goods of a like kind and quality were capable of being sold at that price. But, in my judgment, it is not permissible to say that if the goods have been sold at a price, which was different from the price at which they were in fact sold, and was ascertainable only by certain mathematical calculations and deductions, that goods of a like kind and quality were capable of being sold at that price. There is no evidence whatever that goods of a like kind and quality were capable of being sold at a price fixed in this manner by the learned Judge. In my opinion, there was no justification for his holding that those deductions ought to have been made.
18. I, therefore, think that the appeal must be dismissed with costs, the cross-objections allowed with costs, and the suit dismissed with costs.