1937 (11) TMI 2 - HC - Central Excise

Price attribution - whether the motor cars in question there was no such wholesale cash price ascertainable, that the duty should have been assessed under Clause (b) of Section 30? Held that - In the present case a number of sales have been made to different distributors in the ordinary course of an extensive importing business. It is difficult to think that the appellants practice to find out their distributors requirements in advance, and to place monthly orders with the manufacturers accordingly, would result in a perfect saturation of their market ; but if it did, Clause (a) of Section 30 does not require the customs duty to be calculated upon any supposition that would involve over supply or any additional supplies. Without assuming that for Ford cars there was any perfect market in Bombay at the time in question, it is quite reasonable to ask what such cars were fetching wholesale at that time and place, and quite reasonable to answer it by taking the prices fetched by the cars under assessment. That the wholesale price obtainable was higher than it would otherwise have been by reason of the appellants organisation and business methods is not a ground of exemption under Clause (a), though doubless their methods of business have improved the demand. That it was higher than it would have been, had not the appellants as monopolists carefully controlled the supply, may be equally true, but this again affords no escape from the clause if the case be otherwise within it. Their Lordships will humbly advise His Majesty that this appeal should be dismissed with costs.

Summary

Issues Involved:
1. Determination of the correct customs duty assessment under Section 30 of the Sea Customs Act, 1878.
2. Applicability of Clause (a) or Clause (b) of Section 30 for assessing customs duty.
3. Consideration of post-importation expenses in the customs duty assessment.
4. Impact of the appellants' monopoly and business practices on the customs duty assessment.

Issue-wise Detailed Analysis:

1. Determination of the correct customs duty assessment under Section 30 of the Sea Customs Act, 1878:
The primary issue was the correct assessment of customs duty on 256 Ford motor cars imported by the appellants. The customs authorities assessed the duty based on Clause (a) of Section 30, which defines "real value" as the wholesale cash price less trade discount. The appellants contested this, arguing that the duty should be assessed under Clause (b), which applies when the wholesale price is not ascertainable.

2. Applicability of Clause (a) or Clause (b) of Section 30 for assessing customs duty:
The appellants argued that there was no ascertainable wholesale cash price for the motor cars in question, thus Clause (b) should apply. However, the judgment clarified that if a wholesale price as defined in Clause (a) is ascertainable, Clause (b) cannot be applied. The court found that the appellants' price to their distributors was a wholesale cash price within the meaning of Clause (a), as it was a cash price paid before delivery and included the necessary trade discount.

3. Consideration of post-importation expenses in the customs duty assessment:
The trial judge initially deducted post-importation expenses, such as carriage from the dock and overhead charges for assembling the cars, to reduce the assessable value to an "ex ship" price. However, the appellate court and the Privy Council disagreed, stating that the phrase "at the place of importation" in Clause (a) does not necessitate such deductions. The court emphasized that the statute intended to exclude post-importation expenses in a practical manner without undue refinement.

4. Impact of the appellants' monopoly and business practices on the customs duty assessment:
The appellants contended that their monopoly and business practices, including price control through sole agents and saturation of the market, affected the wholesale price and thus the customs duty assessment. The court acknowledged these contentions but found that the price obtained for the cars under assessment could be considered as the wholesale cash price for goods of like kind and quality at the time and place of importation. The court concluded that the appellants' business methods, while possibly improving demand, did not exempt them from the application of Clause (a).

Conclusion:
The court dismissed the appeal, upholding the customs authorities' assessment under Clause (a) of Section 30. The judgment clarified that the price at which the appellants sold the cars to their distributors was a wholesale cash price within the meaning of the statute, and post-importation expenses were not to be deducted in determining the assessable value. The appellants' monopoly and business practices did not warrant a different assessment method.