9911796707
TMI Blog1976 (1) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... an import licence known as actual user's import licence bearing No. 183273 for the import of electrolytic copper ingot bars. On 15th December, 1962, a letter of authority was issued by the office of the Joint Chief Controller of Imports and Exports, whereby M.R. Co., as the holders of the aforesaid licence, were authorised to permit the respondent, viz., Metal Distributors Ltd., on their behalf to import goods and open letter or letters of credit and make remittance of foreign exchange against the said import licence. The relevant conditions in this letter of authority are as follows: "(a) The person or firm in whose favour it has been issued, will act purely as an agent of the licensee and the goods imported will be the property of the licence-holder both at the time of clearance through the customs and subsequent thereto. The licence-holder will have to assure that the goods on importation will be delivered to him and shall not be disposed of otherwise. The licensee shall not cause or permit the holder of the letter of authority to dispose of the goods. (b) The indentor/agent acting on the authority letter shall clearly indicate on all the relevant customs documents includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions shown on the reverse of the said letter, 2.60 long tons of electrolytic copper ingot bars. The price is mentioned in this letter as 239-5-0 per long ton c.i.f. The term relating to payment shows that payment was to be made by cash against first presentation of documents. This letter contains a statement that the buyers hold import licences of which the numbers are set out in the letter. One of the licence numbers mentioned is 183273, viz., the number of the said import licence issued to M.R. Co., which we have already referred to earlier. The general conditions on the reverse of this document, which are in print, contain the usual force majeure clause. There is also a clause stating that buyers undertake to supply, as the sellers may require, one or all of the following valid documents, viz., import licence, import certificate, end use certificate, delivery verification certificate. There is a further clause providing for arbitration in case of any difference or dispute arising out of the contract. There is also a condition providing that unless otherwise agreed and recorded on the contract the sellers would cover marine and war risk insurance on the basis stated there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. On receipt of the letter of authority in respect of a licence belonging to a buyer, the respondent would place an indent with its foreign counterpart (the foreign company) for sending the goods required for the buyer's order. It has been further set out in this application that the respondent's foreign supplier arranges for shipment of bulk consignment to cover the various orders backed by actual user's import licences. The statements in this application show that a single consignment sent by the foreign supplier to the respondent would include the goods to be imported under several import licences belonging to different buyers. The Deputy Commissioner of Sales Tax, who disposed of this application, held that the transaction in question was one of sale by the respondent to M.R. Co. The respondent preferred an appeal against this decision of the Deputy Commissioner to the Sales Tax Tribunal. The Sales Tax Tribunal accepted the contention of the respondent that the respondent had acted as the indenting agent of M.R. Co. and that the transaction between the respondent and M.R. Co. was not one of sale but only amounted to a supply by an agent to his principal. On the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties to this contract is shown by the opening words in the letter to the effect that the respondent agreed to import the said copper ingots for M.R. Co. against the import licence of M.R. Co. and the note in the concluding portion which shows that the respondent was merely acting as an indenting agent of M.R. Co. for importing the goods on the account of M.R. Co. and at their risk. This, in our view, clearly indicates that the contract entered into between the respondent and M.R. Co. was one of agency, whereby the respondent agreed to import the aforesaid copper ingots as the agent of M.R. Co. and the respondent's main interest in the transaction was of earning commission. We may mention at this stage that bill No. 157 sent by the respondent to M.R. Co. is also entirely consistent with the transaction between them being one of agency. This bill clearly shows that the goods have been imported by the respondent on the said import licence of M.R. Co. and under the said letter of authority, and further shows that the handling commission of Rs. 495 per metric ton includes the customs duty at the rate of Rs. 300 per metric ton. In connection with the contract re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent by the Joint Chief Controller of Imports and Exports would, in our view, clearly suggest that the transaction was one of agency. This letter of authority cleary shows that the respondent was to act purely as an agent of the licence-holder (M.R. Co.) and the goods imported were to be the property of the licence-holder, viz., M.R. Co., both at the time of clearance and subsequent thereto. In this connection, we may refer to our decision in Commissioner of Sales Tax v. Hard Castle Waud Co. Pvt. Ltd[1976] 37 S.T.C. 479. (S.T.R. No. 65 of 1968 decided on 31st January, 1975). In that case, Hard Castle Waud Co. Pvt. Ltd., the respondents, imported certain goods on the strength of an actual user's licence belonging to one Indo-Burma Petroleum Company Limited and a letter of authority in respect of this licence issued in favour of the respondents. The question there was whether the respondents in importing those goods and delivering the same to Indo-Burma Petroleum Company Limited had acted merely as agents of Indo-Burma Petroleum Company or whether there was a transaction of sale between them. In connection with this question, we have observed as follows: "........ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 8., where it has been held that if the person holding the letter of authority actually imported the licensed goods and sold them to the licensee, the transaction should be viewed as a sale and there is nothing either in the provisions of the Imports (Control) Order, 1955, or in the Regulations issued by the Central Government which would compel the court to hold that though there was a sale, it should not be held as such. In that case, the tenor of the document containing the terms of the contract was consistent only with the transaction of sale of cotton by one G to the assessee and it was in those circumstances that it was held that the mere fact that G had imported the goods, viz., cotton, under a letter of authority based on a licence issued in favour of the assessee could not make a difference. We may make it quite clear that we do not wish to suggest that the letter of authority or the fact of the import having been made under the letter of authority are decisive of the nature of transaction particularly where the relevant documents and the surrounding circumstances apart from these clearly show that there was a sale by the importer, who imported the goods under a letter o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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