022-NLR-NLR-V-73-THE-QUEEN-Appellant-and-HIRDARAMANI-INDUSTRIES-LTD.-Respondent.pdf
II. X. C. FERNANDO, C.J.—The Queen v. Hirdaramani (Industries) Ltd. 97
1969 Present : H. N. G. Fernando, C.J. and Wijayatllake, J.
THE QUEEN. Appellant, and HIRDARAMANI (INDUSTRIES) LTD.,
Respondent
S. C. 435166 (F)~D. C. Colombo, 61546/M
Customs Ordinance (Cap. 23S)—Section 167—“ True wholesale market value
Whore a person is permitted to import textiles on condition that ho mustuse t ho textiles only in tho course of his business of the manufacture of garmentsand must not sell the imported textiles in their unsewn state, the import dutyproperly leviable is by reference to paragraph (a), and not paragraph (6), of .tho definition of " true wholosalo market value *' in section 167 of the CustomsOrdinance.
Appeal from a judgment of tho District Court, Colombo.
Deheragoda, Deputy Solicitor-General, with Ian Wikramanayake,for the defendant-appellant.
IK. Jayewardene, Q.C., with J. A. L. Cooray, Mark Fernando and
TK. Athulathmudali, for the plaintiff-respondent.
Cur. adv. vult.
December 21, 1969. H. N. G. Fernando, C.J.—
This is an action for the recovery of a sum of money which the plaintiffclaims was levied as customs duty on certain textiles imported into Ceylonin excess of tho duty properly leviable thereon.
It appears from the evidence that the Controller of Imports imposedcertain conditions applicable to textiles imported on what aro described as“ actual user licences ” authorising the importat ion of textiles by personsengaged in the manufacture of garments. Tho particular conditionrclovant in tho present case is a condition that such an importer mustuse tho imported textiles only in the course of his business of the manu-facture of garments and must not sell the imported textiles in theirunsenn condition. In order to discourage breaches of this condition,tho toxtiles aro required beforo importation to be stamped along the.selvcdgo with the namo of the importer and with tho words “ not for saleIn accordance with this requirement, the textiles which are the subject oftho present dispute bore along their selvedge the words “ Hirdara-mani Ltd.—not for sale ”,
LXXIII—5
■- J*—J 11330—(6/70?
ft? H. -Y. G. KERXAN'DO, C.T.—2'he Queen v. Ilirrloramnni {fnduftrir,*) l.td.
Bv reason of the provisions of the Customs Ordinance, import flutyis levied on " the true wholesale market value ” of imported goods,and this expression is declared by s. 107 of the Customs Ordinance tomean—
(o) the wholesale cash price, less trade discount, for which goods ofthe like kind and quality are sold, or are capable of being sold,at the time and place of importation without any abatement ordeduction whatever except of the amount of the duties payableon the importation thereof; or
. (6) where such price is not ascertainable, tho cost at which goodsof the like kind and quality could bo delivered at such placewithout an}’ abatement or deduction except of the duties asaforesaid ; ”
! Tho precise dispute in this case turns on the question whether it. isparagraph (a) of this definition, or else paragraph (b), which is applicableto the textiles which were imported by the plaintiff. It was proved atthe trial that the Association of textile dealers which is. known as theSindi Merchants Association of Ceylon furnishes regularly to the Customsauthorities wholesale cash price lists of piece goods textiles. At the timeof importation by the plaintiff of the textiles to which this action relates,the current price lists included statements of the wholesale cash pricesof the various descriptions of t extiles which were imported by the plaintiff,and it is not disputed that textiles of these several descriptions were infact available for sale in Ceylon at the relevant times. Accordingly theCustoms authorities levied import duties on these imports by referenceto the prices stated in the relevant lists.
The contention for the plaintiff however has been that the duty waswrongly levied in terms of paragraph (a) of the definition, and should 'instead have been levied in terms of paragraph (6), for the reason thatthese textiles did not have an ascertainable “ wholesale cash priceThe basis of this contention is that because of the marking on the sclvedgo,t hese textiles cannot in fact be sold whether to a wholesaler or a retailer,and that because they arc thus unsaleable there cannot attach to themthe wholesale cash price of other textiles, which, although they are of thesame description, are in fact saleable in the open market. The learnedtrial Judge upheld this contention and gave judgment for the plaintiff.
Paragraph (6) of the definition in s. 167 applies in relation to any goodsonly if the wholesale cash price described in paragraph (a) is notascertainable. Thus the first question for the Customs authorities inevery case is whether the price so described is in fact ascertainable, andwhat is so described is “ the wholesale cash price …… for which goods
of the like kind and quality are sold, or arc capable of being sold, at thotime and place of importationIn referring to the price lists
upon the basis of which the Customs levy duty'in this case, I have thusfar mentioned only that the lists contained the prices of textiles of thedescription of the textiles which were imported by the plaintiff. But
H. N. G. FERNANDO, C.J.—The Queen t. Hirdaramani (Industries) Ltd. S$
at this stago it is necessary to consider whether those lists did containtho prices of textiles of the like hind and quality as the textiles which theplaintiff imported.
Tho argument of Counsel for tho plaintiff has been that although thevarious descriptions in those, lists do fit- thoso textiles, nevertheless thosetextiles arp not of the like kind and quality as those described in the listsbecause the stamping on tho selvedge renders these textiles of a differentkind and quality. Counsel relied in this connection on the decision inKiblctt v. Confectioners’ Materials Co.1 holding that the expression“ merchantable quality ” in s. 12 of the .Sale of Goods Act includes thestate or condition of goods. In fact this meaning attaches to thatexpression by rcasou of a definition clause in the Act itself. In the casojust cited, a seller had supplied to his buyer condensed milk in tins solabelled that they were unsaleable by reason of the fact that the salewould have involved an infringement of trade mark rights. I agreeentirely with the proposition that a contract of sale of goods is ordinarilysubject to the implied condition that the goods must bo saleable, nncl thatif the goods arc in fact not saleable they are then not merchantable.But-I cannot agree that the decision assists the plaintifT in the present• ease.' Paragraph (a) of the definition with which we are here concernedcontains the word “ quality ”, which . can ho construed to mean■ merchantable quality” only if there arc present considerations whichestablish that the Legislature intended the word to have that meaning.
It is in my opinion significant that paragraph (a) of tho definitionrefers, not to the price at which a particular consignment of goods is- capablo of being sold, but instead to the prices at which goods of a likekind and quality are sold or capable of being sold. In other words, tiretrue wholesale market value of a particular consignment is to beascertained bj' refereuco to the price of other goods, being of a like kindand quality to those in the consignment. There is here an indicationthat the Legislature was not concerned with the question whether aparticular consignment of goods is or is not to bo sold or consumed oreven destroyed by the importer. For the purpose of the levy of customsduty, the Legislature has attached to imported goods a value which isdetermined by reference to the selling price of similar goods in the actualmarket. Thus the fact that tho wholesale cash price of a particularconsignment is not ascertainable because the goods in the consignmentare not saleable, docs not by itself have the consequence of excluding theapplication of paragraph (a) of the definition.
I suggested during the course of the argument, an example whichillustrates the consequences which might How from a constructiondifferent from that which 1 have just stated. l,ct me suppose that anindividual shop-keeper imports a dozen cigarette lighters : suppose alsothat he intends to keep one of these lighters for his own personal use andlor that reason instructs the Manufacturer to engrave his own initials orfaihily crest on tho one lighter, and that it is proved that no purchaserwould he willing to buy that lighter. In such a case, if it be correct
■ r? ■» Itoin i K. B. 3S7.
106
Sundara Banda v. Paihtranii
that; the engraving constitutes an element in the quality of a lighter,the importer will pay duty on eleven lighters determined by referenceto paragraph (a) of the definition, but will pay a lower duty on tho singlelighter. One can envisage many other devices by which importers cancontrive to take imported goods outside the scope of paragraph (a).If a large engineering firm which imports various tools, both for use athis own factories and also for sale in the open market, has its name orinitials incorporated into some tools which are intended for its own use,will these tools be subject to the lower duty which paragraph (6) of thedefinition attracts, while the tools imported for sale are dutiable- byreference to paragraph (a) ?
It seems to me that the intention in the definition is that duty shouldbe levied on imported goods at their value to. the importer himself, andthat this value is to be ascertained whenever possible by reference tothe price in the open market of similar goods ; the fact that the particulargoods imported are not saleable does not bring the goods within paragraph(6) of the definition unless similar goods aro not in fact sold.or capable of6ale in the?:open market.
I hold for these reasons that the import duty in this case wasproperly levied by reference to paragraph (a) of the definition.The appeal is allowed and the plaintiff’s action is dismissed with costsin both Courts.
Wijayatilake, J.—I agree.
Appeal allowed.