1. This is an appeal from the judgment of Mr. Justice Blackwell, and it raises an important question under the Sea Customs Act. The question is by no means free from difficulty, but as it lies in a small compass, I do not think any useful purpose would be served by reserving our judgment.
2. The facts, which are to be found very clearly expressed in the judgment of Mr. Justice Blackwell, are not, I think, really in dispute, and for the purpose of my judgment can be stated quite shortly.
3. The plaintiffs are manufacturers, on a large scale in America, of lubricating oils, and they import very large quantities-as much as 80,000 gallons a month-to Bombay, They are in fact the largest importers of lubricating oil to Bombay. They import one class of lubricating oil, viz. mobil oil, in tins, and those tins they sell to dealers, who distribute retail amongst their customers. The rest of the lubricating oil imported by the plaintiffs is imported for the most part in barrels and it is all dealt with by distribution direct to the consumers, without the intervention of any dealer or middleman.
4. The evidence is that the plaintiffs do not sell less than eight gallons at a time, and that the large consumers such as railway companies and mill- owners enter into annual contracts to buy the whole of their lubricating oil from plaintiffs during the year at a fixed price, and people who enter into these annual contracts are allowed a discount varying from two and a half per cent, to fifteen per cent, at the end of the year, which depends on the quantity of oil taken during the year. But the evidence is that only one price is charged to all persons who buy lubricating oil, whether on annual contracts or otherwise. A form of annual contract is to be found in Exh. 1. The plaintiffs allow thirty days' credit < on all contracts. The way in which the plaintiffs conduct their business is that they carry on the whole of their business in New York, and they have branches in India. They have five 0: branches, of which the head branch is at Bombay. For the purpose of book-keeping they invoice the goods to the Indian branch at cost price plus a small manufacturer's profit, and the plaintiffs fl in their bill of entry enter up the invoice price plus the cost of insurance, freight and landing charges at Bombay. The evidence is that the plaintiffs soil their lubricating oil-and when I say lubricating oil I am not including mobil oil-at prices which show an increase of about seventy per cent, over the invoice price. The branches keep accounts, and at the end of the year they remit their profits to New York. The branches incur substantial expenses, in connection with their sales, advertising expenses, office rent, warehouse charges, delivery charges and the like, expenses which Mr. Coltman has conveniently called 'service charges'.
5. Now, the question which arises in this case is as to the real value of the lubricating oil for the purpose of the Sea Customs Act, and that involves the construction of Sections 29 and 30-primarily the construction of Section 30. Section 29 provides:-
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, and shall subscribe a declaration of the truth of such statement at the foot of such bill.
Then there are provisions enabling the Customs Collector to require the production of documents and so forth, and then Section 30 provides:-
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.
6. Putting it generally, the scheme of Section 30 seems to be that the real value is to be the wholesale) cash price, less trade discount, if you can ascertain that price and if you cannot ascertain that price, then Clause (&) comes into operation and the real value is to be the cost price.
7. Mr. Coltman's first argument is this, that if you charge duty on the wholesale price that includes substantial sums spent by the importer in service charges, and he says that it is monstrous to charge customs duty oil monies spent by the importer in Bombay.
8. Well, the first answer to that argument is that if the Act of Parliament is clear, this Court can only give effect to the language used. If the language is capable of two meanings, the Court may no doubt adopt the construction which seems to produce a beneficent result rather than a construction which produces an opposite result, but if the words are clear the Court can only give to them their natural meaning. The second answer to that argument of Mr. Coltman is, that the point is not really open to him in this Court for a reason which I will now state. In 1918 the question of the actual value to be placed on the plaintiffs' mobil oil sold in tins to dealers was litigated in this Court, and the decision of the Court is reported the reference being Vacuum Oil Company v. The Secretary of State for India ILR (1921) 47 Bom. 174, 24 Bom. L.R. 198. The effect of the decision is that inasmuch as the tmobil oil was sold in tins to dealers the price at which it was sold was the wholesale cash price and being ascertainable the case fell under Section 80 (a) and Section 30 (6) did not come into operation at all. It is, I think, quite clear that in the case of mobil oil sold in tine to dealers there must have been some service charges, a certain amount spent in advertising, office-rent, wages for staff and so forth, and therefore, the decision in Vacuum Oil Company v. The Secretary of State for India seems to me to dispose of the argument that the wholesale cash price under Section SO (a) cannot have been intended to include anything in the nature of service charges expended in Bombay.
9. The second argument, and that which prevailed before Mr. Justice Blackwell, is that inasmuch as the lubricating oils dealt with in this case are sold by the plaintiffs direct to customers, without the intervention of any middleman or dealer, there is no ' wholesale cash price less trade discount' within Section 30 (a). No such price is ascertainable, and therefore Section 30 (a) does not apply and Section 30 (a) does apply, and under Section 30 (b) the plaintiffs are chargeable with the value shown in their bills of entry.
10. Mr. Justice Blackwell, in the first instance, considered that this was not a cash price, because the plaintiffs allow thirty days credit, but, in my opinion, where it is a sale on credit, cash price is very easily ascertainable by allowing discount at the ordinary current rates, and indeed. I apprehend that if the words ' cash price' are given a literal meaning there will be no case falling within Section 30 (a), because people do not deal at the customs port on a strict cash basis. Moreover, I think this point is really covered by the decision in Vacuum Oil Company v. The Secretary of State for India, because it appears from the paper book in that case that in fact thirty days credit was allowed to the dealers who bought mobil oil in tins, so that the decision really covers the point that allowing thirty days credit does not prevent a sale being at a cash price.
11. The more serious contention is this, that where you do not deal with a middleman but deal direct with the consumer there can be no wholesale cash price less trade discount. Mr. Justice Blackwell says that the expression ' trade discount' is appropriate to a discount allowed by one person in the trade to another person in the trade, and that it is not an apt expression to denote discount allowed by a person in the trade to a person who is not in the trade. No doubt, generally speaking, a man in the trade does not allow a discount (other than discounts for cash which are very commonly allowed) to a person who is not in the trade. But at the same time if a manufacturer in the trade chooses to sell direct to a customer who is not in the trade and to allow a discount which he would normally allow to a person in the trade, I see no reason why that discount should not be properly described as a trade discount. It is a discount allowed to a large customer such as would normally be allowed to a person in the trade, and, I think, it can properly be described as a trade discount.
12. Mr. Coltnian has further argued that the so-called discount in this case being a sum ascertainable only at the end of the year under these annual contracts, is not a trade discount at time and place of importation. If this be so and the allowance in question is not properly described as a trade discount then there is nothing in regard to which a deduction has to be made under Section 30 (a), I think, however, speaking for myself, that this allowance under the annual contracts can properly be described as a trade discount, and, therefore, the Crown was right in offering to deduct it.
13. The next point is, whether you can have a wholesale cash price where the manufacturer is not dealing with a dealer in the trade, but is dealing direct with the customer. Again, no doubt the expression 'wholesale' is most commonly used in contradistinction to the expression 'retail'. The wholesale dealer is the man who supplies the dealer at one price and the dealer supplies the public retail at a higher price, sufficient, of course, to cover his own overhead charges and profit. But I am not prepared to say that the introduction of a middleman is an essential ingredient in the expressions 'wholesale price' or 'wholesale dealing'. The word 'wholesale' from an etymological point of view, and according to the definition in Murray's Dictionary, means primarily a sale in large quantities, and I think that where a trader sells the whole, or a very large part, of his produce direct at fixed price to customers that price is properly described as the 'wholesale price'. As I have mentioned the same price is charged by the plaintiffs to all their customers whether they buy under an annual contract, or whether they buy otherwise, and it seems to me that that price is the wholesale price. I think that a proper allowance must be made for the fact that credit of thirty days is given and I think also an allowance must be made in respect of the trade discount, i. e., the discount allowed under these annual contracts. I think strictly that the plaintiffs are entitled to the average discount allowed for the year, but as the Crown is prepared to allow discount at the rate of twelve and a half per cent, which is not far short of the maximum rate, probably that will satisfy the plaintiffs, but if they think that is not enough they can go into the figures. Mr. Coltman has further argued that inasmuch as in many cases the price is fixed for the whole year in the case of annual contracts, that again prevents it being a wholesale price at the time of importation. But I do not see why the fact that the price cannot be changed for a year prevents it being a wholesale price at time of importation. In my judgment the appeal should be allowed. Appeal allowed with costs, suit dismissed with costs, and cross-objections dismissed with costs.
14. I agree with my lord, the Chief Justice, and have very little to add. Most of the points which have been raised in this case are dealt with in Vacuum Oil Company v. The Secretary of State for India ILR (1921) 47 Bom. 174, 24 Bom. L.R. 198, which was a case between the same parties, but then it is contended that as in that case the Court was dealing with the sales of mobil oil in tins to dealers, the expressions used in that case will have no reference to the present, which deals with the sale of oil in bulk in barrels to consumers and not to dealers. I do not find that this distinction was present to the mind of the Court in Vacuum Oil Company's case, for at p. 181 it is said:-
Those words clearly indicate that it must be the price which the importers here would be able to realise on a wholesale disposal of the goods by them to any person in Bombay. The expresssion could not be construed as meaning the price which they may have paid for the purpose of importing goods to Bombay.
15. It is not laid down that the wholesale disposal will only be a wholesale disposal if it was not made to the consumer direct, but to a dealer who subsequently passed the goods on to consumers. I am not prepared to hold that the ruling in Vacuum Oil Company's case does not apply to the present case.
16. There is another point, that if the argument of the respondents prevails the result would be that the legislature must be held to have been intended to make a difference in the customs duty to be charged on the goods sold direct to consumers and those sold to dealers, which seems to be a distinction which has no sound basis behind it, I cannot see why one class should pay less than others, because they do their business in rather a different way. I agree with the view of the learned Chief Justice as to the interpretation that he has put on the words ' wholesale cash price ' in Section 30 (a) of Sea Customs Act, and I agree in the order proposed.