Horace Owen Compton Beasley, Kt., C.J.
1. This appeal raises an interesting point. The appellant was the plaintiff in the trial Court and in the suit he claimed damages from the defendant for non-delivery of some bags of sugar. The defendant, the respondent here, was the seller of those bags which had been imported from Java and at the time of the sale lay in a bonded warehouse. The sale was effected on the 28th February, 1930 and on the next day the import duty on sugar was increased by Rs. 3 per bag. On that day the plaintiff demanded delivery of the sugar from the defendant and delivery was refused because the Customs House authorities refused to allow delivery to be given unless the increased duty in respect of the bags was paid. The sale was a sale of ready goods for ready delivery. Stone, J., has found as a fact that the sale was of goods in a bonded warehouse and there is ample evidence to support that finding--indeed, there is no evidence on the appellant's side to the contrary. Evidence was necessary upon the point because it was argued that a sale of goods of this description meant a sale of goods in a warehouse which was not a bonded warehouse, not requiring the payment of any extra customs duty. It should be mentioned that the appellant possesses another warehouse in Madras but the limit of its accommodation is 1000 bags of sugar and that the suit claiming damages was in respect of bags which lay in the bonded warehouse. I see no reason whatever to find fault with the findings of fact of the learned trial Judge on this point.
2. What we have now got to consider is whether the appellant was entitled to demand delivery of the bags of sugar without paying the increased duty. It is argued that by reason of Section 10 of the Indian Tariff Act, 1894, the liability to pay the increased duty does not fall upon the appellant at all but upon the respondent, because the respondent has not brought himself within the provisions of that section. That section obviously was enacted for the purpose of making it plain, in the absence of any agreement, upon whom the liability to pay duty upon articles which had been agreed to be sold was, where the duty had increased between the time the contract of sale was made and the delivery of the goods It was in order to make quite clear what the position both of the seller and the purchaser of the goods would be under such circumstances. Here, in between the time of entering into the contract of sale of these bags of sugar and their delivery the import duty was increased by Rs. 3 per bag. Upon whom was the liability to pay that increase? The section in question, Section 10, reads as follows:
In the event of any duty of customs or excise on any article being imposed, increased, decreased or remitted after the making of any contract for the sale of such article without stipulation as to the payment of duty where duty was not chargeable at the time of the making of the contract, or for the sale of such article duty-paid where duty was chargeable at that time
3. It is the latter part of the section which has application here. This was a case of the sale of an article in respect of which there was a duty chargeable and that duty chargeable was subsequently increased. Here Sub-clause (a) to Section 10 comes into play. It is as follows:
If such imposition or increase so takes effect that the duty or increased duty, as the case may be, (or any part thereof) is paid, the seller may add so much to the contract price as will be equivalent to the amount paid in respect of such duty or increase of duty, and he shall be entitled to be paid and to sue for and recover such addition.
4. Sub-clause (b) has no application here. The point taken before us, although it does not appear to have been taken at all before the learned trial Judge, was that the words 'article duty-paid' in the section mean articles upon which the duty has been paid at the time of the making of the contract. In my view, that is not the meaning of those words. What, in my view, is meant is that it is to be a sale of an article in respect of which the liability to pay duty is upon the seller and he sells the article duty free. If it had been intended that in order to comply with the provisions of that section or to bring himself within the provisions of that section a seller must already have paid the duty, then I should expect the section to read 'for the sale of such article upon which the duty has been paid'. That is not what the section says. Stone, J., says that it was the duty of the purchaser who is under that section liable to pay the increased duty to tender the proper amount to the seller before he was entitled to demand delivery. That, of course, is one alternative. It is also pointed out by the learned trial Judge that the seller himself might have paid the duty and recovered the increase from the purchaser; but this is a suit by the appellant to recover damages for non-delivery of the goods and, in my view, the respondent was perfectly entitled to refuse to give delivery until the proper price, that is to say, the agreed purchase price plus the increased duty had been tendered to him. The fact that the duty had not been paid in this case makes no difference at all. It is found as a fact that the sale was of goods in a bonded warehouse and by reason of Section 37 of the Sea Customs Act it does not matter at all whether the old duty had been paid. Under that section if the old duty had been paid and the goods had been allowed to remain in the bonded warehouse and subsequent to the payment of the old duty a new duty, the increased duty, had been put upon the goods, then that duty would have to be paid if and when goods were removed from the warehouse if the purpose for which the goods was removed was home consumption; and that is this case. So that it did not make any difference at all whether the old duty had been paid or not. The new duty would still have to be paid under Section 37 of the Sea Customs Act the goods not having been removed from the warehouse before the date of its imposition. It being found that this was a sale of goods in a bonded warehouse, the question as to whether or not old duty has been paid is immaterial. In my view, Section 10 of the Indian Tariff Act means a sale of goods duty-free. For these reasons, this appeal must be dismissed with costs.
5. I agree with my Lord the Chief Justice.