Walter Salis Schwabe, K.C., C.J.
1. This case, which is a test case, raises an interesting question as to the true meaning of Section 10 of the Tariff Act now in force, Act VIII of 1894 as amended by Act IV of 1916.
2. The facts of the case are quite simple. The plaintiff entered into a contract in December 1922 for the purchase by him from the defendant of certain Java sugar to arrive by a named ship due somewhere about the end of the year at a price working out at about Rs. 20 a cwt., 'ex godown.' At the time of the contract duty was payable on sugar at 25 per cent, on what is known as the 'tariff value.' This tariff value is fixed annually in practice, though by this Statute Section 3(2) 'the Governor-General in Council may, by notification fix, for the purpose of levying duties, the tariff values of any articles enumerated in the Schedules, 'and no time is fixed for the issuing of such notifications. In this case the tariff value has, in fact, been fixed about a year previously at Rs. 26-4-0, and it is accepted in this case that the method used by the Governor-General in Council in fixing tariff values is to take at the date when they are fixed the average of the market prices ruling during the previous twelve months ending in September, and the practice being to bring the new tariff valuation into operation from the beginning of January. In this case, when the goods arrived, there had been a notification of an alteration of the tariff valuation of sugar by reducing it from Rs. 26-4-0 to Rs. 16-4-0, the rate of duty payable remaining the same at 25 per cent. The effect of this was that the actual duty paid in respect of these goods was Rs. 2-8-0 per cwt. less than it would have been if the old tariff value had remained in force. As the sale was ex godown the result, of course, was that the seller paid so much less duty, while the buyer would have to pay to the seller a fixed price which included duty, and the seller would be, if his contention referred to hereafter is right, Rs. 2-8-0 per cwt. better off than he would have been if the delivery had taken place before the alteration of the tariff value. The Tariff Act makes provision by Section 10 the object of which is to protect parties to contracts for future delivery of goods from having to' pay more duty than, in fact, is current at the time of delivery, or being able to escape the payment of such duty. The principle no doubt, is that merchants dealing in commodities may be quite willing to take the risk of a rise and fall in the market price of the commodity between the contract date and delivery date as being a matter which is their business, but merchants are not, as a rule, prepared to take the risk of the sudden alteration of prices of the commodities in which they deal by reason of the act of the legislature in imposing, increasing, reducing or remitting the duties payable in respect of those commodities.
3. Section 10 runs, '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, - (a) if such imposition or increase so takes effect that the duty or increased duty, as the case may be, is paid, the seller may add so much to the contract price as will be equivalent to the duty or increase of duty, and (b) if such decrease or remission so takes effect that the decreased duty only or no duty, as the case may be, is paid, the purchaser may deduct so much from the contract price as will be equivalent to the decrease of duty, or remitted duty.' It is argued on behalf of the seller that the word 'duty' in the first part of this section refers to 'rate of duty' and rate of duty only and that, for the purpose of seeing whether that section applies or not, we are not entitled to look at an alteration of the tariff value. It is argued that tariff value is merely a convenient way of arriving at the market value, that, where ad valorem duty is imposed it has to be paid on market value, that the tariff value is a convenient method of arriving at the market value, and that the buyer or the seller, as the case may be, takes the risk of the rise or fall in the tariff value in the same way as he takes the risk of the rise and fall of market value in cases where there is no tariff value. I confess that, at first sight, I was much impressed with the argument in favour of that construction, but on a close examination of the statute and particularly looking at the history of this section, I have come to the conclusion that the contention is not right. In the Tariff Act of 1894 before amendment this clause, i.e., Section 10 was contained, and there was power then, under Section 22 of the Sea Customs Act which was then in operation, for the Governor-General in Council from time to time by notification to fix, for the purpose of levying tariff duty, the value of goods, and in Schedule II to that Act one finds that, in the case of many articles including sugar, there was a tariff valuation in the second column and a rate of duty in the third column; so that at the time, in order to ascertain the duty payable, one had to take the tariff valuation fixed by the statute itself and take the rate per cent, on that tariff valuation also so fixed; and, indeed, hat was the way of ascertaining the duty payable in most of the dutiable goods in the Schedule to that Act. It seems to me that the duty payable depends just as much on tariff valuation as on the rate of duty. The tariff valuation is not the real value; in fact, it is agreed that it is based on a value of an entirely different period, namely, the preceding year, and the legislature has chosen to say in effect, that the duty payable shall be, e.g. 5 per cent, per cwt. a cwt. being taken to be of the hypothetical value, whatever the real value may be, of Rs. 10. The rate of duty payable per cwt. is to be ascertained and it could only be ascertained by working out that sum, and it seems to me that, if the Governor-General in Council makes an alteration of the tariff valuation, he is acting with the power of legislature delegated to him for this purpose and the position is exactly the same as if a new statute of a new Schedule was brought in by the legislature to alter the tariff valuation fixed in the original Schedule by increasing or decreasing it; and, in such a case, I think it would be very difficult to argue that there has not been an increase or decrease, as the case may be, in the duty payable. The Act of 1916 brought into the Tariff Act the power of the Governor-General in Council to fix the tariff values and at the same time altered the form of the schedule by substituting for tariff value merely a unit, or the words 'ad valorem.' As far as sugar was concerned, it became 25 per cent, ad valorem ; but, by reason of the amendment to Section 3 referred to above, that meant, as there was a tariff value in existence, the same thing, namely 25 per cent, of the tariff value. I can find no reason for supposing that it was the intention of the legislature in any way to alter the rights of contracting parties under Section 10 and I think they remain as before. In my view the word, 'duty' in that section must refer to the amount payable and arrived at by taking into account (a) the tariff value and (b) the rate of duty. It is to be observed that in the later part of that section what can be recovered is the duty paid and that cannot be arrived at without taking into account the tariff value. This anomaly does remain that after the making of a contract, in cases where there is no tariff value and there is a fluctuation in the market price, the duty in fact, that is payable will be more or less according as the market price has risen or fallen, and on a contract ex godown such as this the effect would be that, on a fall in the market price, the seller, if he can show that the market price, has fallen, would get the benefit for himself really at the expense of his purchaser. But that results from the fact that the legislature in Section 10 is only contemplating things that follow from the acts of Government. The words used are 'being imposed, increased, decreased or remitted' showing quite clearly that it considered only the imposition or alteration of duty by Government, leaving it to the parties in cases where duty is payable on real market value, to make their own arrangements by their contracts. It is not uninteresting to observe that Section 10 of the Tariff Act is based on Section 20 of the English Customs Consolidation Act of 1876, the existing version of which is to be found in the Finance Act, 1901, Section 10. It was perhaps not a very happy idea in drafting the Indian Statute to take the section bodily from the English Act, when the method of levying customs in England and in India is totally dissimilar; for in England there is no duty payable on tariff value or, indeed, on any value, real or otherwise. The duties, as far as I know, are all imposed there by weight or measure, and the sort of question that has arisen in this case and as far as I know has arisen for the first time in this case, could not have arisen in England. Section 10 might, in my judgment, well have been made much clearer, so that this question could not have arisen. Giving the best consideration I can to the words themselves, I have come to the conclusion that the plaintiff in this case is right.
4. A second point was taken, namely, that this was a voluntary payment and, therefore, cannot be recovered back. The learned Judge has found on the evidence before him and there was ample evidence to support the finding that the plaintiff had to pay the full contract amount, in order to get the goods, though he asked to be allowed to clear the goods on payment of an amount less than the contract price by reason of the alteration in the tariff valuation, but that the defendant had refused and insisted, as a condition of getting the goods, on his paying the full amount. On these facts, it is quite clear law that that amounts to money obtained by duress. It is common in such cases and advisable to pay in terms under protest, in which case no question can arise. But the principle of law does not depend on the protest being made or not that is merely evidence of the fact that an excess demand was made and that the plaintiff meant to retain his rights to claim back the excess. But the real question to consider is whether or not it was a voluntary payment, or whether it was a payment extorted by the other party using, no doubt, as he thought legitimately, his hold over the goods to make the plaintiff pay what the defendant considered it was his right to have, but it cannot be said, under those circumstances, that the payment was a voluntary payment. That being so, as the defendant was wrong in his contention, as we hold in this case, he must repay to the plaintiff the amount claimed, that is to say, the amount of over-payment as money had and received to the use of the plaintiff.
5. The appeal is, therefore, dismissed with costs.
6. I entirely agree that this appeal fails. The judgment of the learned trial Judge is right and it must be upheld on both the points that have been taken before us. As the learned Chief Justice has dealt with the questions fully in his judgment, I think it is unnecessary to add anything of my own in the case. I, therefore, content myself by saying that I agree to the order proposed by the learned Chief Justice.