TMI Blog1963 (5) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... examined by the appellate authority and it was found to be of the following kind. The assessees imported from Penang two consignments of betel-nuts under an import licence. Before the goods were landed at the Madras port the assessees entered into a contract with a purchaser for the sale of these goods. According to the terms of the contract, the buyer had to make the arrangements for retiring the documents from the bank and for clearing the goods. The other contracting party paid the value to the bank, received the documents from bank and cleared the goods from the customs through clearing agents. On this material, the appellate authority took the view that there was a transfer of documents of title to the buyer which would make the transaction a sale in the course of import. The appeal was allowed and the assessing authority was directed to delete the turnover in dispute from the assessment. The Board commenced proceedings under section 34 of the Act of 1959 and issued a notice to the assessees to show cause why the order of the appellate authority should not be set aside and that of the assessing authority restored. The grounds upon which the assessees were called upon to show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party took place both in fact and in law only after the clearance of the goods, which would make the sale a sale in this State. The assessees appeal from this order, and Mr. R.S. Venkatachari, learned counsel for the assessees, once again presses the very same arguments that he had put forward before the Board. He claims that the assessees imported the goods under valid licences issued under the Import Control Order. In the contract which the assessees entered into with the ultimate buyer, one of the conditions was that the buyer should make all necessary arrangements in connection with the shipment and clearance of the goods and also retirement of the documents from the bank on behalf of the sellers. A letter proceeding from one Srinivasulu, a clearing and forwarding agent, was produced to establish that the duty and other charges were received from the ultimate purchaser for the consignments in question. This Srinivasulu also claimed that he acted as a clearing agent only on behalf of the ultimate buyer. Learned counsel further contended that the very fact that the mark of the ultimate buyer, the "sovereign" mark, was affixed to the goods by the Penang exporter, amounted to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the draft issued by the Penang exporter from this ultimate buyer. There is no doubt therefore that this advice issued to the bank was subsequent to the date on which the goods were either exported from Penang or the ship carrying them reached the Madras harbour. From these facts, it should necessarily follow that by no stretch of imagination could it be said that the property in the goods passed to the ultimate buyer by the process of appropriation of the goods even at the time when the Penang dealer placed the goods on board the ship. An appropriation can only be to a contract and it is impossible to conceive of a position where the Penang dealer could have appropriated the goods to a contract to which he was not a party or of the existence of which he was wholly unaware. The putting of a specific mark upon the goods could at that time have been only for the purpose of identification of the goods and could have no greater significance. We are also wholly unable to accept the contention that the direction which the assessee issued to the ultimate buyer to meet the draft issued by the Penang dealer and retire the documents from the bank leads to a transfer of property in the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chetti v. Soundararajan and Company(1957) 2 M.L.J. 328. We are really unable to see what support this decision lends to the arguments of the learned counsel. That was a case where the question whether the sellers had committed a breach of contract and were liable to pay damages arose. Part of the headnote reads: "The seller who had purchased the goods from the foreign merchant was in a position to know the date of the shipment and in fact as that involved compliance with the Exchange Control Regulations, by opening a letter of credit, he had presumably obtained this facility with the and of a duplicate of the import control licence which he held; the seller had an import control licence while the buyer did not have any, in the absence of any express term in the contract, the Court would be justified in importing a term that the buyer shall be permitted to avail himself of the import licence held by the seller. It is well settled that it is the duty of the seller on c.i.f. terms to tender documents within a reasonable time after shipment and in the present case, after the contract, as the goods were then afloat. Normally the duty of a buyer on c.i.f. terms is to pay the price on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action to the buyer that the goods conformed to the specified standards, etc., thereby showing that the entire responsibility of bringing the goods was on the seller, and the seller had also to clear the goods across the customs barrier of the importing country. The facts in the case before us are in nowise different, for not only was there no transfer of documents of title but there is clear indication in the contract that all the incidents relevant to the import of the goods had to be undertaken by the buyer only on behalf of the sellers and not in exercise of any right which had passed to him. On a consideration of the material that is available here, we are fully satisfied that the property in the goods did not pass to the ultimate buyer till after the clearance of the goods; such clearance was effected only on behalf of the assessees. In the face of the admitted position that there was no transfer of the documents of title, which alone could give an indefeasible right to the buyer to the goods, and in the light of the admission that the bill of entry was filed only in the name of the assessees, the inference is irresistible that the assessees were the owners of the goods til ..... X X X X Extracts X X X X X X X X Extracts X X X X
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