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TMI Blog1976 (3) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... st of the import through the Calcutta port. At the request of the respondent the Customs authorities of Bombay gave a release order in respect of the remaining goods to be imported in terms of the aforesaid licence through the Calcutta Port. 3.By an indent of November 11, 1958, the respondent placed orders with M/s. Fuji Trading Company Limited, Osaka, Japan, for supply of 162 pieces of industrial sewing machine head "Raruna Brand" and 208 dozen of oscillating rock shafts. By two other indents of December 3, 1958, the respondent sent orders to M/s. Alickson & Company, Osaka, for the supply of 59 sets of industrial sewing machine head "Prosper Brand" and certain industrial sewing machine parts. All these three indents were accepted by the two Japanese Companies in due course. M/s. Fuji Trading Company Limited shipped the goods against orders placed with them on January 30, 1959, by s.s. Sydney Maru. M/s. Alickson & Company also shipped the goods covered by the indents placed with them on January 28, 1959, by s.s. State of Andhra. 4.The respondent apparently had some financial difficulties for releasing the goods at Bombay, as, according to it, it did not have sufficient credit wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ousand only) will be paid by the buyers as and when required before the delivery of the goods and the balance sum of Rs. 2,905/- will be paid by the buyers after the delivery of the goods to them in good condition in their godown. Place of delivery: Buyer's Godown at Bombay. Time of delivery: June-July 1959. Sales Tax : Buyers will issue `K' Form (Bombay Sales Tax) against sellers Bill for the goods. For Pednekar & Co. Private Ltd. Sd/- Managing Director. Bombay, dated 20th February, 1959. We confirm. For Bombay & Calcutta Cycle Co. Sd/- Partner". 6.s.s. State of Andhra and s.s. Sydney Maru arrived at the port of Calcutta on February 26 and February 27, 1959, respectively. The respondent instructed the Bankers to engage M/s. Mackinon Mackenzie & Co. Pvt. Ltd. (briefly the Clearing Agents) as Agents for clearing the goods arriving by the said two ships. The Bankers were also asked to despatch the shipping documents to the Clearing Agents. The Bankers carried out these instructions and the Clearing Agents filed with the Customs authorities, Calcutta, Bills of Entry in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease of the goods immediately. 8.On December 17, 1959, the Assistant Collector addressed a letter to the respondent which is described as an additional show cause notice. The substance of the allegations made in this letter is that the goods in question were ascertained and specific goods and that the property in the goods had passed from the respondent to the Cycle Company by reason of the agreement for forward sale dated February 20, 1959, and that the property in the goods had already vested in the Cycle Company at the time of importation so that the goods were not covered by the licence submitted by the respondent. The respondent was asked to make further submissions within a fortnight from receipt of this letter. There was a similar additional show cause letter dated December 22, 1959, addressed to the respondent with regard to goods arrived by s.s. State of Andhra. The respondent sent a reply to the additional show cause notices. The respondent denied in its explanation that the property in the goods had passed to the Cycle Company before the goods were cleared. 9.On 18-3-1960, the Deputy Collector of Customs passed an order by which the goods arrived by s.s. State of Andh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en unsuccessfully pressed into service before the Division Bench, that though every thing ostensibly was done by the respondent the real importer in the case was the Cycle Company and the respondent merely lent his name. The Division Bench, in our opinion, rightly rejected the submission holding that that was a completely new case which had not been made out either before the adjudicator or before the learned single Judge. The Division Bench further rightly held as follows :- "It was never the contention of the Customs authorities that the importation of the goods was not done by the petitioner and that though everything is ostensibly done by the petitioner the real importer is B.C. Cycle Company. In the show cause notice there is no allegation made on the part of the Customs that the contract with the Japanese supplier was a sham or that the petitioner's contract with the B.C. Cycle Company was also a sham transaction." We are, therefore, unable to agree with Mr. Sanghi that he can be permitted to raise this question of a "make-believe" transaction by the respondent. 15.The only question, therefore, that arises for decision in this case and on which Mr. Sanghi has addressed us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rock shafts as the contract between the respondent company and the buyer was one indivisible contract. The High Court, in our opinion, rightly held that the property in the goods did not pass to the buyer till the time of the delivery of the goods in Bombay. No specific goods in a deliverable state were attached to the contract when it was made. 19.Mr. Sanghi submits that the fact that the Cycle Company was principally financing the whole transaction and stood guarantee to the Bankers in Delhi enabling the respondent to open a letter of credit for the importation of the goods clearly indicates that, notwithstanding the place of delivery in the contract, the parties intended that the imported goods were appropriated to the contract when the same was made. In many genuine commercial transactions guarantee can be arranged by a party importing or exporting goods under a valid licence. The mere fact of financial guarantee to a Banker for the purpose of opening a letter of credit without anything more, would not convert the guarantor to be the owner of the property the moment the contract was entered if the terms therein pointed to the contrary. We are unable to hold that the mere fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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