Salomon v Commissioners of Customs and Excise

JurisdictionEngland & Wales
Judgment Date26 October 1966
Judgment citation (vLex)[1966] EWCA Civ J1026-2
Date26 October 1966
CourtCourt of Appeal

In the Matter of The Customs amd Excise Act 1952


In The Master of The Purchase Tax Act 1963


In The Master of an Arbitration

Walter H. Salomon
The Commissioners of Customs and Excise

[1966] EWCA Civ J1026-2


The Master of the Rolls

(Lord Denning)

Lord Justice Diplock and

Lord Justice Russell

In The Supreme Court of Judicature

The Court of Appeal

From Mr Justice Megaw

MR M. WATERS (instructed by Messrs Tarlo, Lyons & Aukin) appeared as Counsel for the Appellant (Complainant)

MR FREDERICK HALLIS and MR J. J. FINNEY (instructed by the Solicito: Commissioners of Customs and Excise) appeared as Counsel for the Respondents (Respondents).


Mr. Salomon is the Chairman of a firm of merchant bankers in the City of London. In 1963 he went on a trip to the United States. Whilst there a friend gave him a camera with its case. For convenience, I will omit the case. The camera was made in America and called a Polaroid Automatic 100 Camera. It was wrapped up in a parcel. Mr. Salomon did not undo it. The friend also gave him the invoice showing that he had paid £85.50 for the camera in the U.S.A. That equals £30. 10s.8d. in England. Mr. Salomon brought the parcel back with him to England. He arrived by air at London Airport. He declared the camera to the customs officer and produced the invoice. The customs officer opened the parcel and examined the camera. A question arose about the tax and duty payable. The customs Authorities say that purchase tax is payable of £16. 0s.6d. and customs duty of £28. 3s.5d. Mr. Salomon does not dispute the purchase tax of £16. 0s.6d. but he does dispute the customs duty. He says it is more than twice what it ought to be. He says it should be only £12. 6s,3d.


Although the amount involved is small, the case has farreaching consequences. If Mr. Salomon had been a trader in cameras, importing this one from the U.S.A., the Customs Authorities would only have charged him about £12. But as he is not a trader in cameras, they wish to charge him nearly £30.


These cameras are all made in America. When they are imported into England, the customs duty is 40 per cent. of their value at the place of importation. There is only one trader who imports these cameras into England. It is a Company called Polaroid (U.K.) Ltd., who are sole concessionaires for England. When that Company imports the cameras, the Customs Authorities take the value in this way: They take the price which Polaroid (U.K.) Ltd. pay for the cameras to their supplier in the U.S.A., plus freight and expenses. That comes in English money to £31. 6s.10d. The Customs Authorities chargeduty at 40 per cent. of that value. 40 per cent. of £31. 6s.10d. comes to £12. 10s.8d. That is all that Polaroid (U.K.) Ltd. pay on each camera they import.


But when a non-trader like Mr. Salomon comes in with an identical camera as part of his baggage, the Customs Authorities? take the value in a different way: They take the retail list price of a Polaroid camera in London, but adjusted to allow for 40 per cent. customs duty. The retail list price in London is £98. 12s.0d. That is equivalent, say the Customs Authorities, to a value for duty of £70. 8s.7d. plus 40 per cent. duty £28. 3s.5d. So they seek to charge Mr. Salomon duty of £28. 3s.5d. But I cannot help observing that none of the cameras sold in London at that retail price has borne duty of £28. 3s.5d. They are all imported by Polaroid (U.K.) Ltd. and have in fact only borne duty of £12. 10s.8d. Nevertheless, the Customs Authorities say that for Salomon must pay £28. 3s.5d. on his camera.


The Customs Authorities justify the difference in this way. They say that value for duty contemplated by the statute is a value based on the price in the open market in England. In the case of one camera, that is the retail list price. In the case of a quantity of cameras, it would be the wholesale price. But they claim that in certain circumstances they have a discretion to ignore the open market price here and take a lower figure based on the cost price to the importers. This discretion is available to them, they say, when goods are imported under a contract for sale, and are entered for consumption in England. In such cases they say they are entitled, if they think fit, to assess the value on the contract price paid by the importer. They exercise this discretion in favour of traders.


The validity of this contention depends on the Customs and Excise Act 1952. I can find nothing in the statute to justify any distinction being drawn between a trader and a non-trader, or to give the Customs Authorities the discretion which they claim.Customs duty is payable on goods, not on persons. It is chargeable on the value of the goods without regard to the person who brings them into the country. The value is to be ascertained by the method shown in the Sixth Schedule. It is the normal price, which is the price which the goods would fetch "in the open market", depending on the quantity sold. The Customs Authorities contend that that means the open market here at home, the retail market for one article, the wholesale market for many. I do not think that is right. The words "open market" have to be read with the rest of the Schedule, and particularly Section l(2)(a), (b) and (c). It then becomes clear that "open market" is the import market in which a buyer in England buys the goods from a seller overseas. When the statute speaks of the normal price, it is referring to the normal price of imported goods. It is determined by taking the price payable by an importer to an overseas seller on the basis that the price is for delivery c.i.f. to the place of importation, the buyer and seller being independent of each other.


Thus far both buyer and seller are hypothetical. But in some cases the statute permits the Customs Authorities to leave the hypothetical and come down to the actual case. it permits them to have regard to the actual contract price. That appears from the proviso to Section 258(1). It applies when goods are imported under a contract of sale and entered for home use here in England. In such a case, in lieu of a hypothetical contract, the Customs Authorities are at liberty to accept the actual contract and take the price stated in it, i.e. the invoice price, and use it to ascertain the value for duty. If the actual invoice price is for delivery on c.i.f. terms, it may need very little adjustment. But if the actual invoice price is on f.o.b. terms, it will need considerable adjustment so as to make it equivalent to c.i.f. terms. Once the necessary adjustments have been made, then if the Customs Authorities are satisfied it is bona fide, they can accept the actual invoice price as the propervalue for duty.


That is the only discretion which is vested in the Customs Authorities. They are empowered in their discretion to work on the basis of the actual contract price in lieu of a hypothetical contract price. But in any case the normal price is the price in the import market, not in the home market.


I am confirmed in this view by looking at the International Convention which preceded the 1952 Act. In 1950 there was a Convention between many of the European countries. It was specially concerned with the valuation of goods for customs purposes. I think we are entitled to look at it, because it is an instrument which is binding in international law: and we ought always to interpret our statutes so as to be in conformity with international law. Our statute does not in terms incorporate the Convention, nor refer to it. But that does not matter. We can look at it. Then we find that each contracting party agreed to introduce into its domestic law the Definition of Value contained in the Convention; and also agreed, in applying the definition, to conform to the Interpretative Notes. Then when we turn to the Definition and the Notes, we find a clear indication that the "open market" is the import market: and that the contract price payable to the foreign seller is only a permitted basis for calculating it. Note 5 says that: "In practice, therefore, when imported goods are the subject of a bona fide sale, the price paid or payable on that sale can generally be considered as a valid indication of the normal price mentioned in the definition. That being so, the price paid or payable can reasonably be used as a basis for vacation". It is plain that that Note formed the basis for the proviso to Section 258(l). It shows that that proviso only gives a convenient way of ascertaining the normal price and is not a departure from it.


Turning now to the present case: The Customs Authorities should have charged r Salomon with customs duty on the import price of the camera, not on the retail price. In order



Customs and Excise Act of that year was passed. The Convention by Article II required each contracting party to introduce into its domestic law and apply the Definition of Value of imported goods set out in Annex I of the Convention. The Convention is one of those public Acts of State of Her Majesty's Government of which H.M. Judges must take judicial notice if it be relevant to the determination of a case before them, if necessary informing themselves of such Acts by inquiry of the appropriate Department of Her Majesty's Government. Were by a treaty Her Majesty's Government undertakes either to introduce domestic legislation to achieve a specified result in the United Kingdom or to secure a specified result which can only be achieved by legislation, the treaty, since in English law it is not self-operating, remains irrelevant to any issue in the English Courts until Her Majesty's Government has taken steps by way of legislation to fulfil its treaty obligations. Once the Government has legislated, which it may do in anticipation of the coming into effect of the treaty as it did in this...

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