Case Name: TERRY HAGGERTY TIRE CO., INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee
Court: United States Court of Appeals for the Federal Circuit
Jurisdiction: United States
Decision Date: 1990-04-04
Citations: 899 F.2d 1199
Docket Number: No. 89-1499
Parties: TERRY HAGGERTY TIRE CO., INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
Judges: 
Reporter: United States Claims Court Reporter
Volume: 20
Pages: 1199–1203

Head Matter:
TERRY HAGGERTY TIRE CO., INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
No. 89-1499.
United States Court of Appeals, Federal Circuit.
April 4, 1990.
Rehearing Denied May 1, 1990.
Suggestion for Rehearing In Banc Declined May 11,1990.
Jon R. Eggleston, Miller, Eggleston & Rosenberg, Ltd., Burlington, Vt., argued for plaintiff-appellant.
Kevin M. Brown, Tax Div., Dept, of Justice, Washington, D.C., argued for defendant-appellee. With him on the brief were Shirley D. Peterson, Asst. Atty. Gen., Gary R. Allen, and David English Carmack.
Before NEWMAN, Circuit Judge, BALDWIN, Senior Circuit Judge, and ARCHER, Circuit Judge.

Opinion:
ARCHER, Circuit Judge.
Terry Haggerty Tire Co., Inc. (Haggerty) appeals from the summary judgment of the United States Claims Court, 16 Cl.Ct. 620 (1989), holding that Haggerty was the "importer" of certain tires from Canada and was therefore subject to excise tax under Section 4071 of the Internal Revenue Code of 1954, as amended. 26 U.S.C. § 4071 (1988). We affirm.
I
Haggerty is a New York corporation engaged in the business of selling, distributing and retreading tires on both a wholesale and retail basis. Canada Tire Company (Canada Tire) is a Canadian corporation with no business facilities in the United States.
Early in 1984, representatives of Canada Tire visited Haggerty at its place of business in Albany, New York to solicit orders for its tires. Haggerty purchased tires from Canada Tire on that occasion and later purchased additional tires when visited by a Canada Tire representative or by placing orders over the telephone. Hag-gerty was aware that it was making a purchase directly from the Canadian manufacturer. At the time of placing its orders, Haggerty negotiated the price with Canada Tire which included, inter alia, the cost of the tires, freight charges, brokerage fees, and customs duty. The parties dispute whether the agreed price included the payment of the excise taxes in question.
The tires purchased by Haggerty were shipped by Canada Tire, using Canada Tire's own vehicles, either directly from Canada Tire's warehouse in Canada or from a customs bonded warehouse in Essex Junction, Vermont, where Canada Tire had arranged to store tires not yet cleared through customs. Upon receipt of a specific order, Canada Tire arranged for the tires, whether shipped from its warehouse or withdrawn from the customs bonded warehouse, to pass through U.S. Customs and paid the customs duty assessed on the goods.
The Internal Revenue Service (IRS) assessed excise taxes, penalties and interest against Haggerty in the amount of $39,-524.41 for the tires purchased from Canada Tire during the year 1984. Haggerty made partial payment in the aggregate amount of $400 ($100 for each quarter of 1984) and simultaneously filed four claims for refund on Forms 843 at the Internal Revenue Center at Andover, Massachusetts. When the IRS failed to act on Haggerty's claims for refund within six months, see 26 U.S.C. § 7422 (1988), Haggerty filed suit in the Claims Court on November 19, 1987 for refund of the amounts paid. The United States counterclaimed for the balance of the excise tax assessment. On cross motions for summary judgment, Haggerty's complaint was dismissed by the Claims Court and the United States' counterclaim was allowed.
II
Section 4071 of the Internal Revenue Code imposes a tax "on tires of the type used on highway vehicles . sold by the manufacturer, producer, or importer." 26 U.S.C. § 4071(a) (1988) (emphasis supplied). Treasury Regulation section 48.0-2(a)(4)(i) defines an importer as follows:
An "importer" of a taxable article is any person who brings such an article into the United States from a source outside the United States, or who withdraws such an article from a customs bonded warehouse for sale or use in the United States. If the nominal importer of a taxable article is not its beneficial owner (for example, the nominal importer is a customs broker engaged by the beneficial owner), the beneficial owner is the "importer" of the article for purposes of chapter 32 and is liable for tax on his sale or use of the article in the United States.
Treas.Reg. § 48.0-2(a)(4)(i) (1989).
In granting the United States' motion for summary judgment, the court explained that Canada Tire brings tires into the United States only when there is an interested domestic company ready to purchase the tires for the purpose of sale in this country:
Plaintiff here induced and caused the tires to be brought into the United States. Canada Tire would not have transported the goods into the United States or withdrawn them from the customs bonded warehouse without an order from the plaintiff. Thus, plaintiff's placing of an order with Canada Tire caused Canada Tire to bring the tires into the United States. (Emphasis in original.)
16 Cl.Ct. at 622-23.
The decision of the Claims Court is consistent with the precedent of the Court of Claims, one of this court's predecessors. According to the Court of Claims, "the determination of who is the 'importer' under the pertinent statute does not turn on technical rules such as the law of sales," but depends on who is "the inducing and efficient cause of the importation of the pertinent [goods]," Import Wholesalers Corp. v. United States, 177 Ct.Cl. 493, 368 F.2d 577, 583, 585 (1966). Also, as noted in Handley Motor Co. v. United States, 338 F.2d 361, 168 Ct.Cl. 92 (1964), the definition of importer does not turn on the place of sale, as that would in many instances place the tax on a person or corporation who is resident in a foreign country and who, as a practical matter, would be inaccessible to collection procedures. 338 F.2d at 364.
Moreover, the Claims Court's decision corresponds to the administrative position of the IRS. On facts analogous to the present case, the IRS ruled, relying on the Handley and Import Wholesalers decisions, that a foreign corporation which delivers articles to a United States buyer at the buyer's United States business facilities is not the importer for purposes of the excise tax:
[A]n 'importer', . is the person who . is the inducing and efficient cause of, the goods being brought into the United States for purposes of sale or use by him. Whether title to the merchandise passes to such person at time of shipment or only after its arrival in the United States is not controlling in this determination.
Rev.Rul. 68-197, 1968-1 C.B. 455, 456.
In view of the above cases and rulings, we conclude that Haggerty must be regarded as the "importer" of the tires in question for the purposes of 26 U.S.C. § 4071 (1988). Canada Tire, which had no business facilities in the United States, simply shipped tires from Canada or from a customs bonded warehouse to Haggerty on the latter's specific order. Haggerty, on the other hand, was the inducing cause of the tires being brought into the United States and agreed to pay the relevant freight charges, brokerage fees, and customs duty as part of the purchase price of the tires. For purposes of the subject excise tax, Haggerty was the "importer."
AFFIRMED.
. With regard to the customs bonded warehouse, the Claims Court noted that "although Canada Tire's goods were physically inside the United States, in a legal sense the tires were not treated as being within the United States because the customs duty had not yet been tendered." 16 Cl.Ct. at 622.
. It has been recognized that for tax purposes the substance rather than the form of a transaction is generally controlling. Gregory v. Helver-ing, 293 U.S. 465, 470, 55 S.Ct. 266, 268, 79 L.Ed. 596 (1935).
. We have not been directed to any case or ruling in which a nonresident foreign corporation has been held to be the "importer." Although the Claims Court found that Canada Tire had no business facilities in the United States, Haggerty argues that Canada Tire's activities would be sufficient to satisfy the requirements of a "permanent establishment" in the United States. As the Claims Court correctly noted, this argument is grounded on the United States-Canada Income Tax Convention, see 1986-2 C.B. 358, which relates to the reciprocal taxation of income, and does not cover excise taxes.