Case Name: THE TIDE WATER OIL COMPANY v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1896-01-13
Citations: 31 Ct. Cl. 90
Docket Number: No. 17010
Parties: THE TIDE WATER OIL COMPANY v. THE UNITED STATES.
Judges: 
Reporter: United States Court of Claims Reports
Volume: 31
Pages: 90–104

Head Matter:
THE TIDE WATER OIL COMPANY v. THE UNITED STATES.
[No. 17010.
Decided January 13, 1896.]
On the Proofs.
The claimants import box shooks manufactured in Canada. They come in bundles, planed, and of the required lengths and widths, needing only to ha nailed together and trimmed, when defective in length or width, to make a box. The claimants export the boxes and demand a drawback.
I.The Devised Statutes ($ 3019) allow a drawback on “all articles wholly manufactured of materials imported, on whioh duties have been paid.” Boxes made of shooks manufactured in Canada, planed, and of the requisite length and width, so that nothing remains to be done except nail the shooks together and trim the boxes where the shooks are defective in length or width, are not a domestic manufacture within the intent of the statute.
II.The intent of the statute is that the manufacture be within the United States; that the exported article shall not have been partially manufactured elsewhere.
III. The mere fastening together of imported material which was designed and shaped for that specific use abroad does not constitute a manufacture.
IV. Material is matter intended to bo used in the creation of a mechanical structure. Manufacture is a transformation of the material used into a new and different article.
V.The purpose of the statute was not to increase revenue or encourage an export trade, but to foster domestic manufactures.
VI.Shooks are classed by the Devised Statutes (§ 2502) with casks, barrels, and packing boxes, and are dutiable at the same rate. If imported as boxes, the rate of duty would have been the same.
VII.Such a statutory classification indicates that shooks were regarded by Congress as a finished or manufactured material.
The Reporters’ statement of tbe case:
Tbe following are tbe facts of tbis case as found by tbe court:
I. During tbe years 1889,1890, and 1891 tbe claimant was a corporation existing under tbe laws of New Jersey, organized in 1888, and having a factory for carrying on its business at Bayonne, in that State.
If. In 1889 and 1890 tbe claimant imported from Canada box sbooks, and from Europe steel rods, upon wbicb importation duties, amounting in tbe aggregate to $39,638.20, were paid to tbe United States, of wbicb sum $837.68 was paid on the importation of the steel rods.
III. The box sbooks imported as set forth in finding ii were manufactured in Canada from boards, first being planed and then cut into required lengths and widths intended to be substantially correct for making into boxes without further labor than nailing tbe sbooks together. They were then tied up in bundles of sides, of ends, of bottoms, and of tops of from fifteen to twenty-five in a bundle for convenience in handling and shipping.
IY. The shooks so manufactured in Canada and imported into the United States as aforesaid were, at the claimant’s factory in Bayonne, N. J., constructed into the boxes or cases set forth in Exhibit E to the petition herein, by nailing tbe same together with nails manufactured in the United States out of tbe steel rods imported as aforesaid, and by trimming when defective in length or width to make the boxes or cases without projecting parts, i. e.:
The shooks were imported in bundles of ends, of sides, of tops, and of bottoms, each part coming in bundles separated from the bundles of other parts. From one of these bundles of ends the ends of a box are selected, to which the sides taken indiscriminately from any bundle of sides are nailed by nailing machines; then the sides are trimmed off even with the ends by saws; then by bottoming machines bottoms taken from any bundle of bottoms are nailed on; then the bottoms are trimmed even with the sides by saws; then, after being' filled with cans, the tops are nailed on; and then the boxes or cases are ready for exportation.
The cost of the labor expended in tbe United States in the necessary handling and in the nailing and trimming of the boxes as aforesaid was equal to. about one-tenth of the value of the boxes.
The principal part of the labor performed in trimming the boxes was occasioned by the Canadian manufacturer not cutting the shooks into the required lengths and widths for use in making the boxes, and for which the claimants sometimes charged the cost of such trimming to the Canadian manufacturer.
V. The boxes or cases made as aforesaid were exported from the United States to foreign countries in conformity with the regulations of the Treasury Department then in force, to wit, Treasury Regulations of 1884, sections 968, 987, and 968, hereinafter set out, relating to drawbacks upon the exportation of articles wholly manufactured of imported materials, and cases so manufactured were entered for such drawback upon the exportation thereof.
YI. For about four years prior to July 31, 1889, the Treasury Department had allowed and paid a drawback upon the exportation of boxes made from imported shooks fastened, together with nails made from imported steel rods as aforesaid. And the Treasury Department was requested to pay the drawback on the exportation of the boxes or cases set forth in Exhibit E to the petition, but refused for the reasons set forth in the following communication addressed to the collector of customs at New York:
‘‘Treasury Department, July 31,1889.
“Sir: Referring to Department letter of March 2,1885, addressed to the then collector at your port, in which a rate of drawback was established on shooks used in the manufacture of boxes, you are i informed that the Department has recently given the matter further consideration, and it appears upon investigation that the boxes are made complete in Canada, with the exception of nailing, and that the only manufacture which they receive in this country consists in their thus being-nailed together, which part of the labor is omitted to be done in Canada merely for convenience in shipping to the United States.
“The boxes appear to have been manufactured complete abroad, and in the condition imported resemble the finished furniture imported in pieces which the Department has heretofore held to be dutiable at the rate applicable to finished furniture. (See Synopsis, 4272.)
“The simple act of nailing them together is not, in the opinion of the Department, a manufacture within the meaning of section 3019. Bevised Statutes, and tbe authority to allow drawback thereon is hereby revoked.
“You will accordingly receive no further entries for drawback in such cases.
“Bespectfully, yours,
“George O. Tichenor,
“Assistant ¡Secretary.
“Collector oe CUSTOMS, New York.”
VII. The Treasury Begulations of 1884 referred to in finding Y, viz, articles 966, 967, and 968, are as follows:
“Art. 966. On articles wholly manufactured of imported materials on which duties have been paid, a drawback is to be allowed, on exportation, equal in amount to the duty paid on such imported materials, less 10 per cent thereof, except on exportations of refined sugars, in which case the legal retention is 1 per cent.
“Art. 967. The entry in such cases will be as follows, and must be filed with the collector at least six hours before putting or lading any of the merchandise on board the vessel or other conveyance for exportation.”
From the foregoing findings of fact the court finds the ultimate fact, so far as it is a question of fact, that the boxes or cases so exported were not manufactured in the United States.
Mr. JEdioin B. Smith for the claimant:
The allowance is to be “on all articles,” etc. The word “articles” is one of most comprehensive scope, in that “system” (96 U. S., 117; 110 id., 21; 16 How., 160, and 17 id., 93) of tariff legislation of which this section is a part. (Junge v.. Redden, 146 IT. S., 238-9.)
The only limitation upon the sweeping generality of the word is that imposed by those which succeed it in this sentence — the “articles” must be “wholly manufactured” of foreign, duty-paid materials. The imposition of these conditions by Congress excludes the power of any administrative officer to impose any other. Bxpressio tmius, ele.
The articles must be “wholly manufactured of materials imported.”
That these boxes are “manufactured” is as visibly and tangibly evident to the senses as that they are articles. The amount of money invested, or of labor expended, in the manufacture receives no attention from the lawgiver.
It-has been repeatedly decided under the tariff acts, that where an article bas been advanced through one or more processes into a commercial, article, known and recognized in trade by a distinctive name other than the name of the material, and is put into a completed shape designed and adapted for a particular use, it is deemed to be a manufacture. It is sufficient to refer to Hartrcmft v. Wiegmann, 121 U. S., 609; Schriefer v. Wood, 5 Blatch., 215; Stoclcwell v. United States, 3 Clifford, 284. (Erhardt v. Hahn, Custom House News, May 17,1893, p. 861; 55 Fed. Bep., 275, and 5 IT. S. C. O. Ap., 100-1.)
JudgeLacombe epitomizes the Supreme Court decision above cited (121U. S., 009), showing that it lays down “the rule that, to constitute a ‘manufacture’ there must be a transformation;” so that “the article becomes commercially known as another and different article from that as which it began its existence.” (Fojppes v. Magone, 40 F. B., 572; Mayor v. Davis, 6 W. & S., 279.)
No matter how trifling the act which effects the change. Merely causing, or permitting, gum to run and harden into a form adapting it to use as a shoe was held to be a “manufacture,” affecting the article with duty. (Lawrences. Allen, 7 How., 785; Wooton v. Magone, 54 F. B., 675 bot.; King v. Wheeler, 2 B. & Aid., 350; Stoclcwell v. United States, 3 Cliff., 288-9; United States v. Sarehet, Gilp., 275; Holden v. Clancy, 58 Barb., 597.)
The meaning thus judicially assigned corresponds with that given by lexicographers.
We can adopt, as applicable, the remark of a famous English judge (Heath):
“I approve of the term ‘manufacture’ in the statute, because it precludes all nice refinements; it gives us to understand the reason of the proviso, that it was intended for the benefit of trade” (Boulton v. Dull, 2 Hy. B1-. [482J.)
This partial refund of import duty, upon exportation, is not a gratuity; though if it were the customs officers’ or Secretary’s will could not lawfully intercept the bestowal of it (107 H. S., 413); but it is a remission of customs duties. (Ib.)
The laying of these duties is an exercise of the taxing power. (9 Wheaton, 201.) The Congressional purpose has always been to have this tax paid by the domestic, ultimate consumer of the article imported, as will be seen by inspection of all tariff laws, from the earliest to the latest. “A tax in any shape upon imports is a tax upon tbe consumer, by enhancing the price of the commodity.” (License Cas., 5 How., 576, top; 1 Blackst. Com., *316-* 318.)
While the domestic consumer, therefore; must pay the tax thus included in the price of the thing he consumes, the foreign resident may escape it by purchasing of makers domiciled in some country other than the United States. Thus, in any■ market except this, the United States manufacturer would find the price of his goods weighted with this tax, as against foreign competitors, unless it was remitted to him upon the exportation of the thing made here. Foreign materials must come as cheap to the denizens of other lands as to us; labor abroad is cheaper. To add the tax on importation would be to handicap our trade and manufactures too heavily. Hence, the tariff legislation of this country has always been framed to impose its burden upon home consumption, not. upon production; “upon expense and not labor” (2 Or. *62); upon him who ultimately enjoys the fruits of labor, not upon him whose toil produces the thing enjoyed. (Penningtonr. Ch.re,2Cranch,*61,*62.)
Congress has always been desirous to foster our trade, as well as our manufactures, “no less than to obtain revenue.” (9 How., *635.)
Therefore, its duties have, substantially, all been laid upon that which goes into the consumption of the country; “ that, and that alone, is what comes into competition with our' domestic manufacturers; and we are unable to see any principle of public policy which requires the words of the act of Congress to embrace more.” (Id., 632.)
If the cross-examination correctly foreshadows the Government’s position, “ The argument on the part of the defendant seeks to introduce into the act a proviso which is not found there.” (Everett v. Wells, 2 M. & G-r., 278.) “No such public policy is avowed” (1 Pet., 64); and its assumption is “ a ground much too unstable upon which to rest the judgment of the court.” (Hadden v. Collector, 5 Wall., 111-2; Mimic v. Kent, 9 Ap. Gas., 273; Alexr. v. Worthington, 5 Md., 472.)
If the statute were open to construction, it should be read most beneficially for the subject. (Oirr v. Seudds, 11 Exch., 191; Adams v. Bancroft, 3 Sumn., 387; Hartranft v. Wiegmann, 121 U. S., 616; United States v. Isham, 17 Wall., 504.)
Mr. Felix Brannigan (witb whom was Mr. Assistant Attorney - General Bodge) for the defendants :
We contend that the articles exported were manufactured in Canada, because we think that in the tariff laws shooks are regarded as finished packing boxes as fully as the finished parts of imported Vienna bent-wood chairs are regarded as finished chairs (furniture) before they are bolted or screwed together. (Hedden v. Richards, 149 TJ. S., 346; Richard et al. v. Hedden, 42 Fed. B.., 672.)
It is the intention of the tariff laws that we look to. In their interpretation we must have regard to our policy of protecting domestic manufactures from foreign competition, and when so interpreting them the slight operation of nailing a box will not be regarded as its manufacture within the meaning of that policy. In other words, although nailing the shook together may in one sense be a process of manufacture, it is in any view of the case very far from constituting the manufacture of a packing box. To so regard the process would be contrary to common sense, and to stick in the bark of the statute, which draws a line between raw materials and manufactured articles. As was said by Sir William Scott in the Reward Case (2 Dods. Adm. R., 269):
“The court is not bound to a strictness at once harsh and pedantic. The law permits the qualification implied in the ancient maxim, Be minimis non curat lex.”
According to the accepted definition of the word, a shook is substantially a packing box. It is not nailed together because it can be more conveniently and cheaply transported in that shape to the place where it is to be used for packages.
It has been decided in Hartranft v. Wiegmann (121. IT. S.,. 609, 615) that—
“ The application of [a little] labor to an article, either by hand or mechanism, does not make the article necessarily a manufactured article within the meaning of that term in the tariff law.”
The true construction of section 3019 is that it intends by the words “materials imported,” either raw materials or materials more or less advanced that are so regarded, and are suitable for the manufacture of articles which may be used in our export trade. That section intends, in short, to allow duty-free materials for the benefit of American skill and labor as well as commerce, when articles intended for export can be wholly manufactured from them in the United States; and it does not intend to admit with like privilege of drawback articles manufactured abroad which would come into destructive competition with like domestic articles. This is the policy of the tariff laws under which the present claim is made, and by that policy it must be determined.
The case of Lmcrenoe v. Allen (7 How., 790), cited for claimant, makes clear the policy referred to.
To advance an article of manufacture taxable at one rate to a condition requiring higher duties, there must be some change in the article and material labor expended on it. (United States v. Semmer, 41 Fed. Rep., 324; Arnold v. United States, 147 U. S., 498.)

Opinion:
Peelle, J.,
delivered the opinion of the court:
This action is to recover an allowance for a drawback on the exportation of boxes, alleged to have been wholly manufactured of materials imported, on which duties were paid, i. e., of box shooks imported from Canada and of nails manufactured in the United States out of steel rods imported from Europe.
The claimant bases its right to recover under the Act August 5,1861, section 4 (12 Stat. L., 292), Revised Statutes, section 3019, which reads:
"There shall be allowed on all articles wholly manufactured of materials imported, on which duties have been paid when exported, a drawback equal in amount to the duty paid on such materials, and no more, to be ascertained under such regulations as shall be prescribed by the Secretary of the Treasury. Ten per centum on the amount of all drawbacks so allowed shall, however, be retained for the use of the United States by the collectors paying such drawbacks, respectively."
The shooks were imported under the Tariff Act March 3, 1883 (22 Stat. L., 491-502), which reads:
"Sec. 2502. There shall be levied, collected, and paid upon all articles imported- from foreign countries, and mentioned in the schedules herein contained, the rates of duty which are, by the schedules, respectively prescribed, namely:
"Casks and barrels, empty, sugar-box shooks, and packing boxes, and packing-box shooks, of wood, not specially enumerated or provided for in this act, 30 per centum ad valorem."
And the same rate of duty is retained by the Act October 1, 1890, par. 228 (26 Stat. L., 683), and 1st Supp. to R. S., 2d ed., 828.
The claimant's contention is that the boxes were wholly manufactured of materials imported, on which duties were paid, and that under the section of the statute quoted it is entitled to an allowance for a drawback equal in amount to the duty so paid less 10 per cent thereof.
The defendants'contention is that the boxes were not manufactured in the United States, for the reason that the shooks were conqilete boxes of foreign manufacture when imported, with the exception of nailing the parts together, and that the shooks were not "material" within the meaning of the statute.
The question presented is, therefore, as to whether the boxes exported were, in the language of the statute, " articles wholly manufactured of materials imported, etc."
There is no controversy, as we understand, but that the words "in the United States" should be read in the statute so that the section will read, "There shall be allowed on all articles wholly manufactured,""in the United States, "of materials imported," etc.
And this was the construction of the section given by the Secretary of the Treasury in the regulations and forms prescribed by him for the execution of the same, as will be seen by an examination "of finding vn.
The word "articles" appears in section 2502 (supra) and is sufficiently broad and comprehensive to include every item named specifically or in general terms in the several schedules thereunder. And the same is true as to the word in Revised Statutes, section 2503, concerning articles exempt from duty.
In speaking of the word "articles" as used in section 2602, etc., in the case of Junge v. Hedden (146 U. S., 233-239), the court said: "We agree with the circuit court that the word must be taken comprehensively, and can not be restricted to articles put in condition for final use, but embraces as well things manufactured only in part, or not at all."
But will that construction apply to the word concerning exports for the benefit of drawback, as used in section 30191 We think not) and for the reason that the word in this section is qualified or restricted to "articles wholly manufactured," in the United States, "of materials imported, on which duties have, been paid; " if so, then such articles are complete in their man- ufactnre — in condition for final nse — and tbis differentiates tbe meaning of tlie word as used in the two sections (2502 and 3019).
There is, however, no controversy in this case but that the boxes exported were articles manufactured and that the same were composed of materials imported; but were they manufactured in the United States, and were the shooks out of which they were made "materials" within the meaning of the statute?
Material may be defined generally to be any "matter which is intended to be used in the creation of a mechanical structure." (71 Penn., 293; 36 Wis., 29, Bouvier.)
The words "articles" and "materials" both appear in the section, but in different connections, and we think it clear that Congress intended their use in a different sense.
The first, we think, was intended as " articles " complete in their manufacture; while as to the other we think unmanufac-tured "materials" was intended, or at least "materials" in such an unfinished state as to require the expenditure of a material amount, of labor in the United States to prepare and shape the same for use.
Otherwise the mere fastening together in the United States of imported manufactured material into form for use would constitute the manufacture of the articles exported for drawback, and this we do not believe was the purpose of the statute.
The word "manufacture" has been the subject of judicial interpretation a number of times. Most of the decisions, perhaps, have been in cases where the question involved was as to the classification of articles subject to duty under our various tariff laws. In this class of cases it has been held that "a trifling amount of labor is often sufficient to change the nature of the article and determine its classification." (Saltonstall v. Wiebusch, 156 U. S., 601, 604; Arnold v. United States, 147 U. S., 494.)
But in the case of Kidd v. Pearson (128 U. S., 1-20), which arose under the prohibitory liquor law of Iowa, the court, in defining the distinction between manufactures and commerce, said, "Manufacture is transformation — the fashioning of raw materials into a change of form for use."
The definition of "manufacture" there given was in line with the decision in the case of Hartranft v. Wiegmann (121 U. S., 609, 615), in which the court, in speaking of shells cleaned by acid and then ground on an emery wheel and intended for use as ornaments, said: "They were still shells. They had not been manufactured into a new and different article, having a distinctive name, character, or use from that of a shell."
In support of the definition here given, the claimant's counsel has cited us to a number of other decisions, but as they are to the same effect we need not consider them.
So, to constitute a manufacture, there must be a change of form — a transformation of the materials used — "into a new and different article, having a distinctive name, character, or use from that of'''the materials used.
With this judicial definition in mind, let us ascertain, if we can, the purpose of the statute under consideration, and then see if the articles manufactured come within its provisions.
First, it is quite evident that revenue was not the purpose of tin's section, for in case the manufactured articles are exported, the duty paid on the materials of which such articles are composed is allowed as a drawback to the exporter less 10 per cent; and by the Act of March 3, 1875, section 3 (18 Stat. L., 340), it is provided, "That of the drawback on refined sugars exported allowed by section three thousand and nineteen of the Revised Statutes, only one per centum of the amount so allowed shall be retained by the United States."
Ánd 1 per cent is the amount of duty to be retained under the provisions of the Act October 1, 1890, section 25 (26 Stat. L., 617).
In the case of Campbell v. United States (107 U. S., 407, 413) the court held that the purpose of the drawback provision was to make duty free imported material which was used in manufacturing where the manufactured product was exported for the benefit of drawback; so that it is quite clear that revenue was not the purpose of this statute.
Was it intended to encourage our domestic manufactures or export trade, or both?
That Congress have the power to regulate foreign as well as interstate commerce by prescribing the rules which shall govern the same is beyond question and needs no citation of authorities, but see Gibbons v. Ogden (9 Wheat., 1); Gloucester Ferry Co. v. Pennsylvania (114 U. S., 196), etc.
In the exercise of this power, Congress, by the statute, established a rule to the effect that imported dutiable material which has been transformed in the United States by the process of manufacture as therein provided may be exported for the benefit of drawback.
It will be observed that no provision is made in the statute for a drawback when such manufactured products enter into consumption in tbe United States, so we conclude that the drawback provision was intended in part to promote our export trade in such manufactures; not, however, at the expense or sacrifice of domestic manufactures, for as a condition precedent to the right of such drawback, the articles exported therefor must have been manufactured in the United States, and, too, "of materials imported on which duties have been paid."
The statute was not intended to encourage the importation of material to be used in manufactures when like material could be obtained in the United States, but in effect says to those engaged in domestic manufactures, if you import dutiable material for manufacturing purposes and transform the same into some manufactured product in the United States you may export such product with the benefit of drawback, but not otherwise.
We are therefore of the opinion that the controlling purpose of the statute was to foster and encourage domestic manufactures.
In Arnold v. United States (347 U. S., 494, 497) the court, in speaking of the tariff act 1890, said: "The idea which runs through this statute is well known to be that of protection to our manufactures." And the same is true of the tariff act 1883. (Saltonstall v. Wiebusch, 156 U. S., 601, 604.) And wé have no reason to suppose that a different rule would be applied to section 3019, even though the degree or stage of manufacture of an imported article may be less than that required of articles exported for the benefit of drawback.
Certainly Congress did not intend by the provision that articles might be partially manufactured in the United States of imported dutiable material, then exported for the benefit of drawback, and their further manufacture completed in a foreign country, as this would manifestly defeat the purpose of the statute.
It is not sufficient under the statute to take measurement and cut cloth for the purpose, but the coat as well must be made in the United States to constitute it a manufactured article entitling the exporter thereof to the benefit of drawback.
If we are correct in tbis it follows, we think, tbat Congress did not intend tbat materials imported in sucb an advanced stage of manufacture, as tbe sbooks were in tbis case, would bring tbe boxes, wbeu nailed together and trimmed, witbin tbe meaning and intent of tbe statute as articles manufactured in tbe United States.
Tbe sbooks are classed by tbe statute under wbiob they were imported witb oaslcs, barrels, and packing boxes, presumably finished products, and are dutiable at tbe same rate. So tbat bad tbe sbooks been nailed together and trimmed in Canada, as they were in tbe United States, and then imported as packing-boxes, tbe rate of duty would have been tbe same as tbat paid on tbe sbooks.
Tbis shows tbat Congress, by tbe classification they made, regarded box sbooks as finished or manufactured materials for some specific purpose; and when we examine tbe language used in tbe section, "Casks and barrels, empty, sugar-box sbooks, and packing boxes, and packing-box shooks, of wood," etc., we must conclude tbat tbe purpose for which tbe sbooks were imported was for nailing together into boxes, and tbis tbe findings show was done.
So tbe finished condition of tbe sbooks, in fact, not only harmonizes witb tbe classification in tbe statute as stated, but is also in harmony witb tbe definition of tbe word "shook," as given by lexicographers. (See the American Mechanical Dictionary.)
Tbe sbooks having been prepared in Canada complete for use, can it be said tbat tbe boxes fashioned therewith were manufactured in tbe United States? We think not.
Tbe preparation of tbe material was not only necessary to make tbe box, but was an esseutial and inseparable part of tbe manufacture thereof, under section 3019, for tbe reason tbat tbe box could not have been otherwise manufactured.
Material can not be transformed or fashioned "into a change of form for use " without undergoing tbe process of manufacture necessarily incident to the article manufactured; so that tbe manufacture of a box necessarily includes as a part thereof tbe manufacture or preparation of tbe materials therefor.
We are therefore of tbe opinion tbat the manufacture of tbe boxes began when tbe materials therefor were prepared and shaped for tbe purpose in Canada. Tbe utility of tbe material was thereby limited to the purpose for which it was prepared; and in this respect is unlike the case of Worthington v. Robbins (139 U. S., 337).
The mere nailing of a box together witli material prepared for the purpose and then trimming the same, as set forth in the findings, is not, per se, a transformation of such material, but is merely a completion of the transformation which began with the preparation of the material therefor.
To construe the statute as contended for by the claimant would be to say, in effect, that the material for any structure may be maufactured in a foreign country, then' imported into the United States, fastened together into form for use as intended, and then exported with the benefit of drawback, as an article manufactured in the United States.
Upon this theory furniture imported in separate parts or pieces, as in the case of Hedden v. Richards (149 U. S., 346), could be fastened together into form for use and then exported for the benefit of drawback as articles manufactured in the United States.
This, in our judgment, would not only defeat the purpose of the statute, but would have the effect to encourage foreign rather than domestic manufactures, especially if such material could be manufactured in foreign countries cheaper than it could in the United States.
And while this would tend to promote our export trade in such articles and doubtless be of financial interest to such exporters, it certainly would not promote or encourage domestic manufactures.
The claimant or its officers could not have been misled by the statute, as they were bound to know the condition on which they could export the boxes for the benefit of drawback.
The regulation of the Treasury Department in allowing a drawback on the exportation of boxes likewise manufactured, as set forth in the findings, was not sufficiently long and continuous to bring it within the decisions of the Supreme Court in the case of Edwards v. Darby (12 Wheat., 206), United States v. Hill (120 U. S., 169, 182), and authorities there cited. "A regulation of a Department, however, can not repeal a statute." (Merritt v. Cameron, 137 U. S., 542, 551.)
If we are correct in what we have said, it follows that the words " articles wholly manufactured of materials imported on which duties have been paid," etc., mean, first, that such articles shall have been manufactured in the United States; second, that such articles shall have been wholly manufactured of imported materials on which duties have been paid, and third, that such manufacture includes, as a necessary part thereof, the manufacture or preparation of the materials therefor.
Applying what we have said to the case at bar, keeping in view the controlling purpose of the statute, we must conclude that the boxes exported were not manufactured in the United States; that the labor expended in the United States in nailing the shooks together and trimming the boxes was but the completion of the transformation or manufacture which began in Canada with the preparation of the material therefor, and the claimant is not entitled to recover.
We have not deemed it necessary to consider the question as to whether an allowance could be made for the nails, for the reason that while they were manufactured in the United States of imported steel rods on which duties were paid, they were not exported as such, but formed a part of the boxes which were not manufactured in the United States for the reasons stated.
We, however, have found the amount of duties paid on the steel rods, so in case of an appeal the question may be presented to the Supreme Court.
Nor have we deemed it necessary to consider what distinction, if any, there may be between shooks tied up in a 'Single bundle, each sufficient for a box, or tied up separately, as set forth in the findings, for the reason that the purpose of the statute could not be defeated by the manner in which the shooks were bundled for shipment, and for the further reason that the controverted question in this case is as to where the boxes were manufactured; and having reached a conclusion adverse to the claimant on this proposition, *the petition is dismissed.