Court Opinion

ID: 6630159
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:36:57.028491+00
Date Added: 2024-06-11T14:56:56.986283
License: Public Domain

Keefe, Judge:
The merchandise in question consists of fifteen cases of tobacco siftings exported from the United' States and returned thereto without any advance in value or change in condition. The merchandise was entered as American goods returned under paragraph 1615, Tariff Act of 1930, and admitted thereunder without the payment of duty. However, the collector demanded the payment of internal-revenue tax at the rate of 18 cents per pound, under section 314, Tariff Act of 1930. The plaintiff claims that said internal-revenue tax does not attach to tobacco siftings.
At the trial it was established that tobacco siftings are a scrap tobacco, consisting of broken leaves and waste resulting from the manufacture of tobacco into cigars, and that in the condition as imported it was sold to the Higdon Cigar Co. for use in the manufacture of cigars. The plaintiffs are termed quasi-manufacturers, and buy tobacco byproducts known as tobacco scrap from various •cigar manufacturers, grade, blend, and sort it into different sizes and sell the resulting scrap tobacco to cigar and tobacco manufacturers. The tobacco as sold by the importer herein is not suitable for sale for consumption and is sold •only to manufacturers who manipulate it to a condition suitable for consumption, changing it from a raw state into a manufactured article, such as smoking or chewing tobacco. As a quasi-manufacturer the importer is never required to pay internal-revenue tax upon tobacco. All that is done in that regard is to keep a record of all the tobacco that passes through their hands, showing where the tobacco came from and to whom it was shipped for processing. A deputy collector of internal-revenue testified that siftings are not considered package goods and that internal-revenue taxes are not applicable thereto until the siftings are manufactured into a product salable for smoking or chewing, and that a tax is not applicable to sales from a quasi-manufacturer to a manufacturer of siftings.
Section 314 of the Tariff Act of 1930 provides in part as follows:
SEC. 314. REIMPORTATION OF TAX-FREE EXPORTS.
Upon the reimportation of articles once exported, of the growth, product, or manufacture of the United States, upon which no internal tax has been assessed or paid, or upon which such tax has been paid and refunded by allowance or •drawback, there shall be levied, collected, and paid a -duty equal to the tax imposed upon such articles by the internal revenue laws at the time of reimportation.
Paragraph 1615 of the Tariff Act of 1930 so far as applicable reads as follows:
* * * Provided further, That when manufactured tobacco which has been •exported without payment of internal-revenue tax shall be reimported it shall be retained in the custody of the collector of customs until internal-revenue stamps in payment of the legal duties shall be placed thereon * * *.
Sections 700 (a) and 835 (a) (2) of the internal-revenue act provide as follows:
(a) Tobacco and Snuff. — Upon all tobacco and snuff manufactured in or imported into the United States, and sold by the manufacturer or importer, or removed for consumption or sale, there shall be levied, collected and paid a tax -of 18 cents per pound. The tax imposed by this subsection shall be in addition to any import duties imposed upon imported tobacco and snuff.
Sec. 835. Exemption From Tax. (a) * * *
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(2) Materials. — Perique tobacco, snuff flour, fine-cut shorts, the refuse of fine-cut chewing tobacco, refuse scraps, clippings, cuttings, and sweepings of tobacco, may be sold in bulk as material, and without the payment of tax, for export under such restrictions, rules, and regulations as the Commissioner may prescribe.
*606Title 26 of the; U. S. Code Annotated, section 830 (d), reads in part as follows:
Scraps, cuttings, and clippings of tobacco imported from any foreign country may, after the proper customs duty has been paid thereon, be withdrawn in bulb .without the payment of the internal-revenue tax, and transferred as material directly to the factory of a manufacturer of tobacco or snuff, or of a cigar manufacturer, under such restrictions and regulations as shall be prescribed by the Commissioner and approved by the Secretary.
In determining whether or not the tobacco material here imported should be liable to the payment of an internal-revenue tax at the time of importation, all of the provisions relating to tobacco should be read and considered together.
The provision in paragraph 1615 has reference solely to manufactured tobacco. Section 700 (a) of the internal-revenue act providing for payment of a tax of 18-cents per pound can not be reasonably construed to apply to tobacco other than in the manufactured state, and section 835 of the revenue act specifically provide» that tobacco may be sold for export as materials without the payment of any revenue tax. Finally, title 26 of the United States Code, section 830 (d), provides that scraps of tobacco imported from any foreign country may be withdrawn from customs custody without payment of internal-revenue tax. Therefore, in the light of the foregoing provisions, it is clear that section 314 does not apply to tobacco which is exported and returned to this country when in the condition of a tobacco upon which no internal-revenue tax is assessable, either upon the American product not so exported, or upon an imported foreign product.
For the reasons stated, we hold that tobacco siftings, the waste resulting from tobacco manufacturing processes, established to be a scrap tobacco, which has been exported from the United States and returned thereto in exactly the same-condition as exported, and released from customs custody without the payment of duty, and which entered the commerce of the United States in the same state as similar American tobacco siftings, is no more the subject of internal-revenue tax than if it had never been exported.
Judgment will therefore be entered in favor of the plaintiff, directing the collector of customs to reliquidate the entry and to refund all revenue tax taken thereon.