Robert Downs v. United States

• Citation: 23 S.Ct. 222,187 U.S. 496,47 L.Ed. 275
• Decision Date: 05 January 1903
• Docket Number: No. 318,318
• Parties: ROBERT E. DOWNS, Petitioner , v. UNITED STATES
• Court: United States Supreme Court

187 U.S. 496

23 S.Ct. 222

47 L.Ed. 275

ROBERT E. DOWNS, Petitioner,

v UNITED STATES.

No. 318.

Argued October 29, 1902.

Decided January 5, 1903.

This was a writ of certiorari to review a decree of the circuit court of appeals, affirming a decree of the circuit court for the district of Maryland, which itself affirmed the action of the board of general appraisers, holding a cargo of refined sugar imported into Baltimore from Russia subject to a countervailing duty leviable upon merchandise upon which a bounty is paid upon exportation.

The proceedings were instituted by a petition filed in the circuit court setting up the importation of sugar on the steamship Assyria July 6, 1899, the imposition of a countervailing duty by the collector of customs at Baltimore, and the payment of the same under protest, and the fact that the decision of the collector had been affirmed by the board of general appraisers. The grounds stated in the petition for a review are, generally, that the country from which the sugar was exported did not pay or bestow, directly or indirectly, any bounty or grant upon the exportation of said sugar.

The return of the general appraisers contained a copy of the proceedings before them, including a copy of the Russian law and regulations, a stipulation of facts, a copy of certain reports from the United States consul at Odessa, and their opinion overruling the protest, and affirming the decision of the collector. The circuit court affirmed the action of the general appraisers, and upon appeal to the circuit court of appeals that court in turn affirmed the decree of the circuit court. 51 C. C. A. 100, 113 Fed. 144.

Mr. Ernest A. Bigelow for petitioner.

[Argument of Counsel from pages 497-499 intentionally omitted] Assistant Attorney General Hoyt for respondent.

Mr. Justice Brown delivered the opinion of the court:

This case involves the single question whether, under the laws and regulations of Russia, a bounty is allowed upon the export of sugar, which subjects such sugar, upon its importation into the United States, to an additional duty equal to the entire amount of such bounty, under the act of Congress of July 24, 1897 (30 Stat. at L. 205, chap. 11, U. S. Comp. Stat. 1901, p. 1693), which reads as follows:

'Sec. 5. That whenever any country, dependency, or colony shall pay or bestow, directly or indirectly, any bounty or grant upon the exportation of any article or merchandise from such country, dependency, or colony, and such article or merchandise is dutiable under the provisions of this act, then upon the importation of any such article or merchandise into the United States, whether the same shall be imported directly from the country of production or otherwise, and whether such article or merchandise is imported in the same condition as when exported from the country of production or has been changed in condition by remanufacture or otherwise, there shall be levied and paid, in all such cases, in addition to the duties otherwise imposed by this act, an additional duty equal to the net amount of such bounty or grant, however the same be paid or bestowed. The net amount of all such bounties or grants shall be from time to time ascertained, determined, and declared by the Secretary of the Treasury, who shall make all needful regulations for the identification of such articles and merchandise and for the assessment and collection of such additional duties.'

A bounty is defined by Webster as 'a premium offered or given to induce men to enlist into the public service; or to encourage any branch of industry, as husbandry or manufactures.' And by Bouvier as 'an additional benefit conferred upon or a compensation paid to a class of persons.' In a conference of representatives of the principal European powers, specially convened at Brussels in 1898 for the purpose of considering the question of sugar bounties, the definition of bounty was examined by the conference sitting in committee, who made the following report:

'The conference, while reserving the question of mitigations and provisional disposition that may be authorized, if need be by reason of exceptional situations, is of opinion that bounties whose abolition is desirable are understood to be all the advantages conceded to manufactures and refiners by the fiscal legislation of the states, and that, directly or indirectly, are borne by the public treasury.'

'There should be classified as such, notably:

'(a) The direct advantages granted in case of exportation.

'(b) The direct advantages granted to production.

'(c) The total or partial exemptions from taxation granted to a portion of the manufactured products.

'(a) The indirect advantages growing out of surplus or allowance in manufacturing effected beyond the legal estimates.

'(e) The profit that may be derived from an excessive drawback.

'In addition, the conference is of opinion that advantages similar to those resulting from the bounties hereinbefore defined may be derived from the disproportion between the rate of customs duties and that of consumption dues (surtaxes), especially when the public powers impose, incite, or encourage combinations among sugar producers.

'It would be desirable to regulate surtaxes in such manner as to confine their operation to the protection of home markets.'

A bounty may be direct, as where a certain amount is paid upon the production or exportation of particular articles, of which the act of Congress of 1895, allowing a bounty upon the production of sugar, and Rev. Stat. §§ 3015-3027 [U. S. Comp. Stat. 1901, pp. 1989-1994], allowing a drawback upon certain articles exported, are examples; or indirect, by the remission of taxes upon the exportation of articles which are subjected to a tax when sold or consumed in the country of their production, of which our laws, permitting distillers of spirits to export the same without payment of an internal revenue tax or other burden, is an example. United States v. Passavant, 169 U. S. 16, 42 L. ed. 644, 18 Sup. Ct. Rep. 219.

The laws of Russia, regulating the production and exportation of sugar, are very complicated, not easily understood, and too long to justify their full incorporation in this opinion. Such, however, as bear upon the question of bounty are reproduced from a translation of the Russian law of November 20, 1895, and regulations thereunder, the accuracy of which is stipulated by the parties, together with certain statements also stipulated to be read as evidence.

The objects of the Russian law are stated in the words of a recent note delivered to the representatives of the powers at St. Petersburg, as follows: 'The Russian government only regulates the distribution of sugar on its home market, its purpose being, on the one hand, to antagonize over-production of sugar, and, on the other, gradually to bring about lower prices and greater consumption for that product in this country. It protects home consumption against rises in the prices, and production against sudden and considerable falls.' Counsel for petitioner insists that the chief object of the government is to prevent, or at least to discourage, over-production with its attendant evils, and, to accomplish this, the law penalizes over-production by imposing thereon double the regular excise tax.

From the stipulation of facts it appears that at the opening of each sugar campaign a committee of ministers, upon a report of the Minister of Finance——

'(1) Estimates the total consumption and the total production of sugar, and the total amount which may be put upon the market at the normal excise of one and three-fourths rubles (a current ruble being equal to about 51 cents) per pood (of 36 pounds) is definitely fixed at the total amount required for consumption.' (This excise amounts to about 2 1/2 cents per pound.) 'This is known as free sugar.'

'(2) The first 60,000 poods produced by each factory is free sugar. The balance of the production is divided into free sugar, obligatory reserve, and free surplus or free reserve.'

'(3) The amount of free sugar in each factory is proportioned to its total production, as the estimated consumption is to the total production of the country. This percentage is fixed by the government according to the estimates of production and consumption.'

For instance, if the ministers estimate the home consumption at 35,000,000 poods, and the probable production at 50,000,000 poods, 35/50 of the daily production of each factory will be set apart as 'free sugar' by the inspector, and 15/50 (less a certain portion of 'indivertible reserve') will be set apart as surplus.

'(4) Under the Russian law therefore all sugar is divided into the three following classes:

'a. 'Free sugar,' which consists of a certain quantity of sugar which the Russian government permits a factory or refinery to sell for home consumption under an excise tax of 1.75 rubles per pood.'

'b. An 'obligatory or indivertible reserve' of sugar, which consists of a certain quantity kept at each factory or refinery by order of the government, and which may not be sold or removed without the special permission of the government.'

The object of this reserve is to enable the Minister of Finance, in case the price in the home market exceeds the price fixed as a maximum, to authorize the issue of sugar from this reserve upon payment of the usual tax in quantities sufficient to bring about a reduction in prices.

'c. 'Free reserve or free surplus,' which consists of such sugar as is manufactured over and above the quantity of 'free sugar' and 'obligatory or indivertible reserve.' This sugar cannot be sold for home consumption except upon payment of the regular tax of 1.75 rubles and an additional tax of 1.75 rubles, or 3.50 rubles in all.'

The Russian government also fixes and determines (a) the total quantity of sugar required for home consumption for all the factories and refineries, that is, free sugar; (b) the quantity of sugar to...