National Fruit Product Co., Inc. v. Justus

• Decision Date: 02 November 1993
• Docket Number: No. 9227SC1010,9227SC1010
• Citation: 436 S.E.2d 156,112 N.C.App. 495
• Court: North Carolina Court of Appeals
• Parties: NATIONAL FRUIT PRODUCT COMPANY, INC. v. Betsy Y. JUSTUS, Secretary of the North Carolina Department of Revenue.

Page 156

436 S.E.2d 156

112 N.C.App. 495

NATIONAL FRUIT PRODUCT COMPANY, INC. v. Betsy Y. JUSTUS, Secretary of the North Carolina Department of Revenue.

No. 9227SC1010.

Court of Appeals of North Carolina.

Nov. 2, 1993.

Petree Stockton by J. Robert Elster, Timothy J. Ehlinger and Henry C. Roemer, III, Winston-Salem, for plaintiff-appellee.

Atty. Gen. Lacy H. Thornburg by Sp. Deputy Atty. Gen. George W. Boylan, Raleigh, for defendant-appellant.

McCRODDEN, Judge.

The record on appeal in this case contains no certificate showing service of defendant's notice of appeal from the trial court. In Hale v. Afro-American Arts International, 110 N.C.App. 621, 430 S.E.2d 457 (1993), a panel of this Court held that when the record on appeal does not contain the certificate showing service of the notice of appeal, as required by N.C.R.App.P. 26(d), this Court obtains no jurisdiction over the appeal. At oral argument in this case, however, plaintiff's counsel acknowledged that defendant properly served it with the notice of appeal. We elect, therefore, to treat the attempted appeal in this case as a petition for writ of certiorari, which we grant.

The primary issue we confront is whether plaintiff, a large producer of fruit juice products, is entitled to a "fruit juice" exemption under N.C.G.S. § 105-113.47 for juices sold under labels and brand names including private label juice products, different from the one (White House Apple Juice) which it had registered for exemption.

The North Carolina legislature, through N.C.Gen.Stat. § 105-113.45 (1985), elected to subject all soft drinks, including fruit juices, to an excise tax. It also, however, elected to exempt some soft drinks from this tax. At all times relevant to this appeal, the applicable statute pertaining to exemptions provided:

(a) All bottled soft drinks containing thirty-five percent (35%) or more of natural fruit or vegetable juice ... are exempt from the excise tax imposed by this Article, except that this exemption shall not apply to any fruit or vegetable juice drink to which has been added any coloring, artificial flavoring or preservative. Sugar, salt or vitamins shall not be construed to be an artificial flavor or preservative.

(b) Any bottled soft drink for which exemption is claimed under this section must be registered with the Secretary. No bottled soft drink shall be entitled to the exemption until registration has been accomplished by the filing of an application for exemption on such form as may be prescribed by the Secretary, which form shall include an affidavit setting forth the complete and itemized formula by volume of the drink therein referred to, and the failure to submit such affidavit shall be prima facie evidence that such bottled soft drink is not exempt.... .... [T]he Secretary or his duly authorized representative may at any time take samples of any product for which exemption has been claimed ... for the purpose of ascertaining by analysis the contents thereof.

N.C.G.S. § 105-113.47 (emphasis added).

Defendant presents three arguments on appeal based upon three assignments of error. First, she argues that the trial court erred in ordering a refund of the taxes paid on the private label drinks because they had not been separately registered. In essence, defendant argues that each of plaintiff's private label products is a distinct soft drink that had to be individually registered, and, failing that, should have been subjected to the excise tax. We agree.

The statute is clear that no exemption may be obtained for a fruit juice "until registration has been accomplished...." While the Secretary of the Department of Revenue (Secretary) may prescribe the form of such registration, the legislature mandates the inclusion of an affidavit setting forth the formula of the drink. One purpose of the registration, at least by implication, is that it puts the Secretary on notice that the exemption is being claimed, allowing her or her authorized representative to take samples of the drink at any time to verify its composition.

The Secretary's registration form, not at issue here, has one blank for the brand name of the product and a number of blanks for the ingredients by volume. The form which plaintiff completed in 1969, and by which it seeks exemptions for all its apple juice products, listed the brand name as "White House," and the ingredients as "Apple Juice." Significantly, plaintiff also filed registration forms in May 1980 for "12/46 oz. White House Apple Juice," "12/32 oz. Town House Apple Juice," and "12/46 oz. Town House Apple Juice."

Plaintiff asserts that all of the apple juice it produces is fungible, is the same drink, and thus need not be registered separately when sold under different labels. This assertion, however, assumes that the Secretary is aware of all of plaintiff's apple juice products, regardless of their brand names, is aware of plaintiff's expected exemptions, and has periodically analyzed them for compliance with the law. This is an assumption we are unwilling to accept. Moreover, plaintiff's registration of several brand names in 1969 and 1980 belies its insistence that the statute requires only one registration of its product, regardless of brand name.

Plaintiff also contends that, under the statute, the failure to register a juice constitutes only prima facie evidence of non-exemption and that producers of such juices may, therefore, rebut this evidence. Plaintiff, however, misreads the statute. The statute states that failure to submit an affidavit shall be prima facie evidence that the drink is not exempt. The affidavit is only one part of the registration, and "[n]o bottled soft drink shall be entitled to the exemption until registration has been accomplished...." ...