RJ Reynolds Tobacco Co. v. Robertson, 4201.

Decision Date04 January 1938
Docket NumberNo. 4201.,4201.
Citation94 F.2d 167
PartiesR. J. REYNOLDS TOBACCO CO. v. ROBERTSON, Collector of Internal Revenue.
CourtU.S. Court of Appeals — Fourth Circuit

Alexander H. Sands, Jr., and Alexander H. Sands, both of Richmond, Va., for appellant.

Mills Kitchin, Sp. Asst. to Atty. Gen. (James W. Morris, Asst. Atty. Gen., Sewall Key and Norman D. Keller, Sp. Assts. to Atty. Gen., and Carlisle W. Higgins, U. S. Atty., and Bryce R. Holt, Asst. U. S. Atty., both of Greensboro, N. C. on the brief), for appellee.

Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.

SOPER, Circuit Judge.

The R. J. Reynolds Tobacco Company sues to recover from the collector of internal revenue federal taxes paid under protest on certain cigarettes and tobacco products manufactured by it at Winston-Salem, N. C. The goods were delivered on April 5, 1934, from its factory to a common carrier for transportation to the port of Norfolk and thence to foreign purchasers. After the goods had left the factory and were in the course of transportation, they were stolen near the city of Roanoke Rapids, N. C., by bandits and have never been recovered. As the goods were intended for export, they bore, in lieu of the regulation internal revenue stamps, an export label upon each package marking the goods for exportation.

An application for export and an export bond, as provided by Treasury regulations, had been executed but, as the goods did not reach the seaboard, the Commissioner of Internal Revenue on April 12, 1935, assessed taxes thereon in the amount of $6,226.62 under section 400(a) of the Revenue Act of 1926, 44 Stat. 9, 87, 26 U.S.C.A. §§ 700(c) and note, 701(a), and section 401(a), 26 U. S.C.A. §§ 700(a), 701(a); and on May 8, 1935, the tobacco company paid under protest the taxes demanded, together with interest and penalty, in the aggregate sum of $6,537.95, which it now sues to recover with interest.

The claim of the manufacturer is that no tax was payable on the goods because of section 1 of the Act of August 4, 1886, 24 Stat. 218, and section 1121 of the Act of February 26, 1926, 44 Stat. 121, 26 U.S.C.A. § 835(a)(1), whereby manufactured tobacco and cigarettes removed for export to a foreign country is exempted from the tax; and because of article 1, section 9, clause 5, of the Federal Constitution, which provides that no tax or duty shall be laid on articles exported from any state. The position of the government on the contrary is that the tax was imposed upon the manufacture of the goods and became collectable upon the withdrawal of the goods for export, and that therefore the imposition of the tax was not in conflict with the statutes or the Constitution. The District Judge adopted the view of the United States and dismissed the action. The same facts were before this court in R. J. Reynolds Tobacco Co. v. Robertson, 4 Cir., 80 F.2d 966, wherein a temporary injunction to restrain the collection of the tax was denied on the ground that the taxpayer had an adequate remedy at law in the right to pay the tax and sue for its recovery.

The taxing statutes, as codified in 26 U. S.C.A. § 700, are as follows:

"Section 700. Rate of tax

"(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. (R.S. § 3377; Feb. 26, 1926, c. 27, § 401(a), 44 Stat. 88). * * *

"(c) Cigars and cigarettes. Upon cigars and cigarettes manufactured in or imported into the United States, which are sold by the manufacturer or importer, or removed for consumption or sale, there shall be levied, collected, and paid the following taxes: * * *

"(2) Cigarettes. On cigarettes made of tobacco, or any substitute therefor, and weighing not more than three pounds per thousand, $3. per thousand. * * * Feb. 26, 1926, c. 27, § 400(a), 44 Stat. 87."

The exempting statutes are codified as follows in 26 U.S.C.A. § 835(a) (1):

"§ 835. Exemption from tax

"(a) Shipments to foreign countries and possessions of the United States — (1) Manufacturers. Manufactured tobacco, snuff, cigars, or cigarettes may be removed for export to a foreign country or for shipment to a possession of the United States without payment of tax under such rules and regulations and the making of such entries, and the filing of such bonds and bills of lading as the Commissioner, with the approval of the Secretary, shall prescribe. (R.S. § 3387, Aug. 4, 1886, c. 896, § 1, 24 Stat. 218; Feb. 26, 1926, c. 27, § 1121, 44 Stat. 121)."1

It is established by the decisions of the Supreme Court that it is not an infringement of article 1, section 9, clause 5 of the Constitution, for Congress to impose a tax upon the manufacture of goods so as to subject goods manufactured for export to the same tax as all other manufactured goods, Cornell v. Coyne, 192 U.S. 418, 24 S. Ct. 383, 48 L.Ed. 504, but that a federal tax on the sale of goods is invalid, in so far as it relates to goods intended for export when the sale is consummated only by delivery of the goods to the carrier for export, that is, when the act that passes the title is the first step in the exportation of the goods. Spalding & Bros. v. Edwards, 262 U.S. 66, 43 S. Ct. 485, 67 L.Ed. 865.

It is also established that the tax of 18 cents a pound imposed by section 401(a) of the Revenue Act of 1926, 26 U.S.C.A. §§ 700(a), 701(a), upon tobacco manufactured in the United States and sold by the manufacturer is a tax upon the manufacturer and not upon the sale of the goods, being laid upon each pound of goods made irrespective of the sales price, although the time of payment is deferred until the product is sold or removed for consumption or sale. Liggett & Myers Co. v. United States, 299 U.S. 383, 57 S.Ct. 239, 81 L.Ed. 294. Reference is made in the decision to Treasury Regulations No. 8 (1928 edition), wherein it is stated that the tax accrues on such manufactures upon removal from the factory or place where they were made, or upon sale prior to such removal. See, also, Indian Motocycle Co. v. United States, 283 U.S. 570, 51...

To continue reading

Request your trial
4 cases
  • Lucky Lager Brewing Co. v. Comm'r of Internal Revenue
    • United States
    • U.S. Tax Court
    • July 19, 1956
    ...278 U.S. 175; Liggett & Myers Co. v. United States, 299 U.S. 383; Shearer v. Commissioner, (C.A. 2) 48 F.2d 552; R. J. Reynolds Tobacco Co. v. Robertson, (C.A. 4) 94 F.2d 167, certiorari denied 304 U.S. 563; Casey Jones, Inc. v. Texas Textile Mills, (C.A. 5) 87 F.2d 454; Continental Baking ......
  • Norfolk Tidewater Terminals v. Wood Towing Corp.
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • January 4, 1938
  • STEPHANO BROS., ETC. v. United States, 48743.
    • United States
    • U.S. Claims Court
    • April 3, 1950
    ...with or without removal. Liggett and Myers Tobacco Co. v. United States, 299 U.S. 383, 57 S.Ct. 239, 81 L.Ed. 294; R. J. Reynolds Tobacco Co. v. Robertson, 4 Cir., 94 F.2d 167. If, then, stamped packages of tobacco had been removed from the factory, though they were still owned by the manuf......
  • Reynolds Tobacco Company v. Robertson
    • United States
    • U.S. Supreme Court
    • April 25, 1938
    ...893. Supreme Court of the United States April 25, 1938 Mr. Alexander H. Sands, of Richmond, Va., for petitioner. For opinions below, see 94 F.2d 167; D.C., 22 F.Supp. Petition for writ of certiorari to the United States Circuit Court of Appeals for the Fourth Circuit denied. * Rehearing den......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT