United States v. American Bitumuls & Asphalt Co.

• Decision Date: 25 June 1957
• Docket Number: Customs Appeals No. 4899,4900.
• Citation: 246 F.2d 270,44 CCPA 199
• Parties: The UNITED STATES, Appellant, v. AMERICAN BITUMULS & ASPHALT CO., et al., Appellees. AMERICAN BITUMULS & ASPHALT CO., et al., Appellants, v. The UNITED STATES, Appellee.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

44 CCPA 199, 246 F.2d 270 (1957)

The UNITED STATES, Appellant, v. AMERICAN BITUMULS & ASPHALT CO., et al., Appellees.

AMERICAN BITUMULS & ASPHALT CO., et al., Appellants, v. The UNITED STATES, Appellee.

Customs Appeals Nos. 4899, 4900.

United States Court of Customs and Patent Appeals.

June 25, 1957.

George Cochran Doub, Asst. Atty. Gen., Richard E. FitzGibbon, Chief, Customs Section, New York City (Samuel D. Slade and Herman Marcuse, Washington, D. C., of counsel), for the United States.

Sharretts, Paley & Carter, New York City (Joseph F. Donohue, Washington, D. C., of counsel), for American Bitumuls & Asphalt Co., et al.

Before JOHNSON, Chief Judge, and O'CONNELL, WORLEY, RICH, and JACKSON (retired), Judges.

RICH, Judge.

These are cross appeals from the decision of the United States Customs Court, First Division (C.D.1799), sustaining in part, a protest by the importer and holding that the tax or duty assessed against the merchandise, which was crude petroleum and fuel oil, should be at the rate of 3/8 cent per gallon, rather than ½ cent, as assessed by the collector. It is contended by the Government that the rate found by the collector is correct, while the importer contends that the rate should be ¼ cent per gallon or, alternatively, that it should be 3/8 cent per gallon as found by the Customs Court.

The ultimate issue to be decided here is identical with that presented to this court in 1954 and decided in United States v. Metropolitan Petroleum Corp., 42 C.C.P.A., Customs, 38, C.A.D. 567, in which we reversed the decision of the Customs Court, which there applied a rate of ¼ cent per gallon, and held the proper rate to be ½ cent per gallon. Consequently there has been much flailing of old straw because the court below saw fit not to follow our decision in the Metropolitan case, bending to the vociferous arguments of the importers that it should not be stare decisis because of "certain inconsistencies and anomalies in and flowing from the said decision," as stated in the lower court's opinion. Notwithstanding the importers' new approaches to the issues and the novel result reached in the elaborate opinion of the lower court, we are still of the view that the tax of ½ cent per gallon, held to be the proper rate in the Metropolitan case, is the only proper rate and we shall try to state our reasons in sufficiently clear English to avoid further misunderstanding.

The pertinent facts are as follows:

By a series of revenue acts ultimately codified as sections 3420-3422 of the Internal Revenue Code, 26 U.S.C.A. §§ 3420-3422 (approved February 10, 1939), Congress imposed a tax of ½ cent per gallon on imported crude petroleum.

The Reciprocal Trade Agreements Act of 1934 (48 Stat. 943, 19 U.S.C. §§ 1351-1354, 19 U.S.C.A. §§ 1351-1354) added to the Tariff Act of 1930 a new Section 350 which included the following provisions:

"(a) For the purpose of expanding foreign markets for the products of the United States (as a means of assisting in the present emergency in restoring the American standard of living, in overcoming domestic unemployment and the present economic depression, in increasing the purchasing power of the American public and in establishing and maintaining a better relationship among various branches of American agriculture, industry, mining, and commerce) by regulating the admission of foreign goods into the United States in accordance with the characteristics and needs of various branches of American production so that foreign markets will be made available to those branches of American production which require and are capable of developing such outlets by affording corresponding market opportunities for foreign products in the United States, the President, whenever he finds as a fact that any existing duties or other import restrictions of the United States or any foreign country are unduly burdening and restricting the foreign trade of the United States and that the purpose above declared will be promoted by the means hereinafter specified, is authorized from time to time —

"(1) To enter into foreign trade agreements with foreign governments or instrumentalities thereof; and

"(2) To proclaim such modification of existing duties and other import restrictions, or such additional import restrictions, or such continuance, and for such minimum periods, of existing customs or excise treatment of any article covered by foreign trade agreements, as are required or appropriate to carry out any foreign trade agreement that the President has entered into hereunder. No proclamation shall be made increasing or decreasing by more than 50 per centum any existing rate of duty or transferring any article between the dutiable and free lists. The proclaimed duties and other import restrictions shall apply to articles the growth, produce, or manufacture of all foreign countries, whether imported directly, or indirectly: Provided, That the President may suspend the application to articles the growth, produce, or manufacture of any country because of its discriminatory treatment of American commerce or because of other acts or policies which in his opinion tend to defeat the purposes set forth in this section; and the proclaimed duties and other import restrictions shall be in effect from and after such time as is specified in the proclamation. The President may at any time terminate any such proclamation in whole or in part." 48 Stat. 943. (Emphasis ours.)

By a trade agreement with Venezuela made effective on December 16, 1939 by Presidential proclamation dated November 16, 1939 (54 Stat. 2375, 2402) the statutory tax of ½ cent per gallon on crude petroleum was reduced to ¼ cent on imports not exceeding a quota of 5 per cent of the total quantity of crude petroleum processed in the refineries of the continental United States during the preceding calendar years. As to crude petroleum in excess of that quota, the agreement did not affect the tax, which thus remained at ½ cent per gallon, the rate established by the Internal Revenue Code.

Thereafter, by a trade agreement with Mexico rendered effective on January 30, 1943 by Presidential proclamations dated December 28 and 31, 1942 (57 Stat. 833, 909) the tax was reduced to ¼ cent per gallon on all crude petroleum imported.

The act of July 5, 1945 (59 Stat. 410) amended part (a) (2) of paragraph 350 of the 1930 Tariff Act, quoted above, by substituting for the second sentence thereof (which we have italicized) the following:

"No proclamation shall be made increasing or decreasing by more than 50 per centum any rate of duty, however established, existing on January 1, 1945 (even though temporarily suspended by Act of Congress), or transferring any article between the dutiable and free lists." (Emphasis ours.)

The parties agree that the "established rate of duty" on crude petroleum on January 1, 1945, within the meaning of the proviso last quoted, was the tax of ¼ cent per gallon and that the ¼ cent rate was established by the proclamation of the Mexican agreement.

On September 6, 1950, the President issued Proclamation No. 2901, the center of the present dispute, effective January 1, 1951 (64 Stat. A427, T.D. 52559) U.S. Code Cong.Service 1950, p. 1528 which contained numerous "whereas" clauses including the following:

"6. Whereas the Government of the United States has agreed with the Government of the United Mexican States that the said trade agreement shall cease to be effective after December 31, 1950;

"7. Whereas the final sentence of said section 350(a) authorizes the President of the United States to terminate in whole or in part any trade-agreement proclamation made under said section 350(a);"

"16. Whereas I determine that it is required or appropriate to carry out the said trade agreements specified in the first General Agreement on Tariffs and Trade and twelfth Trade Agreement with Venezuela recitals of this proclamation on and after January 1, 1951, that crude petroleum, topped crude petroleum, and fuel oil derived from petroleum, including fuel oil known as gas oil, entered, or withdrawn from warehouse, for consumption in any calendar year in excess of an aggregate quantity of all such products equal to 5 per centum of the total quantity of crude petroleum processed in refineries in continental United States during the preceding calendar year, as provided in said item 3422 set forth in the thirteenth recital of this proclamation shall be subject to import tax at the rate of ½ cent per gallon;" (Matter in brackets added).

The proclamations actually made included the following:

"Part I

* * * * * *

"(b) The said proclamations of December 28, and 31, 1942, relating to the said trade agreement with the United Mexican States, shall be terminated in whole as of the close of December 31, 1950.

* * * * * *

"Part IV

"To the end that the said trade agreements specified in the first and twelfth recitals of this proclamation may be carried out, crude petroleum, topped crude petroleum, and fuel oil derived from petroleum, including fuel oil known as gas oil, entered, or withdrawn from warehouse, for consumption in any calendar year beginning with the calendar year 1951, in excess of an aggregate quantity of all such products equal to 5 per centum of the total quantity of crude petroleum processed in refineries in continental United States during the preceding calendar year, specified in the said item 3422 set forth in the thirteenth recital of this proclamation, shall be subject to import tax at the rate of ½ cent per gallon. * *"

It has been stipulated that the tax or duty of ½ cent per gallon in the instant case was assessed by the collector under the authority of Presidential proclamation 2901, supra, and it is evident that such assessment is in accord with Part IV of that proclamation. It is contended by the importer, however, that the proclamation is invalid for the reason that it purports to increase by one hundred percent (from ¼ to ½ cent per...