Zenith Radio Corporation v. United States
| Decision Date | 21 June 1978 |
| Docket Number | No. 77-539,77-539 |
| Parties | ZENITH RADIO CORPORATION, Petitioner, v. UNITED STATES |
| Court | U.S. Supreme Court |
Petitioner, an American manufacturer of consumer electronic products, filed a petition with the Commissioner of Customs, requesting assessment under § 303 of the Tar ff Act of 1930 of countervailing duties on various consumer electronic products exported from Japan to this country. Petitioner contended that the products benefited from bounties or grants paid or conferred by Japan because Japan imposes a commodity tax (an "indirect" tax) on those products when they are sold in that country but "remits" the tax when the products are exported, any tax paid on the shipment of a product being refunded upon the subsequent exportation. Section 303 provides that whenever a foreign country pays a "bounty or grant" upon the exportation of a product from that country, the Secretary of the Treasury (Secretary) must levy a countervailing duty "equal to the net amount of such bounty or grant" upon the importation of the product into the United States. After rejection of its request petitioner filed suit in the Customs Court, claiming that the Treasury Department had erred in concluding that remission of the Japanese tax was not a bounty or grant within the purview of § 303. The Secretary contended that since the remission of the tax was "nonexcessive" (i. e., not above the amount of the tax paid or otherwise due), § 303 did not require assessment of a countervailing duty. Relying on Downs v. United States, 187 U.S. 496, 23 S.Ct. 222, 47 L.Ed. 275, the Customs Court ruled in petitioner's favor. The Court of Customs and Patent Appeals reversed. Held : Japan does not confer a "bounty or grant" within the meaning of § 303 on the consumer electronic products by failing to impose a commodity tax on those products when they are exported to this country, while imposing the tax on the products when they are sold in Japan. Downs v. United States, supra, distinguished. Pp. 450-462.
(a) The Secretary's statutory interpretation that was followed in this case has been consistently maintained since the basic countervailing-duty statute was enacted in 1897, and that administrative interpretation is entitled to great weight. See Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616. Pp. 450-451.
(b) The legislative history of the statute suggests that the term "bounty" was not intended to encompass the nonexcessive remission of an indirect tax. Pp. 451-455.
(c) The Secretary's interpretation was reasonable in light of the statutory purpose of the countervailing duty, viz., offsetting the unfair competitive advantage that foreign products would otherwise enjoy from export subsidies paid by their governments. In deciding in 1898 that a nonexcessive remission of indirect taxes did not give the exporter an unfair competitive advantage, the Secretary permissibly viewed the remission as a reasonable measure for avoiding double taxation of exports—once by the foreign country and once upon sale in this country. Pp. 455-457.
(d) The Secretary's interpretation is as permissible today as it was in 1898. The statute has been re-enacted five times with no modification of the relevant language, and the Secretary's position has been incorporated into an international agreement followed by every major trading nation in the world. It is not for the judiciary to substitute its views as to the fairness and economic effect of remitting indirect taxes. Pp. 457-459.
(e) Downs v. United States, supra, did not involve the issue of whether a nonexcessive remission of taxes, standing alone, would have constituted a bounty on exportation, and is not dispositive of this case. Pp. 459-462.
64 C.C.P.A. 130, 562 F.2d 1209, affirmed.
Frederick L. Ikenson, Washington, D.C., for petitioner.
Under § 303(a) of the Tariff Act of 1930, 46 Stat. 687, as amended, 19 U.S.C. § 1303(a) (1976 ed.), whenever a foreign country pays a "bounty or grant" upon the exportation of a product from that country, the Secretary of the Treasury is required to levy a countervailing duty, "equal to the net amount of such bounty or grant," upon mportation of the product into the United States.1 The issue in this case is whether Japan confers a "bounty" or "grant" on certain consumer electronic products by failing to impose a commodity tax on those products when they are exported, while imposing the tax on the products when they are sold in Japan.
Under the Commodity Tax Law of Japan, Law No. 48 of 1962, see App. 44-48, a variety of consumer goods, including the electronic products at issue here, are subject to an "indirect" tax—a tax levied on the goods themselves, and computed as a percentage of the manufacturer's sales price rather than the income or wealth of the purchaser or seller. The Japanese tax applies both to products manufactured in Japan and to those imported into Japan.2 On goods manufactured in Japan, the tax is levied upon shipment from the factory; imported products are taxed when they are withdrawn from the customs warehouse. Only goods destined for consumption in Japan are subject to the tax, however. Products shipped for export are exempt, and any tax paid upon the shipment of a product is refunded if the product is subsequently exported. Thus the tax is "remitted" on exports.3
In April 1970 petitioner, an American manufacturer of consumer electronic products, filed a petition with the Commissioner of Customs,4 requesting assessment of countervailing duties on a number of consumer electronic products exported from Japan to this country.5 Petitioner alleged that Japan had bestowed a "bounty or grant" upon exportation of these products by, inter alia, remitting the Japanese Commodity Tax that would have been imposed had the products been sold within Japan. In January 1976, after soliciting the views of interested parties and conducting an investigation pursuant to Treasury Department regulation , see 19 CFR § 159.47(c) (1977), the Acting Commissioner of Customs published a notice of final determination, rejecting petitioner's request. 41 Fed.Reg. 1298 (1976).6
Petitioner then filed suit in the Customs Court, claiming that the Treasury Department had erred in concluding that remission of the Japanese Commodity Tax was not a bounty or grant within the purview of the countervailing-duty statute.7 The Department defended on the ground that, since the remission of indirect taxes was "nonexcessive," the statute did not require assessment of a countervailing duty. In the Department's terminology, a remission of taxes is "nonexcessive" if it does not exceed the amount of tax paid or otherwise due; thus, for example, if a tax of $5 is levied on goods at the factory, the return of the $5 upon exportation would be "nonexcessive," whereas a payment of $8 from the government to the manufacturer upon exportation would be "excessive" by $3. The Department pointed out that the current version of § 303 is in all relevant respects unchanged from the countervailing-duty statute enacted by Congress in 1897,8 and that the Secretary—in decisions dating back to 1898—has always taken the position that the nonexcessive remission of an indirect tax is not a bounty or grant within the meaning of the statute.9
On cross-motions for summary judgment, the Customs Court ruled in favor of petitioner and ordered the Secretary to assess countervailing duties on all Japanese consumer elec- tronic products specified in petitioner's complaint. 430 F.Supp. 242 (1977). The court acknowledged the Secretary's longstanding interpretation of the statute. It concluded, however, that this administrative practice could not be sustained in light of this Court's decision in Downs v. United States, 187 U.S. 496, 23 S.Ct. 222, 47 L.Ed. 275 (1903), which held that an export bounty had been conferred by a complicated Russian scheme for the regulation of sugar production and sale, involving, among other elements, remission of excise taxes in the event of exportation.
On appeal by the Government, the Court of Customs and Patent Appeals, dividing 3-2, reversed the judgment of the Customs Court and remanded for entry of summary judgment in favor of the United States. 64 C.C.P.A. 130, 562 F.2d 1209 (1977). The majority opinion distinguished Downs on the ground that it did not decide the question of whether nonexcessive remission of an indirect tax, standing alone, constitutes a bounty or grant upon exportation. The court then examined the language of § 303 and the legislative history of the 1897 provision and concluded that, "in determining whether a bounty or grant has been conferred, it is the economic result of the foreign government's action which controls." 64 C.C.P.A., at 138-139, 562 F.2d, at 1216. Relying primarily on the "long-continued" and "uniform" administrative practice, id., at 142-143, 146-147, 562 F.2d at 1218-1219, 1222-1223, and secondarily on congressional "acquiescence" in this practice through repeated re-enactment of the controlling statutory language, id., 143-144, 562 F.2d, at 1220, the court held that interpretation of "bounty or grant" so as not to include a nonexcessive remission of an indirect tax is "a lawfully permissible interpretation of § 303." Id., at 147, 562 F.2d, at 1223.
We granted certiorari, 434 U.S. 1060, 98 S.Ct. 1231, 55 L.Ed.2d 760 (1978), and we now affirm.
It is undisputed that the Treasury Department adopted the statutory interpretation at issue here less than a year after passage of the basic countervailing-duty statute in 1897, see T.D. 19321, 1 Synopsis of [Treasury] Decisions 696 (1898), and that the Department has uniformly maintained this position for over 80 years.10 This longstanding and consistent administrative interpretation is entitled to considerable weight.
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