*138 Decision will be entered for the respondent.
Claimant of refund of sugar processing taxes held upon the evidence not entitled to refund because the margin in the tax period was higher than in the before-and-after period and the evidence fails to show that the burden of the tax was borne by claimant and not shifted to the claimant's purchasers.
*105 The claimant paid procession taxes of $ 28,663.55 under the Agricultural Adjustment Act with respect to the first domestic processing of sugar cane and it claims a refund. A petition, filed on December 23, 1941, with the United States Processing Tax Board of Review, had been heard but not decided before the proceeding was transferred to this Court by the Revenue Act of 1942, section 510.
FINDINGS OF FACT.
The claimant is a Louisiana corporation organized in May 1932, with its principal place of business in Thibodaux, Louisiana. It is the successor *106 of Laurel Sugars, Inc., upon whose property the Canal Bank & Trust Co. held a first mortgage. Upon foreclosure the claimant was organized*139 and 51 percent of its shares were held by the bank and 49 percent by three others.
Claimant was engaged in growing and buying sugar cane and processing it by the sulphitation process into refined sugar (plantation granulated), raw sugar, and blackstrap molasses. It owned and operated a plantation and factory about five miles above Thibodaux. It produced about 35 percent of the sugar cane which it processed and purchased about 65 percent from growers or producers within a radius of 15 miles of its plantation. The cane seed is planted in the fall of the year and the cane is harvested in the following year during October, November, and December. The sugar factory operates only during the harvesting season, after which the factory is closed down and remains idle until the next grinding season. Under date of December 17, 1934, claimant entered into a sugar cane production adjustment contract with the Secretary of Agriculture, and received benefit payments as follows:
| Advance 1934 payment under sec. 15 (b) | $ 16,645.00 |
| Final 1934 payment under sec. 15 (c) | 20,659.02 |
| Total | 37,304.02 |
Its purchases prior to 1934 were in competition with six other sugar factories operating*140 in the above area. Prices of sugar cane in 1934 and 1935 were set by the Secretary of Agriculture, but competition was reflected in the amounts of loading and trucking fees paid to producers.
From 1932 to 1937 the claimant had no sales force of its own. It sold its products through a brokerage firm in New Orleans, Louisiana, and paid a brokerage fee of 10 cents per 100 pounds. Its sales territory was limited to the Mississippi and Ohio River Valleys. Most of its sugar was sold in carload lots of 100 and 50 pound bags, largely to wholesale grocery houses, chain stores, candy manufacturers, and bakeries. About 1 percent of sales consisted of 25-pound bags to customers located near the factory. Claimant made no powdered or loaf sugar, or other specialties. Its marketing season began about the end of October and ended the following January or February, in which about 80 to 97 percent of its sugar was sold.
Claimant's refined sugar was of an inferior grade and was sold at a differential of 20 cents to 45 cents below the current price quoted by the American Sugar Refining Co., the largest sugar refinery operating in claimant's trade territory. The standard price of raw sugar was*141 the New York price f. o. b. New Orleans. The sale terms varied from year to year. Sales were on a so-called market move. Many of the sales were made on a four-payment plan, under which the first payment, 25 percent of the invoice, was due ten days after arrival and the remaining *107 payments each seven days thereafter, the entire payment being due thirty-one days after arrival. Whenever claimant learned of an impending advance in standard prices, it informed its customers so that they could satisfy their requirements before the advance. If a customer bought during the period of an impending advance his price remained unchanged. If there was an impending decline in standard price, sales were made with a guarantee of price adjustment. The points guaranteed were less than the differential, for example, if the quoted standard price was $ 5.50 per 100 pounds and the claimant's sale was at a differential of 25 points, the guarantee would be of a differential of 20 points. If the standard price declined 10 cents to $ 5.40 during the time of transit and before final payment, the claimant would lower its price 5 cents -- from $ 5.25 to $ 5.20. The guarantee was applicable only*142 to installments unpaid at the time of the decline. During the sale period 1934-1935, the differential ranged from 20 to 45 points, the higher points being applicable to inferior brands of sugar. In the sale period 1936-1937, the differential was 20 points, the sugar in that year being of a better quality.
At the time of claimant's organization in May 1932 the 1933 crop had been planted. The Canal Bank & Trust Co. went into liquidation in May 1933 and was unable, as it theretofore had done, to make advances for production and operation. Advances could not be had from any other bank or other source except a crop production agency. During a period of about four months the claimant was unable to meet its labor pay roll and interest obligations. Its land was in poor condition because of lack of cultivation and drainage. Many of the growers of sugar cane who had formerly sold their products to claimant thought claimant would be unable to pay, and it was difficult to get contracts for the purchase of sugar cane. In the fall of 1932 claimant purchased 66,153 tons of sugar cane and in 1933 it purchased only 33,226 tons.
From early spring 1933 to June 1934 conditions in the sugar industry*143 were uncertain and confused. In the early part of 1933 there were large excess stocks of sugar in Puerto Rico, the Philippines, Hawaii, Cuba, and the United States, and refiners, processors, and growers of beet and cane sugar of Cuba, Puerto Rico, Hawaii, the Philippines, and the United States began, under the auspices of the Department of Agriculture, to negotiate an agreement limiting the market supply in the United States in order to stabilize the price. As a result, large supplies of sugar were held in check and the price of raw and refined sugar increased steadily. The price of raw sugar at the beginning of 1933 was about $ 2.80 per 100 pounds and it went up to $ 3.65 in mid-September. In late August or early September 1933 the growers and processors reached an agreement, but the representative of the Department of Agriculture announced that it was not satisfactory and would not have his recommendation. On October 9, 1933, the Secretary of *108 Agriculture formally announced, after a conference with the President, that he would not sign the agreement. Consequently, all the excess supplies of sugar held in check were released. This coincided with the processing of *144 the beet sugar crop, which produced 300,000 tons more sugar than had been produced in any year before 1933. From mid-September 1933 the price of raw sugar steadily declined, with a slight interruption in February, from a high of $ 3.65 per 100 pounds to $ 2.80, about June 1, 1934, and the price of refined sugar declined from a high of $ 4.70 to $ 4.10. There was at least 50 percent more sugar available than could be consumed in a year.
On February 8, 1934, the President sent a message to Congress recommending an amendment to the Agricultural Adjustment Act making sugar a basic agricultural commodity. In a press release dated March 16, 1934, the Secretary of Agriculture advocated the passage of the sugar amendment. On May 9, 1934, the Jones-Costigan amendment, which made sugar a basic agricultural commodity, was approved by the President, and it became effective June 8, 1934.
A processing tax of 53 1/2 cents per 100 pounds on refined sugar became effective on June 8, 1934. The general price level of refined sugar was increased by 55 cents.
During the time the processing tax was effective, two reductions were made in tariff on off-shore raw sugar from certain foreign countries. *145 After the decision on January 5, 1936, in , the Secretary of Agriculture announced that in his opinion all the provisions of the act applicable to sugar, except the processing tax, remained in effect. The system of quota control remained in effect.
The statutory tax period is stipulated to be the period beginning June 8, 1934, and ending April 30, 1935.
The statutory tax period is stipulated to be the period beginning the tax period (pounds of sugar, 96 o raw value), without treating the benefit payments ($ 37,304.02) received by the petitioner as a reduction of the cost of commodity processed, was $ .011861 per pound.
The statutory average margin per unit of commodity processed during the tax period, if the benefit payments ($ 37,304.02) are to be treated as a reduction of cost, was $ .016000 per pound; or, if only the amount ($ 16,645) received by the claimant under section 15 (b) of its sugar cane production adjustment contract is to be treated as a reduction of the cost, it was $ .013712 per pound.
The statutory average margin per unit of commodity processed during the statutory period before and after the *146 tax was $ .011538 per pound.
The average margin per unit of commodity processed by the claimant from its 1936 crop of sugar cane, such processing occurring during the months from October 1936 to January 1937, inclusive, was *109 $ .017961 per pound, computed in the same manner in every respect as the above statutory margins.
The units of commodity upon which the claimant paid the processing tax were 5,732,710 pounds, and the total of the units of commodity processed by the claimant during the tax period was 8,988,103 pounds, consisting of 5,120,729 pounds or 56.9 percent granulated sugar; 3,313,338 pounds, or 36.9 percent raw sugar; and 554,036 pounds, or 6.2 percent of magma, out of which second and third grade sugar was made.
No payments were made by the Secretary of Agriculture to any grower of sugar cane under section 8, paragraph 7, of the Agricultural Adjustment Act, as amended.
The claimant paid $ 28,663.55 processing taxes. No part of this has been refunded.
The processing tax was not billed as a separate item on claimant's invoices to customers covering its products sold, except on seven invoices, upon which the processing tax in the aggregate amount of $ 2,737.12 was*147 billed as a separate charge on a total of 575,700 pounds of second raw sugar made from magma.
There was no agreement, written or oral, expressly relieving the claimant of the burden of the tax or expressly reimbursing it therefor.
OPINION.
It has been stipulated that the statutory average margin during the tax period was $ .011861 per pound (without regarding benefit payments as reduction of cost) or $ .016000 per pound (if the benefit payments are treated as reduction of cost), and was $ .011538 per pound in the statutory before-and-after period. Thus the average margin for the tax period was at least $ .000323 per pound greater than in the before-and-after period. This is "prima-facie evidence that none of the burden of such amount [the processing tax paid] was borne by the claimant but that it was shifted to others." Sec. 907 (a), Revenue Act of 1936.
The claimant concedes that $ 2,737.12 of taxes were added by it to the price shown on bills to its customers and that it is not entitled to the refund of such taxes, as they were clearly shifted. As to the $ 25,926.43 not separately stated on bills rendered to customers, claimant says that the burden of the tax was borne by it *148 and not shifted to others. Its argument is based upon the declared design and purported administration of the Jones-Costigan Act and the general circumstances affecting the sugar industry before, during, and after the tax period, and not upon specific facts of any transaction or of the operation of claimant's business as a whole. The statute, however, precludes a finding based upon such general inferences and requires evidence of *110 concrete facts. This is not satisfied by proof of difficulty in marshaling the evidence. . "When particular facts control the decision they must be shown." . Where the spread between margins is against the claimant, it "must show that the spread was not owing to his shifting the tax." (C. C. A., 2d Cir.). "It must not only be demonstrated that the tax has neither been shifted forward in the sale price nor backward in the cost price, but also that it has not been shifted 'in any manner whatsoever.'" *149 (C. C. A., 6th Cir.).
A tax amounting to 53 1/2 cents per 100 pounds was imposed beginning June 8, 1934. At the same time wholesale prices of refined sugar increased generally about 55 cents per 100 pounds. The claimant, which did not sell to the ultimate consumer but to wholesalers and dealers, fixed its prices before, during, and after the tax period at a differential below the price quoted by the American Sugar Refining Co. The differential ranged from 20 cents to 45 cents, depending upon the quality of the claimant's product, its sugar being inferior to that of American. The evidence fails to show the exact prices quoted by American or charged by the claimant at any time during the entire period involved except as shown by several confirmation orders dated in October and November 1934. Such orders disclose that the price of American used as a basis was higher than the average October and November 1934 New York wholesale price per pound of refined sugar including the tax. During the tax period it was not economically impossible for the claimant to shift the tax burden to its customers, for it did this, as it admits, as to $ 2,737.12 by adding this tax to the price as a separate*150 item. Logically it is reasonable to suppose that the claimant probably was also able to pass on the remaining tax to its other customers. At least we can reach no assured conclusion that it did not, or that the sales involving the $ 2,737.12 were exceptional rather than typical. The claimant has failed to overcome the prima facie effect of the unfavorable comparison of the margins and has failed to prove that it bore the burden of the tax and did not shift it by any means whatever to those to whom it sold its products.
The argument that it was the design of the sugar amendment to the Agricultural Adjustment Act not to pass the tax on to the ultimate consumer does not avail claimant, for it did not sell to the ultimate consumer. Even so, the evidence shows that the average retail price for the two years before and six months after the tax period was 5.357 cents per pound of refined sugar as compared with the price in the tax period of 5.647 cents per pound. The quota system remained in effect after the invalidation of the tax and the prospect of the application of a quota system had a stimulating effect on prices prior to the *111 enactment of the sugar amendment, so that*151 the increase may have been to some extent due to the tax.
Whether the burden of the tax was shifted to others in the cost to claimant of its raw material or its cost of manufacture need not be considered, since the possibility that it may have shifted the burden to its purchasers is enough to require a denial of the refund claimed. It is also unnecessary to enter upon the question whether the benefit payments received by the claimant serve to affect its cost and thus become a factor in measuring the margin, for the margin is in either event greater in the tax period than in the before-and-after period.
The claimant also uses the argument that it did not and could not pass the tax on to the growers of sugar cane since the Secretary of Agriculture fixed the prices to producers under the sugar cane production adjustment contracts and since he failed to make any compensating payments under section 8, paragraph 7, of the Agricultural Adjustment Act to growers of sugar cane from whom claimant purchased cane. This argument is based upon the presumption that the Secretary of Agriculture administered the sugar amendment to prevent the passing back of the tax to the producer. This presumption*152 is not the equivalent of proof of substantive facts. . No evidence was submitted as to cost of raw material or cost of manufacturing. It is therefore impossible to determine what effect, if any, the incidence of the tax or other circumstances had upon them.
The claimant further argues that the period from January 7, 1936, to August 31, 1937, should be substituted for the base period established by the statute for comparison of margin with the tax period. This substitution for the statutory period would establish a spread of margin favorable to claimant. There is no warrant for departing from the requirement of the statute in this respect.
Decision will be entered for the respondent.