This proceeding is brought to review an assessment made by the comptroller of the city of New York against petitioner’s predecessor for emergency sales taxes on sales made during the period from December 10, 1934, to December 31, 1935. Petitioner’s predecessor has since been dissolved and the petitioner is its successor and. has all its rights. The'payment of the taxes was duly protested. Petitioner, in fact, did not collect the sales tax on the disputed sales.
Petitioner has sold oil manufactured in bond from crude petroleum imported from Venezuela. The crude petroleum was delivered directly to petitioner’s bonded manufacturing warehouse, Class 6, at Gulfport, Staten Island. The bond was issued pursuant to the Warehouse Laws of the United States and the Treasury Pegu*209lations. Under the bond petitioner agrees that it shall not permit any materials in its warehouse except such as are used for the manufacture of articles which by law are allowed to be exported free of duty and taxes. The bond is void if the goods used for the purpose specified in the bond are truly exported from the United States. This bond takes the place of the payment of the one-half cent per gallon tax on crude oil imposed by the Revenue Act of 1932. It makes unnecessary later applications for drawbacks after exportation of the refined oil.
Bonded warehouses, Class 6, are provided for in section 311 of the Tariff Act of June 17, 1930 (U. S. Code, tit. 19, § 1311), and article 919 of the Customs Regulations of 1937. A “ Class 6 ” warehouse is one “ for the manufacture in bond, solely for exportation, of articles made in whole or in part of imported materials.” , There is no provision in law for the lawful withdrawing of any such articles (other than cigars and by-products) from Class 6 warehouses for domestic consumption. It is provided in article 940 (b) and (d) of the Customs Regulations of 1937 that the merchandise is not subject to levy, attachment or other process or injunction of a State court and “ imported goods in bonded warehouse are exempt from taxation under the general laws of the several States.”
It is unnecessary to describe in detail the careful control exercised by government officials over goods that have been taken into Class 6 warehouses. Suffice it to say that the oil is constantly under government supervision until it is pumped into a vessel in foreign trade and cannot be diverted into domestic trade.
The oil claimed to be subject to tax herein is specifically exempt from Federal tax pursuant to section 630 of the Revenue Act of 1932, which exempts from tax “ any article sold for use as fuel supplies * * * on vessels * * * actually engaged in foreign trade or trade between the Atlantic and Pacific ports of the United States or between the United States and any of its possessions. Articles manufactured or produced with the use of articles upon the importation of which tax has been paid under this title, if laden for use as supplies on such vessels, shall be held to be exported for the purposes of section 601 (b).”
All the foregoing acts, regulations and provisions discussed above were enacted by Congress as an express exercise of its power to regulate commerce with foreign nations. The Tariff Act of 1930 is entitled: “ An act to provide revenue, to regulate commerce with foreign countries, to encourage the industries of the United States, to protect American labor, and for other purposes.”
*210The power of Congress to regulate commerce with foreign nations “ is exclusive and plenary. As an exclusive power, its exercise may not be limited, qualified or impeded to any extent by State action. * * * The power is buttressed by the express provision of the Constitution denying to the States authority to lay imposts or duties on imports or exports without the consent of the Congress. Art. I, § 10, par. 2.” (Board of Trustees v. United States, 289 U. S. 48.) Under this power Congress may grant rebate of duties upon raw or prepared materials imported, “ thus enabling the manufacturer to compete in foreign markets with the same articles manufactured in other countries.” (Tide Water Oil Co. v. United States, 171 U. S. 210.) It was said in Sinnot v. Davenport (22 How. [U. S.] 227, 243): “ The whole commercial marine of the country is placed by the Constitution under the regulation of Congress, and all laws passed by that body in the . regulation of navigation and trade, whether foreign or coastwise, is therefore but the exercise of an undisputed power. When, therefore, an act of the Legislature of a State prescribes a regulation of the subject repugnant to and inconsistent with the regulation of Congress, the State law must give way; and this, without regard to the source of power whence the State Legislature derived its enactment.”
The history of the legislation permitting the manufacture in bond and export free of duty of articles sold for use as supplies on vessels engaged in foreign trade shows that the purpose was to relieve American manufacturers from a competitive disadvantage. (Senate Report No. 58 on the 1933 Amendment to the Revenue Act of 1932, Seventy-Third Congress, First Session, May 1, 1933, p. 3.) Congressional debates (Congressional Record, May 11, 1933, p. 3212) also establish that the provision dealing with fuel oils was passed because experience had proved that “ many of the vessels which carry on the foreign trade heretofore had bought their fuel oil in this country, but since the passage of the tax act they have changed their practice and are filling their tanks abroad in the ports of foreign countries, and we are losing that trade. A provision is recommended [the one finally passed and relied on in this case] by the committee that in the case of fuel oil, ships’ stores, and so forth, as involved in this class of foreign trade, the tax shall not be imposed.”
Congress decided that its purpose to encourage foreign trade would be thwarted by the imposition of a tax on crude petroleum of one-half cent per gallon. It seems perfectly obvious that its purpose would be more than thwarted by a tax on the consumer of refined petroleum of two per cent of the sale price. This is what the city of New York, however, asserts its right to do.
*211The city claims that, because of the processing of the crude petroleum which takes place on Staten Island, this petroleum loses its character as an import and emerges from the refinery as new products which, from the point of view of the State of New York, must be deemed an intrastate article of commerce. This contention must be based on a premise to the effect that any processing of completely segregated imported goods, regardless of the declared congressional purpose, commingles these imports ipso facto with the general goods of the State.
It has long been established that imports must be commingled with the common goods of the country before they may be taxed. (Norfolk & Western R. Co. v. Sims, 191 U. S. 441; Robbins v. Shelby Taxing District, 120 id, 489.) In Robbins v. Shelby Taxing District (supra) it was said: “ But in making such internal regulations a State cannot impose taxes * * * upon property imported into the State from abroad, or from another State, and not yet become part of the common mass of property therein.” The city, in fact, has not questioned this rule, but says it is inapplicable.
The contention that the processing of this oil under government control while in its exclusive possession changes its essential character cannot be sustained. No authority has ever held that mere processing reduces imports to the status of commingled goods. On the contrary, in a case involving the processing of cotton seed cakes into meal in a terminal warehouse, the Supreme Court of the United States said that the character of the goods as articles of interstate commerce had not been lost by the processing. (Southern Pac. Terminal Co. v. Int. Commerce Comm., 219 U. S. 498.) Mere processing of goods as authorized by the act of Congress does not, therefore, change their essential character as imports subject to re-export.
Aside from processing, which we have adverted to above, there is no element in the handling of this crude oil which relaxes in any degree the control of the United States Customs authority. When the crude oil arrives from Venezuela it is immediately delivered into bonded oil tanks at petitioner’s bonded manufacturing warehouse; the more volatile liquids therefrom, such as gasoline and gas oil, are removed by heat in the bonded still. The resulting bunker “ C ” fuel oil is transferred to bonded fuel oil tanks. This bonded fuel oil is delivered from bonded tanks into bonded lighters. From such lighters, still under Customs control and seal, the oil is transferred into bunker fuel tanks of vessels clearing for foreign ports and is listed by the United States Customs authorities as “ ships’ stores.” It is impossible fairly to claim that this oil has become “ commingled.”
*212We hold that it is a legitimate exercise of the power of Congress over foreign trade to provide for the segregation of imports so that they may be processed and re-exported. It is also within the power of Congress reasonably to define the word “ exports ” to include ships’ stores. The regulation of the product being so complete and the purpose thereof so manifest as a proper exercise of the power of Congress under the commerce clause, it must be held that the tax is a burden on foreign commerce and repugnant to the expressed intention of Congress.
Petitioner further contends that it is entitled to a refund of taxes collected upon State and Federal gasoline taxes and Federal lubricating oil taxes included in the price paid by retail customers at its filling stations in New York city. The State gasoline taxes are not properly included in the taxable receipts, and petitioner need not have collected the .taxes thereon. (Socony-Vacuum Oil Co., Inc., v. City of New York, 247 App. Div. 163; affd., 272 N. Y. 668.) While the Federal gasoline taxes are not collected from the purchaser but are paid directly by the seller, for the purpose of the point raised we may treat the two taxes alike. We think that this matter has been decided by the Court of Appeals in Matter of Kesbec, Inc., v. McGoldrick (278 N. Y. 293). The factual situations are not substantially distinguishable and the opinions in the Court of Appeals show that all the points now presented were considered by the court. Petitioner is, therefore, not entitled to a refund of the sums collected by it.
The determination of the comptroller should be annulled to the extent indicated in this opinion, with fifty dollars costs and disbursements to the petitioner.
Martin, P. J., and O’Malley, J., concur; Glennon and Untermyer, JJ., dissent.