Arnhold & Co. v. United States

DISSENTING OPINION

MoClelland, Presiding Judge:

The merchandise which is the subject of these protests consists of dogskins imported from China. The classification that skins in the condition of those involved, and the rate of duty that should be assessed thereon, have been litigated in this court in different forms in a number of cases. The collector assessed duty on the involved skins at the rate of 25 per centum ad valorem under the provisions of paragraph 1519 (a) and the alternative claims in each of the protests are that the skins are entitled to free entry under the provisions of paragraph 1681, or if not entitled *179to suck free entry then that they should have been assessed with duty only at the rate of 20 per centum ad valorem under the provisions of paragraph 1558, all of the Tariff Act of 1930.

The pertinent portions of these paragraphs read as follows:

Par. 1519. (a) Dressed furs and dressed fur skins (except silver or black fox), and plates, mats, linings, strips, and crosses of dressed dog, goat, or kid skins, 25 per centum ad valorem * * *.
Par. 1558. That there shall be levied, collected, and paid on the importation of * * * all articles manufactured, in whole or in part, not specially provided for, a duty of 20 per centum ad valorem.
Par. 1681. (Free List) Furs and fur skins, not specially provided for, undressed.

From the whole trend of the trial it is evident that the claim relied upon is that for free entry under paragraph 1681, but the alternative claim under paragraph 1558, not having been abandoned, still stands, and counsel for the Government in their brief, while pressing for the rate assessed by the collector, make forcible argument in support of the claim under paragraph 1558 in the event that the court finds that the skins are not dressed.

After exhaustive study of the entire record, including the record in the case of Rotberg & Krieger v. United States, protest 642199-G, which was incorporated herein, and of the decisions of this court and of the Court of Customs and Patent Appeals in that case, reported in T. D. 48068 and in 24 C. C. P. A. 441, T. D. 48902, respectively, I am satisfied that the skins in the cases at bar are not dressed within the meaning of that term as used in paragraph 1519 (a), supra. As was pointed out in the opinion of Judge Sullivan in the Botberg & Krieger case, supra, and in the unanimous opinion of the Court of Customs and Patent Appeals affirming said decision, it is the meaning of the term “dressed” as understood in the trade of the United States which governs. From the testimony offered by both the plaintiffs and the defendant herein, it appears that that term, as applied to fur skins, refers to one which, after certain preliminary operations such as fleshing, has been tanned or leathered in a dressing bath, and has also been subjected to certain after-operations such as kicking or drumming to soften the skin, the application of oil or grease to the skin, and the cleaning thereof to remove excess dirt, grease, etc., acquired during the dressing process.

It is the contention of the Government that the skins in issue were tanned or leathered by means of what is called the fermentation or Schrot-Beize method, or a modification thereof. It is claimed that in this process flour, water, and chemicals, including sodium chloride and sodium sulphate, are used to make a fermentation liquor in which the skins are placed for varying lengths of time, and that the lactic and acetic acids formed in the liquor act upon the skins in the same *180way that the salt and alum bath, which it is undisputed is the usual method employed in the United States in the dressing of fur skins, tans such skins. During the trial of the issue in the Botberg & Krieger case, supra, four witnesses testified on behalf of the plaintiff that the skins in issue were subjected to immersion in a solution consisting of flour and water, so that whatever were the actual constituents of the bath in which the skins were so immersed in China, it appears undisputed that flour was one of the ingredients.

At the time the skins included in Collective Exhibit 1, which it is agreed came from one of the shipments involved in the Rotberg & Krieger case, and are similar to those involved in the present case, were originally received in evidence, they had on both the hair and leather side, a fine powdery deposit which the plaintiffs claim is part of the flour used in the bath in which they were immersed in China. All of the witnesses interrogated as to what that powdery substance was identified it as starchy material, evidently derived from flour.

It is obvious, therefore, that even assuming for the sake of argument that the skins in issue had been tanned by the fermentation process, the after-operations of oiling and cleaning were not performed on the skins in Collective Exhibit 1, otherwise the flour residue would not still be on both sides of such skins.

While there is some testimony to the effect that cleaning and straightening of the hair of fur skins are not dressing operations, I think a preponderance in both weight and volume of the evidence indicates that the cleaning operation, at least, is an essential part of the process of dressing, even if the straightening operation is not.

The conclusion therefore follows that the skins in issue were not dressed within the meaning of that term as used in paragraph 1519 (a), supra, and compels a consideration of the question whether the skins in issue are “undressed” within the meaning of that term as used in paragraph 1683, supra, or are “articles manufactured, in whole or in part,” provided for in paragraph 1558, supra.

In their testimony given in the Rotberg & Krieger case, supra, such of the plaintiffs’ witnesses as were interrogated on the point were unanimous in declaring that after the flesh had been scraped off the skin in issue nothing had been done to them save to immerse them in a solution consisting of flour and water. During the course of the trial in the case at bar witnesses for both the Government and the plaintiffs demonstrated that the foregoing was not literally true, and, indeed, plaintiffs seem to have receded from that stand to the extent of admitting that salt or a solution of salt was used in the preparation of the skins in issue.

Analyses of portions of identical skins taken from Collective Exhibit 1 were made by qualified chemists on behalf of the plaintiffs and defendant. This member of the court has long since ceased to *181wonder why the results of analyses made by chemists of apparently equal qualifications, working on identical samples, vary so widely on important matters. To illustrate: Defendant’s witness, Serfass, unquestionably a qualified chemist, testified that he analyzed a portion of Exhibit 1-W with the following results:

Aluminum (calculated as Aluminum Oxide)_ 1. 15%
Sulphates (calculated as Sodium Sulphate)_ 1. 34%
Chlorides (calculated as Sodium Chloride)_5. 02%

Plaintiffs’ witness, Blair, likewise a qualified chemist, also analyzed a portion of Exhibit 1-W, with these results:

Aluminum Oxide_ . 34%
Sulphates_ 1. 37%
Chlorides_4. 92%

It will be readily seen that so far as sulphates and chlorides are concerned the results are in practical agreement, but as to the quantity of aluminum oxide contained in the skin the results are irreconcilable. The last named is the most important ingredient from the standpoint of this case, since it has been testified by both plaintiffs’ and defendant’s witnesses that certain forms of alumina, represented in analysis by aluminum oxide, are tanning materials.

It has been testified by plaintiffs’ witness, Rogers, a consulting chemical engineer, specializing in leather and fur problems, that in order to indicate dressing by the so-called alum and salt method analysis of a fur skin would have to indicate the presence of 2% to 3 p.er centum of alumina. While offhand this testimony might be interpreted as indicating that the skins in issue were not dressed, it should be noted that the Government makes no contention that they were dressed by the alum and salt method. Based upon comparison with analyses made of raw dogskins by Government Chemist Schnop-per, the results of which are given in the record at page 248, it would appear that the quantity of aluminum oxide found by Government witness, Serfass, in the portion of Exhibit 1-W which he analyzed was approximately six times the quantity found in raw dogskins, while the aluminum oxide found by plaintiffs’ witness, Blair, in the portion of Exhibit 1-W which he analyzed was nearly twice that found in raw dogskins. If the analysis made by witness Serfass, showing 1.15 per centum of alumina, be correct, it can scarcely be disputed that the presence of alumina, represented in analysis by aluminum oxide, in a skin to an amount approximately one-half that required to tan properly the skin should have some effect along that line.

The results found by the Government chemists, which indicate that the skins in issue were subjected to chemical treatment for the purpose of tanning them, are borne out by the photomicrographs offered by the Government and received in evidence as Government Exhibits 12 *182and 13, and Government Collective Exhibit 14, together with the testimony given thereon by the witnesses Serfass and Theis, the latter an industrial biochemist specializing in leather and fur problems.

Government Exhibit 12 is a photomicrograph taken by the witness Serfass of a portion of Collective Exhibit 1. Government Exhibit 13 is a photomicrograph taken by the same witness of a portion of Collective Exhibit 1 which he testified had been soaked in water for twenty-four hours. Government Collective Exhibit 14 consists of two photomicrographs, also taken by Mr. Serfass, one of a portion of raw dogskin which he testified had been soaked in water for twenty-four hours, and the other of a portion of a raw dogskin which the witness testified had not been soaked.

Testifying with regard to these photomicrographs, Dr. Theis stated that each of the two photomicrographs in Government Collective Exhibit 14 exhibits the characteristics of an undressed skin in that the fibres are not fully differentiated. Contrasting these with Government Exhibit 12 he stated that the latter shows an entirely different structure indicative of a processing treatment which has changed the fibre structure of the skin in such a way that he, having no other evidence to base his conclusions on, would say it had been subjected to a dressing treatment. As to Government Exhibit 13, which was shown to be a photomicrograph of a portion of skin similar to that shown in Government Exhibit 12, except that it had been soaked in water for twenty-four hours before being placed under the microscope, he testified that there was no change from the structure shown in Government Exhibit 12.

This convincing evidence that a chemical change had taken place in the skins covered by Exhibit 1 to advance them to a point where the dressing process may be said to have been started on them, was not rebutted, in my opinion, by plaintiffs’ witnesses, either technical or practical.

The strongest evidence offered by the plaintiffs to show that the skins in issue are undressed was that given by what may be termed practical men, who identified themselves as manufacturing furriers and dressers and dyers. I do not regard the testimony of the manufacturing furriers as conclusive on this point since their testimony was limited largely to the effect that they could not use the skins in a commercial way in the condition in which they were imported. This testimony supports the conclusion that the skins are not dressed within the meaning of that term as used in paragraph 1519 (a), but it falls far short of proving that they are undressed within the meaning of that term as used in paragraph 1681. It is obvious that if the skins were only partly dressed they would not be usable in the condition in which imported for manufacturing furriers’ use, and yet would not fall into the category of undressed fur skins.

*183So far as the testimony of the dressers and dyers is concerned, it was directed toward establishing that the process to which the skins at bar were subjected after importation resulted in simultaneously dressing and dyeing them.

It is the contention of the Government that dressing and dyeing are separate and distinct operations and that they cannot proceed simultaneously. This contention receives strong support from the testimony of plaintiffs’ witness, Rogers, who, on cross-examination, testified as follows:

X Q. What are we going to do with'skins like Exhibit 1, sent direct to the dyer who has no dressing establishment? Is that dyer going to dress or dye? — A. He is going to leather that material. He is going to tan and dye it, and dress it. He cannot simply dye the skins without dressing them, oiling them, and putting them in the cage, sawdust, and they have to be cleaned. That is all part of the operation.
X Q. May that all be part of the dyeing operation? — A. No; it would not be part of the dyeing operation. The dyeing operation is distinct from the tanning operation. (It. p. 974.) [Italics mine.]

Despite the foregoing testimony from an apparently well-qualified consulting chemical engineer whose work has been largely confined to the leather and fur industries, four “practical” witnesses who identified themselves as “dressers and dyers” testified on behalf of the plaintiffs that they dressed and dyed skins like Exhibit 1 simultaneously by a process known as the wood dye black process.

It appears that since 1930 approximately 90 per centum of all dog-skins imported into the United States from the Orient had been dyed black by the wood dye black process. The four practical witnesses mentioned and one of the Government’s witnesses gave in detail the steps in the process, and although there are more or less slight variations in their descriptions, in general the process may be said to consist of the following:

First, the skins are caged to take out dust and dirt.

Second, they are washed in a vat containing a sal soda solution. The vat has a paddle wheel arrangement which agitates the skins, and this washing is continued for two or three hours, being known as a “killing” bath. The purpose of the bath is to swell the fibers of the skin and to remove the grease from the hair so that the dye will adhere more readily to it. There is some question as to whether upon being removed from the bath the skins are merely hydro-extracted to remove the excess solution or whether they are washed in plain water until the run-off is clear, but all of the witnesses who testified for the plaintiffs in the case at bar were agreed that the latter was the fact.

Third, the skins are immersed in a second bath. All of the witnesses who testified as to this procedure were agreed that the second bath contained logwood and turmeric. All of plaintiffs’ witnesses were agreed that it also contains fustic and sumac, and all save one testified *184that it also contains gambier and nutgalls. The skins stay in this bath approximately 12 hours, and are then taken out and hung on beams over the vat so that the excess dye will drain back for another period of 12 hours.

Fourth, bluestone (copper sulphate), iron liquor (ferrous acetate), and sometimes iron sulphate are added to the second bath and the skins immersed therein for another 12-hour period. There does not seem to be any dispute but that these chemicals develop the color. The skins are taken out of this bath and hung on the same beams for another 12 hours, during which time the air oxidizes the logwood, i. e., in this case it converts it from a colorless compound into a color compound, and the metallic elements, bluestone, iron liquor, and/or iron sulphate, are needed to convert it from a soluble form so that it cannot be washed out again. The procedure of immersion and hanging on beams is repeated three times.

Fifth, the skins are washed in running water until the water runs clear.

Sixth, the skins are washed in salt water.

Seventh, they are dried and a salt and oil emulsion is applied to the skin side.

Eighth, they are again dried and then drummed in damp sawdust.

Ninth, they are then stretched on a machine, drummed with dry sawdust, and then caged to take out the moisture and sawdust.

Tenth, they are combed and brushed and inspected, after which they are finished.

All of the dressers and dyers who testified on behalf of the plaintiffs stated that the foregoing constituted a “dressing and dyeing” process. Under the plaintiffs’ theory of the case the process depends for its tanning action on the vegetable tannins contained in the sumac and gambier. There is testimony that the latter are tanning materials, although plaintiffs’ witnesses also stated they are also used in the second, or dye, bath as mordants to obtain a surface to which the dyestuff will adhere. It also appears that while the so-called dye-woods, such as logwood, turmeric, fustic, and nutgalls, also placed in that bath, contain tannins, they are primarily dyeing materials, and that to obtain a tanning action through their use an exceedingly large proportion of them would have to be used in the dye bath. As they are expensive materials, the record indicates that they are not used for tanning purposes in the processing of dogskins.

With regard to the tanning action exerted by the sumac and gam-bier in the second bath, I deem the following testimony of plaintiffs’ witness, Orthmann, of great significance:

By Mr. Baenes:
R. Q. Now, within the dressing processes, do you include tanning? — A. I do.
R. Q. I am speaking of dogskins. — A. Yes, sir.
*185R. Q. And in your opinion is the tannage complete by immersing for a proper length of time in a bath or vat containing a solution in which there is sumac or gambier and logwood and fustic or turmeric? — A. It depends on the amounts of those you use, Mr. Barnes.
R. Q. Now, if these amounts ran on upwards from twenty to twenty-five pounds of such combination to the hundred skins, would that tan them? — A. I think it ought to be higher than that. I do not know that it would be quite sufficient to do it properly.
R. Q. Thirty pounds? — A. Yes.
R. Q. Thirty pounds would do it? — A. Thirty to forty pounds.
R. Q. Would there by any doubt of that combination exerting a tanning effect? — A. No.
R. Q. It would do so? — A. It would tan the skins, yes sir. [Italics ours.] R. pp. 933-934.

Hence it is apparent that the quantity of materials used in the so-called wood dye process is important in determining whether a. tanning effect sufficient to bring a raw or undressed skin to the tanned condition will be exerted on the skin. In this connection the testimony of Government witness Ruderman at pages 650-651 of the record is interesting:

X Q. If skins in the condition of Exhibit 1 were brought into a dressing and dyeing plant, caged or cleaned in some manner, and all the dry extraneous matter that is in them removed, and immersed in a sal soda solution, washed in fresh water, and then put in a vat or bath containing sumac and gambier, would they be tanned by that solution?
A. Depending on the concentration of sumac or gambier or either, as to whether there would be a tannin. There would be a superficial tanning in any ease, but they would have to stay in that solution for probably a week. Vegetable tannins take a long time. They are the oldest tanning known in the leather industry, and-take probably months to dress with vegetable tannin.

A text-book written by William E. Austin entitled “Fur Dressing- and Fur Dyeing” (D. Van Nostrand & Co., 1922), referred to by-counsel for the plaintiffs in the brief in the incorporated record (which was made part of the brief herein by reference), and also during the-course of the trial of the protests at bar, contains the following reference to vegetable tans at page 65:

Vegetable tans
In practice, the vegetable tanning matters are not used for furs, although in. some special instances gambier cutch may be employed occasionally with some other tan. However, many of these tannins also have dyeing properties, and are used in dyeing the furs. In this connection it must be mentioned that furs, dyed with these materials also receive a vegetable tan, which improves the quality-of the leather to a considerable extent. [Italics added.]

.Upon the foregoing being read together with Dr. Rogers’ testimony quoted above to the effect that dressing and dyeing are distinct operations, one from the other, it would appear that the wood dye black *186process merely farther dresses fur skins already partly dressed, in addition to dyeing them. Manifestly, any testimony with, regard to the action exerted by a bath containing logwood, turmeric, fustic, sumac, and/or gambier, with the addition, possibly, of nutgalls,.must be accompanied by a statement of the quantities of these materials present in the bath in order to be of value in determining the question as to whether such bath either (1) brings a raw or undressed skin to the tanned state, as well as initiates the dyeing operation thereon, (2) further dresses an already partly dressed skin in addition to initiating the dyeing operation thereon, or (3) merely acts as the first step in the actual dyeing process.

In the light of the foregoing, the testimony of the dressers and dyers submitted on behalf of the plaintiff, which in no case included a statement of the quantities used, might as well lead to the conclusion that the bath exerted merely a dyeing action, or an additional dressing action to skins already partly tanned, as to the conclusion that the action exerted was sufficient to bring a raw skin to the completely tanned state.

It might be well to note at this point that with regard to the use of the term “tan” as applied to fur skins the record indicates that tannage in the processing of fur skins in the fur industry is not carried to completion, i. e., is not carried to the point where the skin side would be recognized as leather in the leather industry.

At least one witness for the Government and one for the plaintiff immersed portions of Collective Exhibit 1 in water for varying periods up to 12 hours, and, strangely enough, those immersed by the Government's witness, when wrung out and dried, remained soft, while those immersed by plaintiffs’ witness became boardy and stiff. This contradiction is an apt illustration of the mass of irreconcilable conflicts in the testimony of witnesses found in this record, -the feature in each instance being that the respective opinions of the witnesses support the contention of the party who called them.

Much of the testimony is devoted to the value of tiffs test to determine whether a skin has been dressed, but in view of the foregoing conflict of results it does not seem to be reliable.

I am not unmindful of the contention made by the plaintiff that the skins in issue are merely “cured” for the purpose of ¡^reserving them during transportation and up to the point only when a dressing process may be applied to them. I am satisfied from the record, however, that a manufacturing process, namely tanning, has been applied to the skins in issue the effect of which was to carry them beyond the undressed state and to make them ready for either further operations to complete the dressing or for additional dressing and dyeing by the wood dye black process.

*187I have read with interest the appellate court’s opinions in United States v. Arnhold & Co., Inc., 22 C. C. P. A. 23, T. D. 47036, and United States v. Rotberg & Krieger, supra. In both of these cases the dutiable classification of dogskins from China was involved. There will be no dispute, I think, that the dogsldns here in issue were in all respects similar to those involved in both of those cases, more especially as it has been shown heretofore that the record in the Botberg dc Krieger case, supra, was incorporated herein and the plaintiffs rested ¡their prima jade case on the record and the samples which represented ¡the importation in that case.

In the Arnhold case the court recognized the fact that fur skins may ibe partly .dressed and yet not within the scope of the terms “dressed” or “undressed” as they were used in the Tariff Act of 1922. We .quote the following from its opinion:

As we view the case, upon the record now presented, the testimony respecting the question of whether these dogskins, treating them as furs, are “dressed” or ■‘•‘undressed”, is material and proper to be considered, and the evidence bearing .upon .this ¡has received our careful scrutiny and analysis, with the result that we .conclude -it to ¡have been shown that the merchandise may not properly be held to fall definitely within the proper meaning of either “dressed” or “undressed” .either commercially or within the common meaning of the terms. In other ■words, we think the preponderance of the evidence leads to the conclusion that -they are ‘parity dressed, and only partly dressed, and hence are not properly clas-sifiable as free -under paragraph 1579, supra, as “undressed furs” or “undressed fur skins,” nor .under the first part of paragraph 1420, stipra, as “furs dressed on the skin.”

Manifestly the scope of each of the terms, “dressed” and “undressed,” as used in the Tariff Act of 1930 is the same as when used in the Tariff Act of 1922.

I also quote the following from the opinion of the Court of Customs And Patent Appeals in the Rotberg & Krieger case, supra:

* * * As has been stated, merchandise seemingly similar to that here at issue -•was held, upon the testimonial record made up in the Arnhold & Co. case, supra, -to be neither "dressed” nor undressed, but partly dressed. Even were such finding ¡¡made here, there .could not be a classification by similitude for the reasons already .given, but. here we 'have a different testimonial record, and we think it here has ’been established (as it was not there established) that the treatment given the ¡merchandise in China, including, of course, the use of the flour, did not constitute ,a dressing process, and that the merchandise in the condition as imported was not dressed furs or dressed fur skins within the meaning of paragraph 1519 (a), supra. Further, we think that the merchandise, being undressed furs, is enumerated and ’hence there is no place for the application of either provision of paragraph 1558, supra. * * *

It will be observed that while the court in the Rotberg & Krieger case reached the conclusion that the skins were undressed, it came to ■that conclusion solely on the record then before it, and did not recede from its view of -the law that there is a hiatus between the scope of the *188terms “dressed” and “undressed” into which a partly dressed skin falls.

Mature consideration of the term “undressed” used in paragraph 1681, supra, in the light of the record and of the view expressed by the Court of Customs and Patent Appeals in its decision in the Arnhold case, supra, leads to the conclusion that as used commonly and in the fur trade of the United States it means one to which no dressing process has been applied. Witness Theis referred to skins the fibers of which were not fully differentiated by a dressing treatment as undressed skins. Various witnesses understood no difference between the terms “raw” and “undressed,” and those who made a distinction appear to have regarded the term “undressed” as including only raw and cured or temporarily preserved skins.

I am of the opinion that it has been clearly shown that the process to which the skins at bar were subjected in China was for the purpose of advancing them from the crude state along a line the ultimate end of which was complete dressing, and that such process was not for the purpose of getting the material by itself or for the purpose of temporarily preserving it. I think that it is in a state comparable to that of the processed rubber involved in United States v. Wilkinson Process Rubber Sales Corp., 22 C. C. P. A. 60, T. D. 47051, as to which the court said:

The treatment of the crude rubber which brought it to its imported condition constituted, we think, a manufacturing effort which took the crude rubber out of its crude state.

From a careful reading of the opinion of my associates it would appear that their conclusion is based very largely, if not altogether,, upon the theory that the treatment of the skins in Collective Exhibit 1 in China was for the sole purpose of temporarily preserving them for transportation to the United States. This view, I think, is supported by the following quotations therefrom:

* * * In that case [T. D. 26368] as in the case at bar, the merchandise was temporarily preserved to prevent decay in transit.
* * * * # * *
* * * Manufacturing, if any, was to the same extent, and the use of temporary, preservatives in China could not constitute a manufacture. [Italics added.]

In contravention of that theory, the fact is that the skins included in Collective Exhibit 1, which are concededly representative of all the skins in issue, were imported into the United States on July 20, 1932, and have been continuously in the custody of this court since November 26, 1934. It would seem passing strange, if they were only temporarily preserved for the purpose of transportation to the United States, that they should be at the present writing in a perfect state of preservation. An examination of the pelt side of the skins *189shows that it has been absolutely changed from the natural condition and now has all the appearance of unfinished leather, a condition that manifestly could not be produced by a curing process.

Upon the entire record before us I believe the following findings of fact and conclusions of law would be justified:

Findings of fact: (1) That a dressed fur skin, according to American trade standards, is one which has been subjected at least to processes of tanning, oiling, and cleaning, and is ready for either manufacturing furriers’ use or for dyeing; (2) that an undressed fur skin, according to the same standards, is one to which no dressing process has been applied; (3) that the skins in issue were subjected to some dressing treatment prior to importation, the effect of which was to tan or substantially tan them, and that such treatment constituted a manufacturing process.

Conclusions of law: (1) That the skins in issue are not dressed within the meaning of that term as used in paragraph 1519 (a) of the Tariff Act of 1930; (2) that such skins were not undressed within the meaning of that term as used in paragraph 1681 of the same act; (3) that such skins are subject to duty under the provision in paragraph 1558 of the said act for “articles manufactured, in whole or in part, not specially provided for.”

That claim in each of the protests should therefore be sustained, the decision of the collector being modified to that extent.