La Manna, Azema & Farnan, Inc. v. United States

O’Connell, Judge,

delivered the opinion of the court:

This appeal is from the judgment of the United States Customs Court, C. D. 1248, overruling appellant’s protest claiming that certain imported grenadine was properly dutiable under paragraph 501 of the Tariff Act of 1930 at the highest rate therein provided, by virtue of paragraph 1559, as an imported article not enumerated in the act, manufactured of two or more materials, composed in chief value of sugar.

The merchandise was imported from France in January of 1939 and was assessed with duty by the Collector of Customs at the port of New York at the rate of 20 per centum ad valorem as a nonenu-merated manufactured article under paragraph 1558. An excise tax of 0.5144 cent per pound of total sugars was also levied by the collector in accordance with the provisions of the Sugar Act of 1937. Against that levy, appellant filed no protest.

*46Counsel for appellant at tbe time of tbe trial was unable to get further information from Europe as to wbat degree tbe sugar tested and tbe issues were therefore submitted for decision upon a stipulation whereby it was agreed as a matter of fact that tbe merchandise consisted of grenadine or grenadine syrup in chief value of sugar; that the sugar from which the merchandise was made was granulated and produced from either beet or cane; and that the sugar as imported was not granulated but was in solution form.

The provisions of paragraph 501, 1558, and 1559, so far as pertinent, read:

Par. 501. Sugars, tank bottoms, sirups of cane juice, melada, concentrated melada, concrete and concentrated molasses, testing by tbe polariscope1 not above seventy-five sugar degrees, and all mixtures containing sugar and water, testing by tbe polariscope above fifty sugar degrees and not above seventy-five sugar degrees, 1.7125 cents per pound, and for eacb additional sugar degree shown by tbe polariscopic test, three hundred and seventy-five ten-thousandths, of 1 cent per pound additional, and fractions of a degree in proportion.
Par. 1558. That there shall be levied, collected, and paid on the importation of all raw or unmanufactured articles not enumerated or provided for, a duty of 10 per centum ad valorem, and on all articles manufactured, in whole or in part, mot specially provided for, a duty of 20 per centum ad valorem.
Par. 1559. * * * on articles not enumerated, manufactured of two or more materials, the duty shall be assessed at the highest rate at which the same would be chargeable if composed wholly of the component material thereof of chief value; and the words “component material of chief value,” wherever used in this Act, shall be held to mean that component material which shall exceed in value any other single "component material of the article; and the value of each component material shall be determined by the ascertained value of such material in its condition as found in the article. * * *

Each of the articles specified by name in paragraph 501 is transmuted upon importation into refined sugar, unless the article had already been refined prior to importation, and the refined sugar is approximately 100 per centum pure sucrose.3 “The sugar commonly bought for table use is refined sugar. It may be marketed in several physical forms, as granulated, load, lump, or domino, but the substance is the same.” Tariff Information Surveys, United States Commission, E-l, 1921, at page 34 under the heading, “Refined Sugar — Description and Uses.”

Appellant does not claim that the grenadine involved is sugar or anything specified in paragraph 501, or that it is anywhere else enumerated in the act, but appellant does claim that the merchandise is in fact a nonemumerated, manufactured article, and that the above-quoted provisions of paragraph 1559 require that when a nonenu-merated manufactured article made of two or more materials is imported, duty shall be assessed at the highest rate at which the same *47would be chargeable if composed wholly of the component material of chief value; that in this instance, sugar is the component material of chief value, and that the merchandise, therefore, is indirectly dutiable in accordance with the terms of paragraph 501.

Appellant also' claims that in accordance with the stipulation the sugar provided for under the first article of paragraph 501 is the sugar of which the imported merchandise is in-chief value and hence it cannot be in chief value of a mixture containing sugar and water as otherwise provided for in another article of the same paragraph.

No evidence other than that contained in the official papers and the stipulation of the parties was offered. That stipulation, for a precise understanding of the issues submitted, should be amplified by the following excerpt from the record; Mr. Rode representing the importer, and Mr. Fitz Gibbon the Government:

Mr. Fitz Gibbon: If the court please, Mr. Rode said that the imported sugar was not present in the article. Sugar is present in the article as imported but not in a granulated condition.
Mr. Rode: Well, that is a statement that Mr. Fitz Gibbon wants in the record. Perhaps I didn’t give it the way he wishes it to be, so if he will make it, I will agree to it. It is nothing that I wanted in the record, but it is something the Government wishes in there. If you want to put it in your way, I will accept it.
Judge Johnson: (To the reporter) Read the stipulation as it now stands.
(The reporter read the stipulation)
Mr. Rode: All right. Amend thát to read “that in its condition as imported the sugar is no longer in the form of granulated sugar, being now, or being then in solution.”
Mr. Fitz Gibbon: Then it can’t be in chief value of granulated sugar as imported. I have no objection to stipulating that the merchandise is in chief value of sugar, that the sugar from which it was made was granulated sugar from either beet or cane. However, as imported, the sugar is not in a granulated form but is in solution.
Mr. Rode: I think that is the same thing and I will agree to it.
Judge Johnson: Does the Government agree with that stipulation?
Mr. Fitz Gibbon: I stated it myself.

It is immaterial, appellant contends, that the sugar was no longer in granulated form, but was in solution, because in determining the component material of chief value, it is the value of the single component in the state in which it was found when it was originally put into the article at the time when nothing remained to be done except putting the various components together.4

The composition of the grenadine here in issue was thus defined for the record by Government counsel:

Mr. Fitz Gibbon: * * * I have no objection to stipulating that the merchandise is in chief value of sugar, that the sugar from which it was made was granulated sugar from either beet or cane. However, as imported, the sugar is not in a granulated form but is in solution.

*48Measured by the accepted standard that all of the facts vital to the interests od appeal have been first developed in the record of the trial court, the foregoing stipulation, which is submitted here as proof of that accomplishment, leaves much to be desired. However, in determining the issue thus presented this court is not at liberty to infuse private notions or prepossessions into the record by surmise since the predominant question here has been before our court and the Customs Court for determination on various occasions.

The composition of imported grenadine was held by this court to be established on the testimony of three qualified witnesses familiar with the process of manufacture to the effect that grenadine “is always made according to a fixed formula, which is, for 100 liters [of grenadine], 80 kilograms of sugar, 50 liters of water, and 3 per cent coloring matter and citric acid” and that “This testimony as to the composition of grenadine accords with one definition of grenadine given in the dictionaries.” United States v. Wakem & McLaughlin, 6 Ct. Cust. Appls. 385, 386.

The grenadine just described was conceded to be the same kind of merchandise that was involved in Cresca Co. Inc. v. United States, 49 Treas. Dec. 1297, Abstract No. 174, affirmed, 15 Ct. Cust. Appls. 105, T. D. 42185, where our court held on appeal that the imported grenadine was properly dutiable under paragraph 501 of the Tariff Act of 1922, and not as a nonenumerated manufactured article. There it was definitely established that the involved grenadine was in chief value of a mixture containing sugar and water testing above 50 sugar degrees, one of the sugar substances specified in paragraph 501.

Certain language inadvertently used in the opinion of our court in the Gresca case, supra, has no controlling significance on the issue here. That language has been exorcised by our court5 and by the United States Customs Court,6 but the Gresca case itself has been otherwise frequently followed.

That case was cited, for example, in Mouquin, Inc. v. United States, 23 C. C. P. A. (Customs) 196, 199, T. D. 48050, where the court had no occasion to disapprove or follow the rule for the reason that the appellant wholly failed to sustain the burden of proof as to its claim that the imported grenadine was in chief value of sugar or was one of the sugar substances specified in paragraph 501 of the Act of 1930. To the same effect, see Schenley Import Corp. v. United States, 16 Cust. Ct. 274, Abstract 51084.

The trial court in the instant case held there was no showing in the record that the component material of chief value in the imported *49grenadine was one of the sugars provided for in paragraph 501 and that the stipulated facts were wholly insufficient to effect that result.

That court in reaching its conclusion had recourse to section 403 (a-) (3) of the Sugar Act of 1937 and relying on the definition of “total sugars” defined in article 760 of Customs Regulations of 1937 held, among other things, that “According to the official papers, the total sugars amounted to 60 per centum, that is, the sum of the sucrose and the- invert sugars in the merchandise is equal to 60 per centum of the value , of the product.” Appellant’s vigorous contention that “There is no such statement in the official papers, but merely a red ink notation on the invoice '60% sugar c/v’,” has not been challenged nor refuted by the Government.

Moreover, counsel for the Government concede in their brief with respect to the Sugar Act of 1937 that: “This statute levies an excise on all articles composed in chief value of manufactured sugar.” On that point they summarize their position as follows:

The Collector has assessed a duty on this grenadine on the theory that it is an article of chief value of manufactured sugar, and has refused to assess it with the customs duty appropriate for an article of chief value of sugar testing by the polariseope not above 75 sugar degrees, or appropriate for all mixtures of sugar and water testing by the polariseope not above 75 sugar degrees, etc.
At first blush this gives us pause. However it is at once apparent that the application ■ of the two statutes cannot be measured by the same yardstick. The Sugar Act section is broad in scope. The Tariff Act paragraph is narrow. That which is taxable with the excise may be properly dutiable, not under paragraph 501, but under paragraph 502 or some other paragraph.

A statement attached to the invoice was filed pursuant to the provisions of the Sugar Act of 1937, as to the commodities composed in substantial part of the manufactured sugar, which statement alleges that the manufactured sugar used was “granulated sugar from beet”; that the total cost of producing one manufacturing lot or batch of 144 kilos was 546.85 francs; that flavoring material was supplied at a total cost of 157 francs; and that coloring material was likewise used at an additional cost of 11 francs.

The Government frankly admits here “that at a point prior to importation granulated sugar was used as an ingredient in the final product, grenadine,” and that “Of all the materials used to make the imported merchandise, the granulated sugar was of the greatest value.” It would seem to follow, therefore, under the authorities hereinbefore cited, that the Government’s contention that since the sugar in the imported grenadine was not in granulated form, but was in solution, the grenadine was excluded from the provisions of paragraph 501, under the mixed materials clause of 1559, is without merit.

In support of that conclusion it is noted the Government here has nowise controverted the fact that the court in the Cresca case, supra, *50squarely held tbe grenadine there in issue was a solution of which sugar was a component material of chief value; and that grenadine so constituted was properly classified and held to be dutiable by the Customs Court, Abstract'No. 174, under paragraph 501 of the Tariff Act of 1922 as “a mixture containing sugar and water testing by the polariscope above 50 sugar degrees but not above 75 sugar degrees.” What the Government does contend for here is set forth in the following excerpt from its brief:

Since the Tariff Act of 1909, with one exception, the courts have held that grenadine is properly dutiable as an unenumerated manufactured article. The case of Cresca Co. (Inc.) v. United States, 15 Ct. Cust. Appls. 105, T. D. 42185, is the exception. * * * This case has not been followed administratively nor judicially and has, in fact, been overruled by several subsequent decisions involving the same issue. * * * (Italics supplied.)

The truth of the matter is that the Cresca case, for example, was cited and its procedure was administratively applied by the Government and by this court in the case of Savannah Sugar Refining Corp. v. United States, supra. There the court held that merchandise consisting of a mixture or solution of sugar and water, with a small quantity of formaldehyde, sugar being the component material of chief value of said mixture, was properly assessed with duty at the rate applicable to sugar under paragraph 501 of the Tariff Act of 1930, by virtue of the mixed-materials clause in paragraph 1559 thereof.

The Savannah Sugar Refining Corp. case, it may be noted, is the leading case on the subject of imported sugar and was written by our present Chief Judge Garrett. A petition for a writ of certiorari in that case was denied by the Supreme Court of the United States and reported at 288 U. S. 615.

In reality the only authority advanced by the Government in support of its contention that the Cresca case has not been judicially followed “and has, in fact, been overruled by several subsequent decisions involving the same issue”.is certain dictum quoted by Government counsel from the opinion of the lower court in Mouguin (Inc.) v. United States, 60 Treas. Dec. 415, T. D. 45114. There the Customs Court undertook, unsuccessfully, to overrule, in their entirety, all of the holdings of our court in the Cresca case.

Admittedly, the factual situation in the Mouguin case, supra, both in the court below and on appeal to this court, differed from the factual situation presented by the record in the instant appeal. The same is true of the Schenley case, supra, and another case of Cresca Co., Inc., et al. v. United States, 71 Treas. Dec. 953, T. D. 49027; two other cases of the court below also relied upon by the Government here in support of its position. In the absence, therefore, of any proper authority or logical reason submitted by the Government, we find no occasion in the present appeal to overrule the doctrine of the original Cresca case.

*51For the reasons stated, the judgment of the United States Customs Court is reversed and the case remanded for further proceedings not inconsistent herewith.

2 As stated In the Tariff Information Surveys, United States Tariff Commission, 1921, E-1, page 9:

In the polariscopic test the sample is dissolved and placed in the tube of a polariscope. The angle through which a beam of light passing through the solution is rotated determines the purity. * * *

Savannah Sugar Refining Corp. v. United States, 20 C. C. P. A. (Customs) 272, 274, 280, T. D. 46061.

Seeberger v. Hardy, 150 U. S. 420; Adolph Goldmark & Sons Corp. v. United States, 31 C. C. P. A. (Customs) 6, C. A. D. 241; United States v. Johnson & Johnson, 154 Fed. 39; Cresca Co., Inc., et al. v. United States, 71 Treas. Dec. 953, T. D. 49027.

United States v. Olavarria & Co., Inc., 37 C. C. P. A. (Customs) 40, C. A. D. 417.

Mouquin, (Inc.) v. United States, 60 Treas. Dec. 416, T. D. 46114.