Dixie Veneer Co. v. United States

DISSENTING OPINION

Cole, Judge:

The court’s decision, holding the instant merchandise is not “sawed timber,” is based on the finding that the sawing of the logs, from which the imported merchandise was made, was done “to eliminate imperfections for the purpose of getting the wood by itself and facilitating its transportation.” I am constrained to dissent from this factual finding as well as from the legal conclusion.

The use of the phrase, “for the purpose of getting the wood by itself,” relates to a doctrine enunciated as early as January 27, 1899, in United States v. Godwin et al., 91 Fed. 753, which involved certain powder made from the juice of the papaw melon, which had been dried and purified. The court held that drying in the sun and sifting •out mechanical impurities “had no effect upon the article itself, other than to get it by itself,” and accordingly held the merchandise to be properly classifiable as a crude drug. The above-mentioned case is cited with approval in United States v. Sheldon & Co., 2 Ct. Cust. Appls. 485, T. D. 32245, which is greatly stressed in Doap Leun Hong Co. v. United States, 19 C. C. P. A. 313, T. D. 45481, the latest authority given in the court’s opinion. The principle has been followed under a long line of uniform decisions, but in all instances the issue related to a commodity which had been subjected to cleaning, straining, drying, and separation processes that did not affect the merchandise per se.

The rule has no application here. The walnut flitches covered by protest 44177-K were obtained by sawing logs in quarters and trimming them of undesirable parts. The New Guinea logs involved in protest 33279-K are sawed halves with decayed portions removed therefrom. The uncontradicted testimony shows that the manipulation of both classes of merchandise was for the specific purpose of bringing the wood to a condition suitable for further manufacture into veneer, its only use in this country. Obviously, the removal of useless *116parts of the logs-facilitated transportation of the goods and reduced the freight charges, but this condition is not 'to be regarded as a controlling element in determination of the present issue. The important factor is that the processing of the logs, which included sawing, in the country of exportation materially advanced the condition of the wood toward its ultimate use here.

Section 704 of the Revenue Act of 1938 (26 U. S. C. 1940 ed. §3424) reads, in part, as follows:

(a) Lumber, rough, or planed or dressed on cine or more sides, except flooring made of maple (except Japanese maple), birch, and beech, $3 per thousand feet, board measure; but the tax on the articles described in this section shall apply only with respect to the importation of such articles. * * * .
(b) In determining board measure for the purposes of this section no deduction shall be made on account of planing, tonguing, and grooving. .As used in this section, the term “lumber” includes sawed timber. * * * .

The last sentence (italicized) in the above quotation is new language. It did not appear in the .predecessor section 601 (c) (6) of the Revenue Act of 1932 (47 Stat. 260) which, except for the statutory definition referred to, was identical in language with the quoted provision from section 704, supra.

In Laurence Phillips Lumber Co v. United States, 68 Treas. Dec. 104, T. D. 47810, decided on July 16, 1935, affirmed on rehearing in Laurence Phillips Lumber Co. v. United States, 73 Treas. Dec. 995, T. D. 49624, of June 17, 1938, which arose under the earlier, law, this court, speaking through Judge McClelland, construed the term “lumber” for the purposes of section 601 (c) (6), supra. The merchandise in question there consisted of some 92 pieces of wood, varying in cross section from 2x4 inches to 6 x 18 inches. It was assessed with the revenue tax under said section 601 (c) (6), and was claimed to be exempt therefrom on the ground it was timber and not lumber. The court held, on the evidence introduced in the case, that “in order to be classed as timber, wood must be not less than 6 inches on any one side,” and accordingly sustained the protest only as to the merchandise (six pieces) “within the dimensions required for timber.”

It is significant that shortly after the first decision in the Phillips Lumber Co. litigation and while decision on rehearing of the case was pending, Congress amended the Revenue Act of 1932 by extending the meaning of the term “lumber” as used in section 601 (c) (6) thereof to include sawed timber. Hence, it is fair to say that if the statute, as amended in 1938, had been in existence at the time the Phillips Lumber Co. case, supra, was before the court, there would have been no question whatsoever as to the proper classification to be applied. Whether or not the action in placing sawed *117timber under the category of “lumber” was influenced by this decision, I do not know, but it seems proper to impute knowledge thereof to Congress.

The term “sawed timber” 'as it is used in section 704, supra, is unrestricted and without qualification, and it should be given broad construction. The court does not do so. It gives the term a very narrow interpretation, and in doing so has considered only a brief subdivision of one dictionary definition. A salient feature of the court’s opinion, and one which furnishes a basis to give proper effect to the provisions of section 704, supra, is the reference therein, citing authorities, to the tariff classification of logs as “round unmanufactured timber.” Since the so-called flitches and New Guinea halves in question are in fact sawed logs, they are clearly embraced within the provisions of the said section, and accordingly subject to the revenue tax imposed by the collector.

The court places much reliance on the testimony of L. A. Daugherty for the supporting evidence to the position it takes. This witness, however, stated he had never seen, in all his 30 years’ experience, any sawed timber or lumber that resembled illustrative exhibits A and B, except at a veneer mill. This confirms, definitely, the fact that the lumber, as imported, was in shape for use, exclusively, as he indicated. The same witness furnished a definition of a flitch and admitted that flitches such as he sold (were considered lumber, and that he did not deal in commodities like the exhibits in this case .(illustrative exhibits A and B) which are commonly known as flitches. His testimony is too glaringly minus of that knowledge and experience with merchandise like illustrative exhibits A and B that should be present before his contribution to such litigation may be accepted as controlling the decision in a case of this importance.

In the case of Lunham & Moore v. United States (57 Treas. Dec. 244, T. D. 43849), cited in the court’s opinion, the issue involved was whether the imported talc was properly classifiable under a provision for “cut or sawed,” as fixed by the collector, or “crude and unground,” as claimed by the importer. The quotation set forth in the court’s opinion relates to factual findings, without mention of the consequent conclusion of law, which the court expressed as follows:

We are of the opinion that by the words “crude and unground” contained in paragraph 209, supra, as descriptive of talc, Congress pieánt talc which had not been advanced in condition beyond the point necessary for its economic transportation, and by the words “cut or sawed” meant to include later manufacturing processes.

That judicial interpretation of the term “sawed” supports my position here.

It is the different factual basis that distinguishes the cited case from this. There, the court emphasized the fact that the merchan*118dise was sawed, in convenient smaller sizes for the sole purpose of enabling it to be transported by means of small trucks drawn by-oxen from the quarry at the top of a mountain to a point at the base-thereof where it was.loaded in automobile trucks for further transportation to the' railway station. It was not until after the talc was-received in this country that it was sawed according to customer’s specifications to suit it for its ultimate use in the manufacture of electric insulation and burner tips.

The manipulation in the foreign country of the merchandise involved in the Lunham & Moore case, supra, is not analogous with the processing applied to the instant merchandise prior to its exportation. In this case, the crude timber — felled trees-^is sawed, as directed by the importer, primarily for the purpose of getting the wood into such shape as advances its condition making the finished sawed product-suitable for immediate use, upon importation, for veneer, which procedure, according to the testimony, at times results in -the tree as initially felled being totally eliminated as timber suitable for veneer and therefore, in the language of the court, “rejected and not shipped.” The effect of the operations abroad is that of a manufacturing process, which, under the pronouncement in the Lunham & Moore case, supra, produces a commodity that has been sawed; in the instant case, sawed timber. If requirements that the talc be cut and prepared in certain prescribed forms before shipment had been enforced by the importer in the cited case, it is difficult to conceive of any finding by the court therein.other than the classification I believe applicable here.

The protests should be overruled.