By Rev.Stats. § 3386, as amended, a drawback on tobacco, etc.,
subsequently exported, on which the tax has been paid by affixing
stamps before removal from the factory, is allowed "equal in amount
to the value of the stamps found to have been so affixed."
Held applicable to an additional tax on cigarettes imposed
by the Act of February 24, 1919, payment of which would have been
treated in practice as evidenced by the stamps already on the
goods, if they had not been removed, but which, in view of their
removal, took the form of a "floor tax." C. 18, Title VII, § 700,
702, 40 Stat. 1057, 1116. P.
267 U. S.
473.
58 Ct.Cls. 541 affirmed.
Appeal from a judgment of the Court of Claims allowing recovery,
by way of drawback, of taxes on cigarettes, which were
exported.
Page 267 U. S. 472
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a suit brought by the P. Lorillard Company to recover by
way of drawback a tax paid by it upon 153,050,000 cigarettes of its
manufacture exported after the tax had been paid. The Company
recovered in the Court of Claims and the United States appeals. The
total was $3 a thousand, and was collected under successive Acts as
follows: a tax of $1.25 per thousand was imposed by Rev.Sts. § 3394
and was paid in the usual way by stamps for the amount, bought and
attached to the original packages before they were removed from the
factory. An additional tax of 80 cents per thousand was imposed by
the Act of October 3, 1917, c. 63, § 400, 40 St. 300, 312. The
cigarettes had not been removed, and the Company paid the
additional tax but without attaching new stamps, the practice being
to treat the payment as so much added to the cost of the old ones.
Then the Act of February 24, 1919, c. 18, Tit. 7, § 700, 40 St.
1057, 1116, in lieu of the internal revenue taxes then imposed,
raised the tax to $3 per thousand to be paid as before by attaching
and cancelling stamps. By § 702, if the goods had been removed from
the factory and were held for sale on the day after the Act, a
"floor tax" equal to the difference between the sum already paid
and $3 was to be paid. These goods had been removed, and the
company, having previously paid $2.05, paid the additional 95
cents. Between August 29 and November 21, 1919, these cigarettes
were exported. By Rev.Sts. § 3386, amended, Act of March 1, 1879,
c. 125, § 16, 20 Stat. 347, a drawback on tobacco, etc., on which
the tax has been paid by suitable stamps, etc., affixed before
removal, is allowed, "equal in amount to the value of the
Page 267 U. S. 473
stamps found to have been so affixed." The Commissioner of
Internal Revenue allowed the claim for the $2.05 paid under the two
earlier Acts, but rejected that for the 95 cents paid under the
last. The Court of Claims gave the Company judgment for
$145,397.50, the amount of the rejected claim.
The argument for the government stands on a strict adhesion to
the letter of the statute giving the drawback and a narrow
interpretation of even the letter of the Act. It contends that only
the value of the stamps attached before removal from the factory
can be recovered, and, while admitting that the second payment made
after the stamps had been bought and attached can be taken as
adding to their value, it denies that the payment of what the
statute calls a floor tax, paid after removal of the goods, can be
added in a similar way. But we are of opinion that the Court of
Claims was right. When it is considered that, at the time the Act
allowing the drawback was passed, the tax was collected wholly by
stamps, it seems evident that Congress meant to carry the policy of
the Constitution against taxing exports beyond its strict
requirement, and to let the event decide about the tax. In this
case, if the cigarettes still had been in the factory, the
additional payment would have been treated as made for the stamps
already on, if that fiction was necessary to secure the rebate. We
see no insuperable difficulty in adopting the same device for a
payment of the same amount under the same Act by the same people
for the same goods, after they had left the factory. And if the
payment should be made by a third person who had purchased from the
manufacturer, it seems to us that, if necessary, he also might be
taken to stand in the manufacturer's shoes, and still to make the
payment on account of the stamps. Our opinion perhaps gets some
confirmation from § 1310(c)
Page 267 U. S. 474
of the Act of 1919, but we rest it upon what we have said.
A protest was not necessary at the time of payment, because,
apart from other reasons, at that time, the event creating the
right to the drawback had not come to pass.
Judgment affirmed.