# Transcript of Record — Colgate-Palmolive-Peet Co. v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386403_0224%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Transcript of Record - **Published:** January 1, 1943 - **Citation:** 320 U.S. 422 ## Text . e ~~ rite . prs? years awh 7] ahs . ~~ STATES OF 1 7a oo Se . a ’ PALMOLIVE-PERT | _ PETTTIONER, ‘ED STATES OF . . : ~ ‘ SES ns Se AA ‘ ae ; COLGA we : a Y ¥ oy a . _«, THE ; : UNITED STATRS CIRCUIT COURT » MPANY, + . * e fr OF APPEALS FOR THE THIRD CIRCUIT ON WRITS OF SUPREME, COURT. OF THE UNITED STATES » OCTOBER epee, 1949 \ No.2 38 | COLGATE- PALMOLIVE-PEET COMPANY; PETITIONER, THE UNITED STATES OF AMERICA’ - No. 39: COLGATE-PALMOLIVE- PEET COMPAN A ‘PETITIONER, ; _ THE UNITED STATES OF AMERICA N WRITS OF CERTIORARI TO'THE U NITED ‘STATES CIRCUIT COURT OF APPEALS FOR THE THIRD CIRCUIT roceedings in t. 8S. C. C. A. Third Circuit pendix to brief of appellants Portions of record in Appeal No. 7791 in D.C. U. S., re | ee .\ Docket entries Stipulation. of facts ‘A”"—Table showing month month usage in pounds of processed forms of vegetable oils, ete. ee Ce Print Upp & Derwerter (INc.), PRINTERS, WASHINGTON, D. C., Orders allowing certivrari ....... weet eee econ seen eeeenes 68 il ee '. INDEX. : Appendix to brief pf appellants—Continued Stipdlation of facts—Continued *. Original Print Schedale “B"—Claim for. refund of the tax. i _ assessed and collected upon the subse- r > Lis quent use of oils first domestically proe- essed prior to the effective date of the a See ee TETETT TTT Tiree _7 3 @—— Portions of record in Appeal, No. Fz WCU. S GMI. Ma rede sankesetasscessciases 6acivhe 25 IS Judgment ’...... Re Ruakaskha Sheeeeenedes 25 1S Note re opinion ........ noe asevetes cgeviawiaen’ \ 2 18 Docket entries ......:..... aS cechiewuiakvens 19 e- Seipilation of Meth ....cscecdesessecescsoses 26 19 a Schedule “A"—Table showing month by , month usage in in pounds of processed forms -of vegetable oifs, ete. 6.0... cc eeepc eee 35 | 8 ae “B"—Rider attached to and made ‘e at ‘$a of the claim for refund, GW... owas : 26 Captioh apa tak eg Fo Ria. cen ee wae AL sen Eee R Saks ae 39 29 CO eS ee eee Seat ete cea 39 23 Judgment in 7791 ...:.....05. 2.008 erage es cean aang yeah en aae ‘47 36° Judgment he WE ccs oe nn duets cbse eOk backs Se bee eg anaes « e 48 37 Order extending time to file petition for rehearing.»....-.. oS: . a oD ge eee ere eer eer ery eee . 49 37 Order granting petition for rehearing in 7791............. F 51 30... Order granting petition-for rebeating tm TIOR, =... c40cesa. 51 3o Opinion on rehearing, Higes, Be Sade ks shod Kann cus ehuneane B 39 ~_, immantiong-oplenion,—Masin— Fo. ss. 0. sete cee Tecccsccccccivs .§ 40 Judgment in 7791 ..:........ iweneuuee pibi ane nanaeens pads 5 41, Be Ba Te ko vake nan eckatckibneaas Witcadess sake =; 2 Order extending time to file petition for rehearing... ........ 57 > * Petition: Bor anced TOROATHIG. 6.05 icc cick cic caewss ei cciesic 5S 3 Order correcting opinion on rehearing and Gearing. petition * for second rehearing ....... Orr Sree re eee e ewes ones Oo 44 Clerk’s certificate /........... SEO PER oe oa he .. —@ H Order extending time te file petitior for certiorari eek Pree 62 45 46 (fol.1] IN UNITED STATES CIRCUIT COURT OF APPEALS, ; “Appendix to Appejjant’s Brief Portions of Recorp—Appeal No. 7791 Ix Unrrep States District Court for District of DELAWARE | Jupement—April 23, 1941 And now to-wit this 23rd day of April, A. D. 1941, this cause having come on to be heard upon the pleadings filed ' herein and the Stipulation of Facts filed with the Court on the 27th day of June, A. D. 1940, and living been argued by Counsel for the respective parties and maturely considered by the Court, it 1s, upon motion of Stewart . Lynch, United States Attorney for the District of Dela- ware, Ordered, adjudged and decreed. by ‘the court that the complaint filed in this cause be and the same. is hereby _ dismissed with costs to the Defendant and against the omnis to be taxed by the Clerk.” John P: Nields, J. In Unrrep States District Court Oprnion—March 20, 1941 These suits are for the recovery of Internal Revenue ' taxes alleged to have been illegally assessed and collected, together with interest.. The suits are based on Sec. 24, Par. 20 of the Judicial cn he as amended (28 USCA 41 (20) ). a The subject of the tax is the processing or use of coconut ' oil, palm oil, palm kernel oil and sunflower séed oil, Here- | inafter referred to as ‘‘oils.’’ Cocoanut Oil is made from - products grown ‘in the Philippine Islands. This tax is im- posed by section 60214, e. 277,. of the Reve enue Act of 1934. (48 Stat. 680). [fol.2] In’suit No. 2 plaintiff withce to recover $1, 476,- - 007.81 paid as tax on “the processing.or use of oils from —1—88-39 : ; sn. cel ¢ en . re > va , \ . : ° F > ol ee) ol May. 10, 1934 to April 31,. 1935,,/ : ia interest. In, suit. No. | 58 plaintiff seeks to recover $885, 874.56 paid as tax on the processing or use of oils ffom May 1, 1935 to January “ 31, 193%, with interest. The two suits are consolidated for trial. The material facts are stipulated. vd. Plaintiff is a Delaware corporation with its princi : office and’place of business in Jersey City, New. Jerse) It manufactures and sells soaps and other " products” In _ that manufacture it uses coconut oil and the othe r oils. May 10,-1934, the effective date of section 60214; a eee had on hand 78,746, 079 pounds of ‘oil (49,216, 927 | pounds of ‘oil covered in suit No. 2 and the balance of 29,529,152 - ‘pounds covered in suit No. 58). Before that date these oils had been processed one or more times in the United. States. After that date these oils were subjected to further processing or uses by plaintiff in the manufacture of arti- cles for sale. Plaintiff reported the amounts of oils pro-_. cessed and paid a processing tax with respect to the first ‘ processing occurring. after May 10, 1934. Such taxes were. paid under. protest. ° Claims for refund were filed and rejected by the Commissioner. Section 60214 of the Revenue Act of 1934 imposing ‘processing Tax on Certain Oils’’ provides in part: ‘“(a) There is hereby imposed upon the first deesoative processing of cocoanut oil, sesaine oil, palm oil, palm kernel ~ - -oil, or sunflower oil, or of any combination or mixture eon- taining a substantial quantity of any one or more of such oils with respect to any of which oils there has been no previous first domestic processing, a tax of 3 cents per pound, to be paid by the processor. There is hereby im- posed (in addition to the tax imposed by the preceding sen- (fol. 3] tenee) a tax of 2 cents per pound, tobe paid by the. processor, upon the first domestic processing of cocoanut oil or of any combination or mixture containing a sub- stantial quantity of cocoanut oil with respect to which oil there has been no previous first domestic processing, éx- cept that the tax imposed by this sentence shall not apply when it is established, in accordance with regulations pre- scribed by the Commissioner with the approval of the : Secretary, that such cocoanut oil (whether or not. con-: tained in such a combination or mixture), * * *. All taxes collected under this section with respect to cocoanut oil wholly of Philippine production or produced from materials . oe e sid - e _ [fol 13] 7. The said 17,293,779 lbs. of refined oils were sub- sequently processed or used by plaintiff in. the United States after the effeetive date of said Section’ 602% in the respective quantities and during the respective months indi- cated on said Schedule A, and the tax at the rate of 3 cents per pound was paid under protest by plaintiff on the dates indicated on said Schedule A with respect to such subsequent pr ocessing or usage by plaintiff. 8. The lewse layer resulting from the above process, com- mouly referred to and known as ‘‘ Foots’’, is a different prod- uct from the crude oil originally put into the process; the Foots are darker in color than either the original crude oil or. the refined.oil and consist of a semi-solid mass of soap, water, some refined oil in emulsified coloring and other organic matter removed from the crude oil in the’ refining process, 7 ‘ 9, The 1,972.37 8 Ibs. of Foots shown on Schedule A under the column headed ‘‘ Foots”’ represent the product obtained in the lower layer from the subjection of said oils to the re- fininé process described in Paragraph 6 hereof and were obtained from such refining process carried on in the United States prior to the effective date of said Section 60214 of: . Title FV of the Revenue. Act of.1934. Such Foots were sub- sequently processed or used in. the Wnited States after the effective date of said Section 6021 in the respective quan- -tities and during the respective months indicated on said Schedule A and the tax at the rate of 3 cents per pound was paid under protest by the plaintiff on the dates indicated on-said Schedule A. with’ respect to such subsequent process- ing or usage by the plaintiff. 11 10. The 11,056,088 Ibs. of Refined Coconut Oil and Foots shown on Schedule A under the column headed ‘‘Refined [fol. 14} and Foots”’ had been.produced, prior to the effec- tive date of said Section 60214, by subjecting the crude Coco- nut Oil in the United States to the refining process described in Paragraph 6 hereof, but on that date the super-natant layer of élear, refined oil had not been transferred to the storage tanks but remained with the ‘‘Foots”’ in the tanks in which the refining ‘process had been conducted, although there was then a clear separation between the Refined Oil and Foots. . Bed ade ; ~ 11. Subsequent to. the effective date of Section 60244, the number of pounds of .Refined Coconut Oil and Foots shown under the column headed ‘Refined and Foots’’ in Schedule A hereof were further processed or used in the respective quantities and during the respective months as indicated on said Schedule A, and:the plaintiff paid. the fax under protest at the rate of 3-cents per pound with respect to such-subsequent processing or usage, on the dates as in-. dieated on said Schedule A. ‘ 12. The 18,312,632 Ibs. of Bleached Palm, Oileshown on Schedule A under the column headed ‘{ Bleached”’ had been obtained prior to the effective date of Section 602%, by . ‘Subjecting crude Palm Oil in the United States to the well- known commereial process of bleaching, generally referred | to as the ‘“‘Air Bleaching Process’’. This process consists ‘in the oxidation of certain coloring matters in the erude oil asthe result of which a-product different from the crude oil is obtained, which is lighter in color than the erude oil and is generally known and referred to.as ‘‘Bleached Palm Oi. The ‘Air Bleaching Process’? consists of heating . the erude oil to a pre-determined temperature after which air is aspirated or blown through-the heated oil until a sample. shows the desired degree Of bleaching. When the [fol. 15] operator judges the bleaching process complete a sample is tested by the labaratory to ascertain if the bleached "oil conforms to the required specifications. | a,° 13. The Bleached. Palm Oil in the respective quantities in pounds as shown under the column headed ‘* Bleached”’ 20n Schedule A hereof was, subsequent to the effective date - “of said Section 60214 further processed or used by the» plaintiff, in the respective months shown on said Schedule 12 and the plaintiff paid a tax, under protest, at the rate of 3 cents per pound with respect to such subsequent process- ing or use at the respective dates shown on said Schedule A. . 14. Of the total Bleached Palm Oil which plaintiff had on . hand on the effective date of said Section 602'% obtained by subjecting crude palm oil in the United States, prior to said effective date, to.the Air Bleaching Process: hereinabove described, said 18,312,632 ‘lbs, thereof were so processed or used as aforesaid and 307,802 lbs. thereof were sold by plaintiff to other persons or corporations throughout the : period May 10, 1934 to April 30, 1935 inelusive.: 15. The 103,355 ‘Tbs. of Refined .and Bleached Palm Oil shown on Schedule A under-the_column heafled ‘Refined ‘ and Bleached’’ had been obtained, prior-+to_the effective date of said Section 60214, by subjecting crude Palin Gil in the United States first, to the refining process described in Para- graph 6 hereof and secondly, to the Air Bleaching Process described in Paragraph 12 hereof. The Refined and Bleached Palm Oil is a different product from the crude Palm $i! ' from which it is made. 16. The respective quantities in pounds .of said -Refined and Bleached Palm Oil, shown under. the column headed ‘‘Refined and Bleached’’ were, after the effective date of [fol. 16] said Section 60214 further processed or used by plaintiff in the respective months shown on said Schedule, A, and the plaintiff paid, under. protest, a tax at the rate of 3 cents per pound with respect to such subsequent proocss:.- —ing-or. usage on the dates indicated i in the said Schedule .. 17. The 336,798 lbs. of Refined, Dehydrated and Bleached Coconut Oil shown on Schedtile A under the column heade| ‘Refined, Dehydrated and Bleached’’ had been obtained, prior to. the effective date of said Section 602%, by subject- ing the crude Coconut Oil in the United States to the three followi ing commercial processes : ; (1) The refining process. described in Paragraph 6 hereof: -(2) A dehydrating process which is carried out by heat- ing the refined oil under. vacuum ina dehy rdrating tank until the moisture is expelled ; and 7 (3) A bleaching process consisting of adding a prede- termined amount of a mixture of Fuller’ s earth and bleached earbon to the Refined.and Dehydrated Oil which has been heated to a pre-determined temperature and agitating the - . mixture mechanically until the desired color is obtained, ~ . after which the oil is pumped through a filter press to remove the bleaching materials. In these processes, the operations are carefully controlled ° hy chemical tests and definite specifications must be met hefore thesproduct can be graded as. Refined, Dehydrated — and Bleached Coconut Oil. The Refined, Dehydrated and Bleached Coconut Oil is a different product from the crude Coconut Oil from which it is made. : fol. 17] 18. The said 336,798 lbs. of Refined, Dehydrated and Bleached Coconut Oil were, after the effective date of said Section 60212, subjected in the United States to fur- ther processing or usage by plaintiff and plaintiff paid a tax, _under protest, at the rate. ‘of 3 cents per pound with respect “to such further proggssing, or usage of said Refined, De- ‘hydrated and Bleached Oils during the respective months : on the dates show non said Schedule | A. “19. Of the totaPRefined, ‘Dehydrated and Bleached Co- conut Oil which plaintiff had on hand on the effective date of said Section 60214, obtained “by subjecting crude Coco- «nut Oil in the United States, prior to said effective date, to the three ‘processes above described in Paragraph 17 ° hereof, said 336,798 tbs. were so processed orwused-as afore- ’ said and 61,200 Ibs, thereof were sold by plaintiff to other . persons or corporations throughout the period May 10, 1934 to April 30, 1935 inclusiy e. 2), The 139,463 Ibs. of Refined, Bleached, Dehydrated and Deodorized Coconut Oil shown on Schedule A under the column headed ‘Refined, Bleached, Dehydrated and - Deodorized’’ had been obtained, prior to the effective date of said Section: 60214, by subjecting the crude eqeanut. oil > Paragraph 17 liereof and in addition thereto, had been sub- jected to a fourth commercial process commonly known as the ‘Deodorizing Process.’’. This process consists of heat- ing the Refined. “Dehy drated and Bleached Coconut Oil to a pre-determined teniperature after which it is drawn into a closed vessel ar deodorizer- which has been evacuated, and - the deodorization is carried out -by blowing-super-heated in-the United States to the three processes described in > ' 14 steam through the heated oil until the desired degree of ‘ deodorization has been obtained, after which said oil is [fol. 18] drawn into a cooler where the heat is extracted by water circulated through closed coils. When cooled to the ‘ desired temperature this deodorized oil is pumped through a filter for clarification. ‘Particular skill is required in pro- — ducing this grade of oil which must conform to the trade specifications for edible oi] with respect to color, odor, taste ’ -and free fatty acid content. This processed oil, known in the trade as ‘‘Refined, Bleached, Dehydrated and Deodor- . ized Coconut Oil’’ cannot be graded as such until after chemical tests in the laboratory, and it is a very different product from the crude Cocomet Oil originally put into the processes. 21. The said .139,463 Ibs. of Refined, Bleached, Dehy- drated and Deodorized Coconut Oil shown on Schedule A under the column headed ‘‘ Refined, Bleached, Dehydrated and Deodorized’’ were, after the effective date of said’ Sce- tion 60214, subjected in the United States to further process- ing or usage by plaintiff and plaintiff paid the tax, under protest, at the rate of 3 cents per pound with respect to such further processing or. usage:of said oil in the 5 agg aie months and on the dates shown oo hedule A. D 99. Of the total Refined, Bleached hydrated and De- odorized Coconut Oil which plaintiff“~had on hand on the effective date of said Section 602%, obtained by subject- ing crude Coconut Oil in the United States prior fo said effective date, to the four processes hereinabove deseribed, 139,463: lbs. thereof were subsequently procéssed or used by plaintiff as aforesaid; and 241,921 lbs. thereof were sold by. — plaintiff to other persSons.or corporations from time to time during the period May 10, 1934 to April 30, 1935 inclusive. 23., Thé 2,439 Ibs. of Serapol shown on Schedule A under the column headed ‘‘Scrapol’’ had, prior to the effective [fol. 19] date of said Section 602%, been ‘subjected i in the United States-to the three processes described in Paragraph’ 17 hereof and was recovered from the filter press cake _ formed when the processed oil is pumped through-a- fitter --. press, as described in said Paragraph 17. The filter press . ’ eake contains some reccverable oil and is. blown with steam and air to: recover this processed.oil which is designated on the records of the plaintiff as ‘‘Serapol.’’ . The said 2,439 15 lbs. of Serapol was, after the effective date of said Section 602% and during the month of May, 1934, subjected to a further processing or usage dnd the plaintiff paid, under protest, the tax at the rate of 3 cents per pound with respect to such further processing: or usage of said Scrapol on the . date shown on said Schedule A, viz., July 31, 1934. 24. The processed forms of oils hereinbefore referred to and upon the subsequent processing of -which were levied the taxes herein sought to be recovered, continued to be oils in their respeetive processed forms as hereinabove stated, up to and at the time when they were used as aforesaid after the effective date of Section 602%, said subsequent - | usage being in each case a use in the manufacture or produe- tion of an article or articles intended for sale. s 25. Generally, though not always, ‘after. each processing, ofany of said oils, the resulting products were drawn from _ the processing tanks by plaintiff and were pumped to stor- . age-tanks where the respective processed forms of that par- ticular oil were stored for subsequent usage or sale. When the resulting products had not deen transferred to their respective storage tanks on or prior to the effective date of said Section 60214 and were not stored separately, plain- tiff’s records and Schedule A hereof show the quantities of - the respective products combined as one item; far example, [fol. 20] where the Refined Oil and Foots both remained in the same tank on the effective date of said Section 6021 although there was then a clear separation of the two, ‘dain tiff deemed it expedient, from an accounting standpoint, to combine both items in one account as ‘‘ Refined Oil and Foots’’ to which reference has heretofore been made in Paragraph 10 hereof.. 26. On September 25, 1935 plaintiff duly filed with the | ‘olleetor of Internal Revenue for the Fifth District of New Jersey, at Newark, New Jersey, a claim for refund of the taxes ‘paid as aforesaid, plus interest thereon, a true copy of an excerpt therefrom setting forth the basis of said ‘claim being hereto attached and made a part hereof 4s Schedule B. Said ¢laim for refund was rejected in full by the Com- ~ ~“niissioner of-Internal Revenue on January 27, 1936 and this suit was thereafter timely instituted. | 27.-If plaintiff is-entitled to recover herein, it is en- : titled to recover from the defendant the sum of $1,476,507.81 16 ., plus interest at the rate of six per cent per annum until: , payment, on the following sums: . On $240,980.64 from July 31, 1934 (in $112,712.91 from August 30, 1934 On $153,444.03: from September 29, 1934 On $159,240.75 from October 30, 1934 . ‘On $204,164.70 from November 27, 1934 On $134,235.93 from December 29, 1934 On $115,777.23 from January 24, 1935 On $73,269.06 from February 27, 1935 “On $76,461.09 from March 28, 1939 On $99,040.83 from April 26, 1935 On $107,180.64 from May 25, 1935 (fol. 21] 28. In administering Section 6021 of the Reve- nue Act of 1934, the Commissioner of Internal Revenue has always construed said Section to mean that the liability for the tax accrues during the month when ‘the first proc- essing after May 10, 1934, in the United States of the specified oils occurred, in the manufacture of an “article ‘ntended for sale, irrespective of whether such manufacture was completed during ‘the month of such first processing or whether further processings in such manufacture were above stipulated constitute the entire proof “to be offered in this case, provided, however, that-in stipulating said facts neither party admits the competency, relevancy or materiality of any of such facts, but each party: reserves -the right to object tc the competency, relevancy or materi- ality of any stipulated fact, and if any such objection is sustained by the Court the other party shall be at liberty, ‘for purposes of the record, to offer oral testimony or other proof in lieu of the stipulated fact or facts so stricken by the Court, ses : E. Epnalls Berl,-Attorney for Plaintiff. Stewart Lynch, Attorney for Defendant. _ : - Dated; June 27, 1940. (Here follows one paster, folio 22)) pet ae ~~ : i Me A r a on Sa me %\ ig “* . ae. . x { . \ a = Q \ a a ia -¥ —————————— — a 2 | i : | oN \ | Pan as 1 + ‘ pn . ; . x : B \ / » i ‘o- c \ ae 4 / ~* 36A ieee - [fol. 22] : ; ae ScHEDULE “A” To. STIPULATION OF Facts hiltas v -o Colgate-Pal molive-Peet Company | : . ‘Table Showing Month by Month Usage in- Pounds Between May 10, 1934, at 11:40 A. M., E. S.T. andA vil 20, 1935, a Processed Forms of V. cpetable Gils (Coco- nut, Palm, Palm-Kernel and Sunflower) Which Oils Had Been Domestically Processed Prior to the Eftective ‘Date of Section 6021% of ‘the Revenue Act of if 1934; the Tax Paid Under Protest b intiff with Respect to Such Subsequent. Usage, and the re tte Dates of Payment Thereof, the Quantities | in = Sf © Pounds of the Various Oils Are Combined and Grouped —™ to the Processed Form Thereof. ¢ : . Refined ; : Refined Refined, Bleached, ° ts = : Refined ~ — and Dehydrated Dehydrated & . Total® Tax Date of . Period Refined Foots & Foots Bleached Bleached & Bleached Deodorized -Scrapol ~ Used ~ Paid Payment | ag 1934. May 2,007 ,171. 209 ,613 310,903 44,115 1,145,753. 319;678 = 127,824 2,439 4,167,496 $125.024.88 7-31-34 ; June. 1,689,490 493,920 - 649,691 780 - 1,003,001 . 17,120 11,190 3, 865 192 115,955.76. 7-31-34 “July 2,104,143 - 31,196 ' 435,962 58,460 1,126,887 + 449. , 3,757 ,097° 112,712.91° 8-30-34 Aug. 2,093,976 39,988 . 1,135,932. °° 1,844,905 _ 5,114,801 153 444-03 “9-29-34 Sept. 2,132,751 none Il, , 837 1 ,668 , 437 cide 5,308,025 159,240.75 10-30-34 Oct. 3,393, 161 98,638 1,089,790 _ 2,223,901 .- 6,805,490 (204,164.70 11-27-34 Nov. -- 2,232,455 . 128,651 693 , 294 . 1,420,131 ; ane , 4,474,531 - 134,235.93 12-29-34 ” Dee. 1 ;082 ,905 351,590 .. 799,128: . 1,625,618 3,859,241 ©. 115,777.23 1-24-35 1935 Jan. . , 407,214 291 ,043 783,051 ° ° 960,994. - 2,442,302 73.269.06 2-27-35 Feb. - 150,513 ~ 189,153 - 1,029,785 1,179,252 [ . 2,548,703 76,461 09 3-28-35 Mar. . none 138.581 1,614,637 1,548,143 © 5 3,301 ,361 99,040.83 4-26-34 Apr. none ° none 1 ,007 ,078 ; 2.565 ,610 . : . 3,572,688 107,180 64 5-25-35 17,293,779 1,972,373 11.056,088 103,355 18,312,632 336,798 = 139,463 2,439 49,216,927 $1,476,507 81 J “= Tfor 2a Scurpute B. To SriPULATION 0 OF r Facts ; II—Refand of the Tax- Assessed and Collected Upon the subsequent Use of Oils First Domestically Processed Prior A. M. Rexulations. 48 issued by the Commissioner of Internal Revenue and approved by the Secretary of the: Treasury construe the term ‘‘first domestic processing’’ as used in vionsly taxed, any use in the United States on and.after the " « ffective date of the tax in the manufacture of an article for sale, notwithstanding that said Section in explicit language defines said term to mean the “‘ first use in the Unite d States int the manufacture or production of an article intended for sale,’’ ete. Any attempt td broaden the scope of said See- __tiemby gaid regulations i is wholly unwarranted, illegal and “void. No executive tribunal or official ean constitutionally ‘ (cither with or without: the by re of Congress) make any rule or regulation, the effect of which is-to add to, take from, — or otherwise change a stafute. Such construction by the aforesaid Regulations 48 is simply an attempt by. an Exeeu- . tive Officer or Department to write into the statute. some- thing which is not there. _/ On the effective date of said Act tans er had-on hand / 6 ‘rtain. palm oil, coconut oi], palm kernel oil and sunflower / oil which had, prior to said date, been bleached and ‘or re- ‘fined in the’ United States in the manufacture.or produc- tion of an article intended. fer gale. ‘Such bleaching and ‘or refining in the United States prior to said date constituted the first domestic processing of such oils within the con- ‘tomplation of said Section 60214 and any subsequent, proe- processing or use each month of: such bleached andor re- fined oils and taxpayer has heretofore filed with the’ Col- lector of Internal Revenue, Fifth District of. New Jersey, 4 protest-each month against the payment of said tax on ‘ snch oils, specifying in detail the amount of ‘such oils so ‘snhsequently uséd and the tax paid thereon for \each of the - ionths during the period covered by. this claim, viz., May - 10, 1934 to and including April 30, 1935, to which — / o the Effective Date of the Act; vi2., May 10, 1934, at 11:40" Section 602% to mean, with respect to said oils not pre-, /essing or yise of said oils was not subject to the tax imposed - _ by said Section. The tax has been assessed and collected. + [fol 24] from the taxpayer with respect to the subsequent. hs 18 3 reference is hereby made. The taxeg so assessed atid paid upon such oils have been illegally and erroneously assessed and collected and taxpaye er is entitled to a refund thereof, with interest. “Attached hereto, marked ‘* Exhibit 2°’ and made a part hereof, is a schedule by months showing -the total taxes paid by the taxpayer to said Collector of Internal Revenue under Jt Section 602%, with the dates of payment thereof and the: amount of the taxes so erroneously assessed and collected,” aggregating a total of $1,481,694.75. The-taxpayer is en- titled to a refund of said amount, with interest. |fol. 2 5] In Unrrep States District Court ¥ x aa -—— Portions or Recorp—Aprrat No. 7792 Jupement—April 23, 1941 em -And now to-wit this 23rd day of April{ A. D. 1941, this ‘cause having come-on to be heard upon the pleadings filed - berebe and the Stipulation of Facts filed with the.Court on the 27th day of June, A. D. 1940, and having been argued by Counsel for the respective parties and maturely: conside red hy the Court, it is, ypon motion of Stewart Lynch, U nited States Attorney for the District of Delaware, Ordered, Adjudged and Decreed by the Court that the Complaint filed in this cause be and the same is hereby dis- missed with costs to the Defendant and against the Plaintiff to he taxed by the Clerk. ® John P. Nields, J ~ In Untrep States District Court e Note RE Orumos The cases were consolidated hice and but one opinion was written. lt ere ante, page 1. . ‘ 19 [ fol. 26] Ix Unirep States District Court Docket ENTRIES . Aug. 1, 1939 Complaint filed; same day summons: issued. Aug. 1, 1939 Affidavit of E. Ennalls Ber! as to service ck filed. ; : Aug. 3, 1939 Marshal returns on Summons ‘*Served”’, : &e.; same day writ filed. | Aug. 24, 1939 Defendant appears by Stewart Lynch, Esq., *. U.S. Attorney; saine day precipe filed. Sept. 28, 1939 Answer filed. ook : June 27, 1940 Trial before the Court. June 27, 1940- Stipulation us td facts filed, “I~ Unitep Stares District Covert | Stipvu.ation or Facrs—-June 27, 1940— The parties hereto through their respective Attorneys ‘stipulate the following facts for the purpose of this suit, and for no other purpose. 1. Plaintiff is and at the times mentioned in the com- plaint was a corporation of the State.of Delaware and a resident and citizen of said State, and has it$. principal offfve and place of business in the City of Jersey City, State of New Jersey. It is and was at the times mentioned in the. complaint engaged in the business of manufacturing and selling soaps and other products in the manufacture of {fol 27] which it used Palor Kernel Oil, Sunflower Oil .PalnyOil and Coconut Oil, (which oils are hereinafter some- “times: referred to ‘as “said oils**) the last mentioned oil leing of P hilippine origi or nade from products grown in the a Islands. . This is a suit of a civil ahture at common law, aris- ing phi the Internal Rewgnue Laws of the United States, and the.amount in controver§y exceeds the sum or value-of $5,010. exclusive of interest, aml costs. It is a suit against tlie Thited States of America Yor the recovery of certain oil processing taxes alleged Dy plaintiff to have been ér- roneously and illegally assessed and collected under Section 6021, of Title IV of the fevenue Act of 1934 which became 20 effective May 10, 1934, at 11:40 A. M., Eastern Standard Time. Effective at 12:01 A. M., E. S. '., August 21, 1936, . Secti ion 702 of Title V of the Revenue Act of 1936 amended Section 602% of the Revenue Act of 1934. 3. Said taxes were paid under protest in the amowite and at the times hereinafter set forth to the several Collectors . of Internal Rev enue for the Fifth District, of New Jersey, successively fn office at the times of said payments, none of whom was in office at the time this suit or proceeding was comnenced. 4. This Court has jurisdiction of this suit pursuant to paragraph 20 of Section 24 of the Judicial Code as amendeil. (28 U.S. C. A. 41 (20).) | ».. As shown on the attached Schedule A which is hereby made a part hereof, between June 1, 1935 and February 23s, 1937 plaintiff, pursuant to the requirements of Regulations 48 issued by the Commissioner of Internal Revenue and approved by the Secretary of the Treasury, paid, under [ fol. 28] protest, taxes aggregating $885,874.56 with respect to the usage, month by month, during the period May 1, 1935 to January 31, 1937, of various processed forms of Coconut Oil, Palm Oil and Palm Kernel Oil, which said oils had, prior to the effective date of Section 602 of the Rev- enue Act of 1934, been subjected in the United States to one of the domestie processes hereinafter described in the manu- facture or production of an article or articles intended for sale. Said Schedule A shows the aggregate pounds of said oils according to the processed form in which said oils were on the effective date,of said Section 602! of the’ Revenue -Act of 1934, and shows the respective monthly usages oy and after May 1, 1935, of such processed forms of said oils, together with the total amount of the tax paid under pro- test with respect to each month's usage thereof, and the re- spective dates of payment opposite the respective amounts. 6. The aggregate of 12,466,411 pounds of refined oil and foots (refined Coconut Oil and foots) shown on Schedule A under. the column headed ‘‘ Refined and Foots’’ had been produced, prior to the effective date of said Section 602!, of the Revenue Act, of 1934, b¥ subjecting crude Coconut * Oil in the United States to the Well-known commercial proe- - @8S of refining w hich i is in common use and 1 is generally re- ferred to as the ‘Caustic Soda Process,’’ described as follows: — 7 a ’ aris The operation congists of adding to a known quantity of crude coconut oil i solution of eaustic soda or solutions of caustic soda and salt, the amount and'concentration of which are computed from a laboratory determination of the free fatty acid content of the crude oil. The crude oil is heated to a predetermined temperature and while -the heated oil is being agitated mechanically or by means of [fol. 29] compressed air, the caustic solution is added. The agitation is continued until the operator, by examining sam- ples, observes that the ‘‘foots’’ shoW a clean break and set- tle rapidly,. whereupon the agitation is stopped and the ‘contents are allowed to settle. After settling and as a result of this process, two products are obtained, viz.: a’ super- natant layer of clear oil which is commonly known and re-’ ferred to as ‘‘refined Coconut Oil”? and the lower layer consisting’ of what, is generally known as ‘‘foots.’’ The operator by observing the samples during the refining proe- ess, can ‘tell wher the mixture is in condition te separate _ properly and yield the maximum of refined oil. However, J 7 : ' suluples were sent to the laboratory for testing as to. color und free fatty acid content of the refined Coconut Oil. The refined oil produced in such refirfing process is a different’ product from the crude oil, the refined ol being much lighter in volor than the crude oil and being substantially free from free fatty acid. J 3 The lower layer resulting from the above process, com- - wonly referred to and known ‘as ‘*foots,’? is a different product from the-erude oil originally put into the process; .the foots are darker in color than either the original crude oil or the refined oil and consist of a semi-solid mass of ‘oap, Water, some refined oil in emulsion and coloring and: other organic matter removed from the crude oil in the refining process. On the effective date.of Section 6021 of the Revenue Act of 1934 the super-natant layer of clear, ie- lined-oil had not beeh transferred to the storage tanks but remained with the ‘*foots’’ in the tanks in which the re- fining process had been coaducted, although there was then a clear separation between the refined oil and foots. ‘. On and after. May 1, 1935, the said 12,466,411 pounds of refined oil’ and foots shown under the eolumn headed [fol. 30] ‘Refined and Foots’? in Exhibit A hereof were (92 B further processed or used in the United States in the re- spective quantities and during the respective months as in- dicated on said Schedule A, and the plaintiff paid the’ tax under protest at the rate of three cents per pound with re- spect to such subsequent processing or usage, on the dates ji as indieated on said Schedule A. 8. The 63 977 pounds of foots (Pan Kernel Oil foots) shown on Schedule A under the column -headed ‘‘Foots’’ represent the product obtained in the lower layer from sub- jecting crude Palm Kernel Oil to the refining process de- scribed in Paragraph 6 hereof, which processing was car-. ried on in the United States prior to May 10, 1934. 9, Said 63,997 pounds of foots were seiabenentty proe- essed or used in the United States after May 1, 1935, viz., during the month of July, 1935, and the fax at the rate of three cents per pound with respect te suéh subsequent proc” essing or usage.was paid under pyotest by the platntiff.on August 23, 1935, all as indicated on said Schedule A: 10. The 16,998, 764 pounds” of bleached ‘Palm —— n on Schedule A under the column headed ‘*Bleached*? had,~ beew obtained, pr ior to.May 10, 1934, by subjecting crnde Palm Oil in the United States to the well-known commercial *. process of bleaching known as the *‘ Air Bleaching Process.” This process consists in the oxjdation of. certain coloring nattersin the crude oil as the result of Which a product dit- ferent from: the crude oil is obtained, which is lighter in. color than thre crude oil and is generally known and refeyred to as **bleached palm oil.’”: The “Air Bleaching ‘Process’ consists of lieating the crude oil to a pre-déternrined tem- perature after which air is aspirated or blown through the - [fol. 31] heated oil until a sample shows, the desired degree of bleaching? When the operator. judges the bleaching procs éss complete a sample is tested by the laboratory to ascer- tain if the bleached oil conforms to the required specific a tions. : \ 11. The said 16,998,764 pounds of bleached palm oil shown under the column headed ‘‘ Bleached’’ on Sciedute * A hereof were, on and after May 1, 1935, further processtl or used by the plaintiff in‘the United States in the respec- tive months shown on said Schedule arid the plaintiff paid’ a tax, under protest, at the rate of _ cents per pound | > respective dates shown on said Schedule A. 12. Of the-total bleached Palm Oil which. plaintiff Thad on hand on May 10, 1934, obtained by subjecting crude Palm - Qil in the United States, prior to:said date, to the ‘‘ Air Bleaching Proeess’’ hereinabove described, said 16,998,764 pounds were so processed or used between May 1, 1935 and January 31, 1937, as aforesaid, and 1,568,741 pounds thereof were sold by plaintiff to other persons or corporations from ‘time to time during said period. May a, 1935. to January 31, 1937 inclusive. - 13: The processed forme of oils hereinbefore referred to and upon the subsequent processing of which were levied -the taxes Lerein sought to be recovered, continued to be oils in their respective processed forms as hereinabove stated, up to and at the time when they were used as aforesaid after the effective date of Section 60244, said subsequent usage’ lying-in each case a use in the manufacture or production of an article or articles intended for sale. i4. Generally, though not. always, after each processing of any of said oils, the resulting products were drawn from , Hfol.282]. the processing tanks by plaintiff and were pumped “to sturage tanks: where the respective processed forms of that particular oil were stored for subsequent usage or sale. When the resulting. products had not been transferred to their respective storage tanks on or prior to the effective date of said Section 602'2 of the Revenue Act of 1934 and were hot stored separately, plaintiff's records arid Schedule Av hereof show the quantities of the respective: products ™ ‘combined as one item: for example, where the refined oil and foots both remained inthe same tank on the effective date of said Section 60214 -of the Revenue Act of 193, al- though there was then a clear separation of the two, plaintitf deemed it expedient, from an accounting standpoint, to com- bine both-items in one account as ** Refined Oil and Foots”’ to which reference has heretofore been made in Paragra he | G he reof. . 1x Of the sum of $885, 874.56 paid on account: of said- taxes alleged to have been erroneously and illegally as- sessed, the sum of $810,420.15 was paid with respect to usage of the aforesaid oils between May 1, 1935 and August -20, - 1936, inclusive, and the sum of $75,454. Al Was paid with re- rt ~ 93 . with respect to. such subsequent processing or use on the 4 ee : spect to » the usage of the aforesaid oils on or after August 21,.19836. . 2 ee 16. Plaintiff filed with the said Collectors of Internal Rev- enue for the Fifth District of New Jersey, respectively, a > protest-each+nenthagainst the payment of any tax on said _ * subsequent processing of said processed oils, specifying in detail the amounts of such oils so subsequently used during the respective months from May 1, 1935 to January 31, 1937. 17. On June 16, 1939. plaintiff duly filed with the Collector of Internal Revenue for the. Fifth District of New Jersey, at Newark, New Jersey, a claim for refund of the taxes paid . [fol. 33] as aforesaid, plus interest thereon, a true copy of an excerpt therefrom sétting forth the basis of said claim — being hereto attached and made a part.hereof as Schedule ~B. Said claim for refund was rejected in full by the Com- missioner of Internal Revenue on wend Fi 14, 1939'and this suit was thereafter timely instituted. . 18. If plaintiff is entitled to recover for said taxes as- sessed and collected during the aforesaid period under Section 602% of Title IV of the Revenue Act of 1934 and under Seetion 702 of Title V of the Revenue Act of 1936, it is entitled td recover from the defendant the sum of $885,874.56, plus interest at the rate of six. per cent per annum until payment, on the following: sums: ’-On $83,544.75 from June 26, 1935. On $84,732.87 from July 31, 1935. On $64,430.10 from August 23, 1935. On $50,720.91 from September 27, 1935. - ~ On $43,719.03 from Octoher 31, 1935. - On $57,806.13 from November 29, 1935. On $39,606.06 from December 28, 1935. On $65,982.18 from J anuary 27, 1936. On $63,401.49 from February 28, 1936. On $60,087.15 from March 31, 1936. Qn $52,135.29 from April 30, 1936. On $37,617.30 from May 27, 1936. On $36, 971.67 from. June 25, 1936. .° On $37,356.87 from July 25, 1936. On. $18,019.14 from August’ 19, 1936. _On $19,600.32:from September 28, 1936. ~ On $29,186.79 from October 27, 1936. 25 On $22,297.32 from November 28, 1936. On $9,880.74 from December 23, 1936. On $8,218.38 from January 28, 1937. On $560.07 from February 27, 1937. (fol. 34] 19. In administering Section 602% of the Reve-: nue Act of 1934, the Commissioner of Internal Revenue has always construed said Section to mean that the liability for the tax acerues during the month when the first processing _afler May 10, 1934 in the United States ‘of the specified oils — occurred, in the manufacture of an article intended for sale, _ irrespective of whether such manufacture -was completed | during the month of such first processing or whether fur- ther processings in such manufacture were necessary and _ occurred during subsequent months. 20. It is understood and agreed that the facts herein- above stipulated constitute the entire proof to be offered in this «ase, provided, however, that in stipulating said facts neither party admits the competency, relevancy or - materiality of any of such facts, but each party reserves the right to object to the competency, relevancy or materiality of any stipulated fact, and if any such ‘objection i is sustained by the Court the-other party shall be at liberty, for purposes of the record, t6 offer oral testimony’ or.other. proof in lieu of the stipulated fact or facts so stricken by the Court. E. Ennalls Berl, Attorney for Plaintiff. Stew art Lynch, Attorney for Defendant. “Dated: June 27, 1940. 26 ' [fol. 35] Scuepute “A” To SriPULaTION or Facts’ _ Colgate=-Palmolive-Peet Company . 7 bee y= Month by Month Usage in Pounds Between May 1 1935 and Jan. 31, Processed Forms of Vegetable Oils (Coconut, Palm and Palm Kernel) Which Oils Had Been Domestically Processed Prior to the Effective Date of Section 602! of the Revenue Act of 1934; the Tax Paid Under Protest by Plaintiff with Respect to Such Subsequent Usage, and the Respective Dates of Payment Thereof. The Quan- tities in Pounds of the Various Oils Are Combined and Grouped According to the Processed For Thereof. Refined a Date of : Period” Foots | & Foots Bleached Total Used Tax Paid — Payment ° “1935 “May none 940,329 1,844,496 2;784,825 $83,544.75 6 26-35 .” * June none 673,218 2:151,2k1 2.824.429 84,732.87 7.31-3% July 63,977 487,530: 1,596,163 2,147,670 “64,430.10 8 23.35: Aug. 517,096. 1,172,601 1,690,697 50.720 91-9 27-35 Sept. 760 , 248 697,053 1,457,301 43.719.03 10-31-35 Oct. 942.940° 983,931 1,926,871 57,806.13 11-29-35 Nov. 1,061,613 © ©. 258,589 1.320.202 39,606.06 12-28-35 Dec. 710,446 1,488,960 - 2.199.406 65,982.18 1-27-36 1936 Jan. * 1,098,936 1,014,447 2.113.383 63,401.49 2 28-36 - - fob ~ 1,139,955. 862,950 . 2,002,905 60,087.15 3 31-36 Mar. 1,201 , 282 536,561 ° 1,737,843 552,135.29 4-30-35 Apr. 957 , 997. 295.913 1,253,910. 36,617 30° 5 27-36 ay . 458,329 774,060. 1,232,289 36,971.67° 6 25-36 June 643.183 - 602,046 1,245,220 37,356.87 7 25-36 July 287 329 333 , 309 600,638 18.019 14° 8 19-36 Aug. 20> 904 387 ,440 653,344 19,600 32-9 28-36 Sept. 275,161 097 .732 972,893 29,186 79+ 10-27-36 Oct. 64.915’ 678,329. . 743.244 22,297.32 11-28 36 Nov. 329.358 329.358 ~~ 9,880.74 12-23-36 Dec. 273.946 + 273.946 © 8,218 38 1 28-37 1937 Jan. 18,669 18,669 560 07 2-27-37 63,977 11,466,411 16,998, 764 29,529, 152 $885, ST4 56 ie —_——__ {fol. 36] Scuepvuie B to Stipviation or Facts “/ Nitva@icceg. |": ane -aRceaamee Rider Attached to and Madea Part of Claim of Colgate- Palmolive-Peet Company for Refund of Certain Oil Proc- essing Taxes Under Section 6021 of the Revenue ‘Act of 1934 and Under the Amendments of Said Section 662!,— Paid by Said Company for the Period May 1, 1935 Through January 31, 1937 Inclusive. Taxpayer is entitled to the allowance of its clin for refund-in the.amounts.- hereinafter stated and for the. rea- sons hereinafter set aut. Regulations 48 issued by the Picmeiiatias® of Internal - Revenue-construe the term ‘first domestic processing’’ as — ‘used in Section 6021 of the Revenue Act of 1934 and in the amendments of said Section 60214, to mean, with respect to ‘ er any of the specified oils not previously taxed, any‘use in the _U nited States in the manufacture of an article intended for — sale’ which happens to be the ‘‘first use’’ on and after the effective date of the tax notwithstanding that the said Sec- tion, as enacted and as amended, in: explicit language de- fines said term to mean the “‘first use in the United States in the manufacture or production of an article intended for sale,’’ ete. Such attempt to broaden the scope of said Sec- tion-by said Regulations i is wholly unwarranted, illegal and void. No executive tribunal or officer can constitutionally make any rule or reguiation the effect of which is to add to, - take from, or. otherwise change a statute. Such construc- - tion in the aforesaid Regulations 48-is simply an attempt by an Executive Officer or Department to —_ into the statute something which i is not there. {fol. 37] On the effective date of said Section 602%, \ viz., May 10, 1934 at 11:40 A. M., Eastern Standard Time, Tax- payer had on hand certain palm oil, coconut oil, palm kernel oil and sunflower seed oil which had prior to said date, been bleached and/or refined in the United States in the manu- facture or production of an article intended for sale. Such bleaching and/or refining in the United States prior to said date constituted the ‘‘first domestic processing’’ of such oils within the contemplation of said. Section 60214 and.any subsequent processing or use of said oils was not subject to the tax imposed by said section. Notwithstand- - ing that such oils had-in every instance been.first domes-: tically processed and ‘‘first used’? by Taxpayer in the United States prior to said effective date in the manufat- ture of products intended for sale, Taxpayer to comply with the apparent purport of Regulations 48 and with rulings of - the Bureau of Internal. Revenue, reported the subsequent processing or use by it during the period May. 1, 1935 _ through January. 31, 1937 inclusive, of such oils so previ- - ously processed, and the tax was assessed against and col- lected from the Taxpayer with respect to such subsequent processing or use. ‘ Attached hereto, marked ‘‘ Exhibit 1°’ and made a part hereof, is.a schedule showing by months the quantities ‘of the.respective processed oils so subse- ° quently processed or used by Taxpayer, the total quantities of such’ processed oils so used by Taxpayer during each month, andthe total tax assessed.and collected from the | Taxpay er. with — to such use. Taxpayer has hereto- } - oon ea 28 _ forefiled with the Collector of Internal Revenue, Fifth Dis- triet of New Jersey a protest each month against the pay. — ment of said tax on such processed oils, specifying in detail substantially all of such oils so subsequently used and the | *[fol. 38] tax paid thereon for each of the months during the period covered by this claim, viz., May 1, 1935 to and includ- ing January 31, 1937, to which protests "reference is hereby mad he taxes so assessed and collected from Taxpayer wi vest to such oils so bleached and/or refined prior ’ to May 10.\1934;.have been illegally’ and. erroneously as ‘sessed and collected and Taxpayer is entitled to a refund thereof with interest. _ Attached hereto, marked ‘‘ Exhibit 2”’ and made a part hereof; is ‘a schedule showing by. months the total oil proe- essing taxes paid with respect to said period by the Tax- ' payer to said Cellector of Internal Revenue under said See- tion 60212, with the respective dates of payment thereof, together with the amounts of such payments which were x. erroneously- and illegally assessed and collected with re- \ spect to the subsequent processing or use of said oils so processed prior to said effective date, aggregating: a total of, $885,874.56. - Taxpayer is entitled to a refund of said sum, of -$885,874.56, with interest, from the respective dates _ of payment: _ [fol. 39] I~ THE: Usrrep States Circurr. — OF Apreats FOR THE TuirpD Circvu! IT, Octoser. Term, 1941 Nos. 7791, 7792 ° Coreate-PALMOLIvE-PEET Company, Plaintiff-Appellant, Vs. Unrrep States OF Aatentes And rearsn te wit, the 23d day of tusshen, 1941, come 3 the parties aforesaid by their. counsel aforesaid, and this .. case being called for argument sur pleadings and brief s, be- fore the Honorable John Biggs, Jr., Honorable Albert B. Maris and Honorable Herbert F. Goodrich, Circuit Judges, and the Court not being fully advised in the premises, takes: further time.for the consideration thereof, And afterwards, to wit, on the 31st day of March, 1942, ‘. come the parties aforésaid by their counsel aforesaid, and the Court, now being fully advised in the premises, renders . the following decision: (fol. 40] In tHe Untren States Crecvit Court or Apprats FoR THE Trirp Circuit, October Term, 1941 t Nos. 7791 7792 _ Coeate- Paumonive-Peet Company, — Appellant, Sore, * ‘Tne Unirep States oF AMERICA, ne Sea eer On heebele from the District Court of the U nited States aa the District of Delaware _ Orisios—Filed March 31, 1942 - ileee Biggs, Maris waa Goodrich, Cireuit Judges : : Buces, Cirevit Judge: ‘The question presented for our determination by the ap- g: peals at bar is the construction of Section 60214, ¢. 277 of . the Revenue Act of 1934,.48 Stat. 680, 26 U. S. C. A. Internal Revenue Acts p. 778. ‘ 1—3170 a 20 ; 40, The appellant makes soaps ‘ein other products and uses coconut oil, palm oil.and other oils in their manufacture. [fol. 41] On May 10, 1934, the effective date of Section 6021, _it had on hand over 78,000,000 pounds of coconut and other _ oils referred to in the statute which had réceived one or more domestic processings. After the effective date of the statute: these oils were subjected to further. processings by the ap-"— _pellant in the manufacture of products intended for sale. The appellant paid the-taxes and made claims for refunds . which were rejected by the Commissioner. The —— then sued the United States: . The court below held that. the phrases of the: statute, ‘*first domesti¢é processing’’ and“‘‘first use’’, niean ‘the first. domestic processing or first use in the United States after the effective date of thie act.. See Colgate-Palmolive-P cet Company v. United States, 37 F. Supp. 794. The pertinent portions of Section 602% are set out in : the margin.’ There oe . Section 602%, provides: “Processing. Tax on Certain Oils. . ‘(a) There is hereby imposed upon the first domestic processing of coconut oil, sesame oil, palm oil, palra kernal oil, or sunflower oil, or of any combination or mixture con- taining a substantial quantity of any one or more of such. - oils with respect to’any of which ‘oils there has been.no previ- ous first domestic processing, a tax of 3 cents per pound, to be paid by the processor. There is hereby imposed (in addi- tion to the tax imposed by the preceding sentence) a tax of 2 cents per pound to be paid by the processor, upon the first . domestic processing of coconut oil or of. any combination or mixture containing a substantial quantity of coconut oil w ith respect to which oil there has been no previous first domestic provessing, except that..the tax imposed » ‘by this sentence shall not apply when it*is established, in accordance with | ‘regulations prescribed by the Commissioner ‘with’ the ap-. proval of the Secretary, that such. coconut oil (whether,or “not contained in such a combination or mixture), (A) is wholly the productiqn of the Philippine Islands or any other possession of the United States,’ or (B): was produced. wholly from materials the growth-or production of the Philippine Islands or any other possession of the United States, or (C) was brought into the United States on or be- 4 ¥ ar bea ; - a \ of ‘{fol. 42] is no dispute between’ the. parties as to the meaning | — of the phrases ‘‘domestic processing’ ’ or ‘use in the United States’’. All concede that the oils subjected to the tax, were processed in the United States both before and after the effective date of the act. The dispute arises:as to the mean- | ’ ing of the phrase ‘‘the first’’ as used throughout the statute, _. The appellant makes‘a number of contentions. It'refers to. the word ‘‘first’’ as defined in Funk & Wagnall’s New ‘Standard Dictionary, 1938, as meaning ‘‘Prior to all others in time or occurrenc¢; earliest, as the first snow of the sea- son.’’ To this may be added the definition contained in’ Webster’s New International Dictionary, Second Edition, viz., ‘‘ Preceding all others; foremost ;—used as an ordinal of one; as (a) earliest in time or succession ;—said of either 7 = or produced from materials brought into the United States ~ on or before the 30th day after the date of enactment of this — ' Act, or (D) was purchased under a bona fide co-tract’en- tered into prior to April 26,1934, or produced from ‘ma+ terials purchased under a "bona fide contract entered into prior to April 26, 1934. All taxes collected under this sec- tion with respect to coconut oil wholly of Philippine pro- duction or. produced from materials wholly of Pliilippine - growth or production, shall. be held as a separate fund and paid to the Treasury of the Philippine Islands, but if at any time the Philippine Government provides by any law Mor ’ any. subsidy’ to be paid to the producers of copra, coegnut | Y, oil, or allied products, no further payments’ fo the’ Philip- pine Treasury shall be made under-this subsection. For ae purposes of this section the term ‘first domestic processing ' means the first use in the United States, in the manufagture or production of an article intended for sale, of the “rticle _with respect to which the. tax is imposed, but dgés not in- clude the use of. palm oil in the manufacture of tin plate.’’ | Subdivision (1) of Article 1 of Regulations 48 provides : __ *(1) First domestic processing means the first use in the . ' United States on or after the effective date of the Act. At all times in these regulations, the term ‘processing or first domnestic processing will be degmed to be synonymous with — ‘use’ or ‘first use in the: United States on or ‘after the ef- fective date’, respectively, and will include the meanings ‘implied in the latter terms by subdivision ( k) above.’’ fore the 30th day after the date of the enactment of this’ me. > : | . | the past or future, as he, Was the first to come; the first train leaves at noon; my first voyage; the first year of Indéepend- ° ence; (b) foremost in pgsition;—in front.of or in advance — of all others; as first in the race;...’’ The appellant urges that if the modifying adjective ‘‘first’’ be given its ordinary or normal meaning it must refer to the earliest use of processing in the United States, that which precedes all others in point of-time. This interpretation, says the ap- . pellant, is the same as that which the Treasury Department: . put upon the phrase, “*‘the first.domestic processing’’ used in Section 9(a) of the Agricultural. Adjustment Act, ap- _ [fol. 43] proved May 12, 1933, c. 25, 48 Stat. 31,7 U. S.C. A. § 609(a). The’ appellant. contends that Section 60214 of the Revenue Act of 1934 was derived from — of the Agricultural Adjustment Act. We entertain little doubt that the. iia isions of -Seetion . 602% were derived largely from Séction 9(a). The Treas- ury Regulations (Article 7 of, Treasury, Regulations 81, ap- proved July 12, 1933) and the amendments thereto pro- -mulgated by the Treasury, Department in connection with Section 9(a) of the Agricultural Adjustnient Act bear out the appellant’s assertion that-the Treasury Departinent construed the phrase ‘*the first domestic ~ processing’ to mean the first in point of time If the prov isions of, See- . : Article 7 of Regulations 81, approved July B 1933, pro- mulgated under the Agricultural Adjustment: Aet, pro- vides: «When tax attaches.—The. tax attaches: upon. the first domestic processing of the commodity. Where some part of the first domestic processing of a particular quantity. of the commodity takes place during the period. when the ti x. -is effective, the tax attaches notwithstanding that some por-° tion of the first domestic processing of such quantity takes place before or after such period.”’ The foregoing was amended on September 20, 1933 by T. D, 4392, Article 7 (See C. B. XTI-2,-p. 430) to read as fol: lows: . . ‘*When tax attaches.—The tax attaches at the beginning of the first domestic processing of the commodity, When — the first domestic processing begins before the effective date, no tax attaches, although jit is not completed unt . after the effective date. When the first domestic process- _ ing begins while the tax is-in effect, it is subject to the “proe- 4 88 tions 9(a) and 602%. are deemed to be in pari materia the [fol. 44] two -sections should be. interpreted similarly. While the Agricultural Adjustment Act placed a floor tax upon commodities already processed (See Supplementary Revenue Provisions of the Agricultural Adjustment .Act, Section 16(a), ¢. 25, 48 Stat. 40 and the last regulation cited in note 2 supra), Congress did not impose any floor tax ‘under the Revenue Act of 1934. Because.of this Section (a) and Section 602% cannot be deemed to be in pari materia even if the commodities named i in Section 9(a) be deemed to be the equivalent for tax purposes of the. oils referred to in Section 602% The appellant contends that the history of the section shows that it was the purpose of Congress.to protect do- mestie farm. products against competitive oils brought into this country .by levying a compensating tax on the first actual use of such oils within the United States. The ap- . pellant takes, the position that Congress did not intend to : tax any processing after the first processing in point of time in the United States because such a tax would not ef-. fectuate the purpose of Section 6024 which is a substitute for an impost.© The appellant points out that when the Revenue Act of 1928, 45 Stat. 791, was under consideration unsuccessful attempts were made by members of Congress from agricultural and eattle-raising states to impose: duties eras essing tax, notwithstanding it is not aompetes until after the tax is terminated. 6 . Article 7 was again amended on November 2, .1933, by T. D. 4403 (See C. B, XTI-2, p. 430) to be effective retro- actively to July 9, 1933. Article 7 7 in its final form provides: “When tax ‘attaches. —The tax is imposed upon the first domestic processing, and is measured by the amount of the commodity. put into such processing. The tax attaches toa particular quantity of the commodity (1): if it is in process * on the effective date, provided the first domestic processing . has not been completed prior to that date, or.(2) if the first domestic processing is: begun during the period while the taxis in effect, provided it is completed before the termina- tion of the tax. . Where the. first domestic processing of a particular quantity of the commodity is completed prior to the effective date, but on the effective date such quantity is in secondary processing g, it Ts: “subject to the tax on floor - stocks (see Regulations 82).”’ ee upon imported competitive oils including coconut oil. These proposed amendments were rejected.* In 1929 when the Tariff Act. of 1930, 46 Stat. 590,.19 U. S.C. A. § 1001, was - again before Congress, amendments were offered to place imports upon competing’ foreign oils.4 These proposals ~ were not made law. When Congress had before it the Rev- enue Act of 1932, 47 Stat. 169, similar ‘amendments were proposed but were rejected again.’ During the Seventy- Second Congress a separate bill, H. R. 12,835, was intro- ° duced to provide an amendment ‘to the Tariff Act of 1930 in orde to impose a duty on such oils as were processed. . in the ease at bar. This bill did not pass. [fol. 45] The continuous agitation for the protection of domestic farm products from duty-free coconut oil-and other competitive vegetable oils resulted i in the passage of.” the statute under consideration. See the statements of ~ Congressman Schallenberger,® those of Congressman Knut- son,’ those of Senator Byrnes,* those of Senator, Borah’ - and those of Senator Norris.”° The fact that the Philippine . Independence Act of March 24, 1934, ¢. 84, Section 6(b), 48 Stat. 456, 459, 48 U.S. C. A. 1236(b), specifically authorized the importation free of duty of 200,000 long tons of Philip- : ping coconut oil a year for ten years made it impossible for Congress to place an impost on Philippine coconut oil ’ without a breach of faith. Congress, in order to protect the American‘farmer, but also to keep faith with the people of the Philippines, substituted for an impost upon Philip- pine oil the tax provided by Section-602%. It follows, savs the appellant, that Congress intended the tax of 602%, fo attach to the earliest ‘use of the oils: after entry into “the United States and therefore Congress intended to levy the tax upon ‘*the first domestic processing’’ in. point of time. *See Cong. Record, Vol. 69, pp. 8483, 9262. 5 . *See Cong. Record, Vol. “1, p. 4914, et = ; Vol. 72, PP... 5717, 5942, >See Cong. Record, Vol. 75, pp. 10, 249 et Seq., 11,095- 11,116. * See Cong. Record, Vol. 78, p. 2529, * See Cong. Record, Vol..78, pp..2614, 2615. . See Cong. Record, Vol. 78, p. 6314. | * See Cong. Record, Vol. 78, p. 6316. © See Cong. Record, Vol. 78, p. 6380. 45 : Our difficulty in accepting these arguments lies in the fact that we can see no reason why Congress should not have desired to protect domestic fats against competitive imported oils whether prior to the passage of the act these had been processed within the United States -or not.” Ob- viously Congress could have made its itttention very plain by adding a very few words to the phrase ‘‘first domestic - processing”? such as ‘in point of time’’, if that body had. in mind the end which the appellant contends it had. Upon the other hand if we take the literal meaning of the word — ‘*first’’, we must concede that it ‘means in advance of all others,.the earliest. [fol. 46] Two plain sign ial remain to guide us. First, as was stated by the learned trial judge a statute is pre- . sumed. to operate on future acts unless the contrary intent is declared. See Hassett v. Welch, 303 U. S. 303, 314. A -shuilar view was expressed by the Circuit Court of Appeals for the Second Cireuit in Loose-Wiles Biscuit Co. v. Res- quin, 95 F, (2nd) 438,- 440, cert. den. 305 U. S..611. The -Court_of Claims in the case of Tasty Baking Co. v. United States, 88 F. Supp. 844, reached a similar conclusion, ‘though upon somewhat differetit reasoning. In our opinion the doctrine of the prospective operation. of a statute has become so much a-part of our law as‘to require Congress to employ plain words to overcome the presumpfion that a statute will so operate. Second, Tréasury Regulations 48 (see note 1, supra) construe the phrase “first domestic processing’? as mean- ing the first use in the United States after the effective date of the Act. The defendant points out that:these regula-. tions were promulgated by the Treasury Department pur- suant to the provisions of Section 1101 of: the.Revenue Act of 1926. See 44 Stat. 111. See. 602%(f) of the Revenue Act of 1934, 48 Stat., 764, provides that all provisions of ‘Section 600 of the Revenue Act of 1926, 44 Stat. 93, not in- | consistent with the provisions of See. 602% of the Revenue Act of 1934 shall be applicable in respect to the taxes im- ‘posed by Section 602%. In effect, therefore, contends the def« ndant, Treasury Regulations 48 were made applicable © to Section 602% of the Revenue .Act of 1934. Since the promulgation of the regulations. referred to. Congress on. one oceasion-amended Section 60214 without any indication of disapproval of the interpretation of the Treasury De- partment as to the prospective gperation of the statute. jo 7 46 tes pear 026, yorta- ection By Section 402 of the Revenue Act. of 1985, 49 Stat. Congress imposed a compensatory tax upon the i ‘tion of articles produced from the oils named in 602%; The United States claims similar approval by Coxgress by the enactment of Section 702 of the Revenue Act of 1936, 49 Stat. 1742, amending Section 6024 (a). This con- [fol. 47] tention cannot be sustained, however, because Con- gress made substantial changes in the wording of Section” 60212 though it ‘did-refer specifically to the existing regula- tions in respect to definitions of combinations or mixtures." This may indicate some degree of approval by Congress of the interpretation. by the’ regulations @ the prospective action of Section 602% (a) as enacted in the Revenue Act of 1934, but since the statute was not reenacted in identical language the rule of congressional confirmation enunciated by Brewster v. Gage, 280 U. S. 327, 337, and Mass. Mufual Life Ins. Co.'v. United States, 288 U.S. 269, 273, cannot be upplied. “i We. have given careful consideration to the appellant’ s- argument in respect to the 1986 amendment. Put briefs it is as follows. As we have already indicated Rention 702{a) of the-4936 Revenue Act amended Section 602!% of thie Revenue Act of 1984. As the amendment was “originally proposed by the Senate Finance C onimittee and passed by the Senate,’ it stated in part, ‘There is hereby imposed “upon the first domestic processing of coconut. oil, palm oil .. fatty acids... (whether or not... refined... or otlier- Wise. processed), or any combination or mixture [thereof | .. 4 With respect to any of which... there has been no previous first domestic processing and no import tax has heen paid... a tax.of' 3 cents per pound to be paid by the processor.” These words were apparently: insufficient to express the intent of Congress for the bill was rewritten in copnnittee and the words. ‘‘taxed’ under this: section”’ was added to the phrase ‘*no previous domestic process- ‘ing’’. The addition of this phrase, says the appellant, .re ‘ sulted in two classifications of ‘* previous first domestic processings’’, viz., a class of those -previous. processing which had-been taxed, under the section and which, accord: 1 See S. Rep. No. 2156, 74th Cotie., 2nd Sess. p. 30 (1939-1 Cum. Bulli, (Part 678, 698)). * See Cong. Ree.-Vol. 80, p. 8786. - 47 : Rael ingly, must have occurred subsequent to-the effective date of the Revenue Act of 1934, and a second class of previous’ first domestie processings not taxed under the. section ¢ [fol. 48] which could have eceurred only prior to the ef- * fective date of the Revenue Act of 1934. * Study of the 19286 umendment leads, we think, to the opposite conciusion. Congress intended to. tax oils of the designated classes or combinations which had not been pre- - viously taxed wider Section 602% (a) or upon which an import tax-had not heen paid under Section 601(¢) (8) of ‘the Revenue Act of 1932. In shert we think that the amend- ment shows it was the intention of Congress to tax the designated oils or combinations not previously taxed under the ‘section, evhether processed prior to the passage of the 1934 Act or not. It follows that Congress intended Gils or ecombingtions processed subsequent tthe effective date of the 1934 Revenue Act to be ‘taxed. | The question posed for our detetmination is a diffic ult” one Following the two signposts to which we have re. ferred we conclude that the District, Court reached the right’ result. : f Accordingly, the judgments are affirmed. * . . * ivee copy: ‘ es eee Téste: "-—, Clerk of the U nited States Cireuit Court f Appeals for the Third Cireuit. {fol 49] Is rar Unrrep States Circvrr Cocrr.or APPEaLs ron THE Trirp Circuit, OcTonen Teno, 1941 No. 7791 Co.gaTE-PaLMOLIVE-PEET,,Company, Appellant, etc U NITED STATES. OF America, Appellee On Appeal front the District Court of the United States, for the District of Delaware ; This cause came on to be heard on the transcript of ail _from the District Court of the United States, forthe Dis- .triet.of Delaware, and was argued by counsel: : eee On consideration ‘whereof, it is now here ordered and adjudged by this Court: that the judgment of the.said Dis- trict Court:in this case be, and the same is hereby affirmed. March 31, 1942. : John’ Biggs, J r., Cireuit Judge. Endorsements: G@rder Affirming Judgment. , Received -and Filed March 31, 1942. Wm. P. Rowland, Clerk. [ fol. 50] Ix THE Usitep States Crrcuir Court or Appeais s. FOR THE THIRD Circult, OctosEr TERM, 1941 ‘No. 7792 _CoLGaTE-PaLMoLive-Peet Company, Appellant, ~ Unrrep States or America, Appellee On Appeal from the District Court of the United States, for the District of Delaware This cause came on to be heard on the transcript of record from the District Court of the United States, for the Dis- trict of Delaware, and was argued by counsel. : On consideration whereof, it is now here ordered and ad- judged by this Court that the judgment of the said District Court in this case be, and the same is hereby affirmed. March 31, 1942. John Biggs, Ir: Cireuit Judge. Endorsements :. Order Affirming Judgment. Received and Filed March 31, 1942. Wm. P. ee, Clerk. | 39 49, [fol.51] In tHE Unrrep Srates Cimcurr Cover OF Arreais - FOR THE THIRD Circuit 7 win 7791 and 7792 | CotcaTE-PaLMo.ive-PEeet Company, Plaintiff-Appellant ‘g : s. ‘Unsrrep Srares or America, Defendant-Appellee Orptr. Extenotnec TimE ror Pertiion ror REHEARING - Before Biggs, and Goodrich, Circuit Judges: It is hereby Ordered that the time for filing petition for rehearing in the above entitled cases be and the same is hereby oe for an additional fifteen diiys. Apr il 6 fy the Court, John Biggs,.- Jr.,. Cireuit Judge. , Endorsements : Order extending time for filing Petition. - for Rehearing. Received and Filed April 6, 1942.. Wm. P. _ _ Rowland, Clerk. ia —_-—_—_—_——. . e e - : : > ¢ [fol. 52] Is tHe Unirep Srates Circuit Court or APPEALS - FoR THE Tuirp Crrcurt, Ocrosper Term, 1941 . Nos. 7791 and 7792 —* Corsate-Pat MOLIVE-PEET Company, Plaintiff-Appellant, } ¥ | THE Us wes STATES OF Amenica, Defendant Petition } FOR » REHEARING The appellant respectfully petitions for a rehearing on ‘the following grounds: . 1. The Court overlooked that the specific. aim of Con- > gress, as expressed in the debates, was the limitation of future imports and not taxation of oils on hand; there Was no ‘occasion to resort to a novel and, we submit, an erroneous application of the principle of the: prospective operation of statutes. | 8 ~ enactment. Av. a 2. The Court has distorted the principle of prospective : operation of statutes, and has applied it to the exclusion of other established canons of construction. 3, When the intent of. Congress is made plain by the debates, to resort to-a dubious use of an abstract canon ‘of construction beconies completely unrealistic. [fol. 53]. 4.. The view (Opinion, p. 7) that Treasury Regu- lations '48 were in effect adopted and ratified by the Rev e-. nue Act of 1934 and made applicable to Section 6021 thereof is: based on, the erroneous premise that. those Regulations were promulgated. prior to-the enactment a SS Oe Unitep States or America, Appellee — . [SUR Petition ror REHEARING And Now, to wit June 3,. 1942, after due consideration, the petition for rehearing in the above-entitled case is hereby granted, and the case set for rehearing on Monday, June 15, 1942. Philadelphia: ; | John Biggs, Jr., Circuit Judge. Endorsements: Order Granting Rehearing Received and filed June 3, 1942. Wm. P. Rowland, Clerk. _* ‘eome the parties aforesaid by their counsel aforésaid, and . * 52 (fol. 57] Ix tHe Unrrep States Crrevit Court or APPEALS FOR THE Tutrp rr Octoser TERM, 1941 . Nos. 7791, 7792 - .42- oe Coveate-Pamouive-Prer Company, Plaintiff-Appellant, Vs. Unrvep States or AMERICA And afterwards, to. wit, the 15th day of June, 1942, come ‘the parties aforesaid by their counsel aforesaid, and this case being called for re-argument sur pleadings and briefs, before the Honorable John Biggs, Jr., Honorable Albert B. Maris and Honorable Herbert F. Goodrich, Cireuit Judges, and the Court not being fully advised in the premises, takes further time for the consideration thereof, . _And afterwards, to wit, on the 21st day of August, 1942, the Court, now being fully advised in the premises, renders. . the following decision: ._. seis _[fol. 58] In tHe Unirep States Crrcurr Court or Appeats For THE THirp Circurt, OcToser. Term, 1941 re % a Aye 6 oats Nos. 7791-7792» - re " Conaste-Pinscsave Pane Company, Plaintiff-Appellant, bi | aD vs. . ; ; > A Tue Unirep States or AMERIO\, Defendant _ On Appeals from the District Court of: the United States for the* District of Delaware . ? ‘Onnnion ON Reneantno—Filed August 1, i942 Before Bigss, Maris and Geodrich, Circuit J nudges’ Bices, Circuit Judge: oe ee a . ‘ ; . ‘After careful reconsideration of this case on reargument a majority of the court feel constrained to reach the same decision as that expressed in our first opinion. The opin- " posed a compensatory_tax upon the importation of articles ° ‘produced from the oils named in Section 6024. Obviously, _ the word ‘‘amended’’ was used ‘erroneously. Congress did . * > "9 o. \ , « : \ we , \ closely allied to that contained in Séefion 60214 and i 53 See ern ion, ‘however, contains two errors which dioald be cor- rected. We stated in our opinion, ‘«Since the Silsidiaiatatlais of the regulations referred to [Treasury Regulations 48] Con-, / gress On one oceasion aitended Seetion 602% without. any [fol. 59] indication of disapproval of the interpretati ion of the Treasury Department as to the prospective opération of the statute.’’, and we went on to say that Congress by Section 402 of the Revenue Act of! 1935, 49 Stat. 1026, im- not amend-Section 60214, bit it dealt with a subjeet matter doing so indicated no disapproval of the interpretation pyt upon that section by the Treasury Department in Regulations 48. We think that these facts furnish some evidenc¢ that Con- gress was not dissatisfied with the Treasury Départment’s . interpretation providing prospective iiamean for See- — tion 60214, We stated also that ‘the appellee alee app vival by Congress of Regulations 48 by reason.ef the eng¢tment of _ Section 702 of the Revenue Act of 1936, 49/Stat. 1742 amendiag Section 602%. We concluded that th contention could not be sustained ‘‘*. * .* . b¢cause Con- gress made. substantial changes in the.wording of Section : 60212, though it did refer specifically to the e isting regula- f tions in respect to definitions of combinations/or mixtures.”’ We think we adopted too narrow a view implicit approval by Congress ef dep 1ental interpreta- tions of statutes by reenactment of their\provisions by. sub- sequent legislation. In Loose-Wiles Biscuit Co. v. Rasquin, _. 99 F. (2nd) 438, Judge Chase ruled correctly upon this sub- ject and 'ppon this very statute. He con: (dered that Con- gress “iad tacitly approved the Treasury interpretation of Section 60214 by Regulations 48 because it enacted Section (02 of the Revenue Act of 1936: See also Helvering v. Wil- shire Oil Co., 308 U. S. 90, 100. ‘Compare Textile Mills Corp. v. Corimissioner, 304 U.S. 326, 335-339. It is sufficient if an amendment dealing with substantially. the same subject - matter as the amended statute makes: “hon e indicating disapproval by Congress of existing departmental .inter- pretation. - appellee’s © the doctrine of. . i: se / et ok ee ee le “ [fol. 60] After consideration of every point raised by the appellant we can perceiye no reason why our prior decision - should be altered. Accordingly the judgments will ‘be af- ’ ’ firmed. . Seay fie . Maris, Circuit Judge, dissenting : After full consideration of the arguments advanced upon the rehearing of this case I find myself constrained to dis- sent from the judgment of the court. In my view the con-. .struction placed by the majority of the court upon Section 60214 of the Revenue Act’of 1934 cannot be supported vither by its language or by the intent of its framers as shown by its legislativ e history. ‘T shall briefly set forth the reasons for my view. In the first place the phrase “first domestic processing sa _seenis to me to be wholly free from ambiguity. ‘‘First”’, : ‘when used as here in respect of time, means earliest in point of time. If no reference point in time is specified the refer- ence must be to the beginning-of time. The majority say’ that another reference point, the effective date of the act, ‘was intended. But it is not so expressed in the act ‘and I. find no conv incing evidence that Congress | so intended. - * The provisions of Section 602% Were derived largely . from Section 9(a) of the Agricultural Adjustment Act of May 12, 1933 and the phrase ‘‘first domestic Rrocessing” "was taken verbatim therefrom. - It is conceded that in the Agricultural Adjustment Act the word ‘‘first’’ was used in the absolute sense of earliest in time. I find nothing to indi- cate that Congress cid not intend to use the word in the same sense when it included the phrase in Section 60214. Furthermore when Congress in the Revenue’ Act of 1936 amended Section 6021 it-indicated by the use of the phrase ‘first domestic processing taxed under this s¢ction’’ that it recognized that not all first domestic proce sings were tax: able. Secondly the legislative nore of S ction 60214 cori- vinces me, as it convinced Judge Sullivan n Durkee Famous : [fol. 61], Foods v. Harrison, — F. Supp. + + (D.C. Til. 1942), that it was the purpose-of Congress-to proteéct domestic farm — ' products against competition from specified oils which were brought from outside the United States, by levying a tax on'their first use’ within-the Uiijted ines ‘As Judge Sulli- - . Z . PF» eae 4 [ sae oh a nek: 45 van pointed out in the case just cited: ‘‘The Philippine In- dependence Act had been passed on March 24th; 1934, (48 U.S. C. A. 1236 (b)) specifically authorizing the importa- tion, free of duty, of a designated amount of coconut oil each year for a period of ten years, thus prectuding Congress ° - from placing an import duty thereon. Therefore; the.amend- _ ments to subdivision (a) of Section 602%, as adopted, pro- -vided for (1) a surtax of two cents: per. pound on coconut oil of non-Philippine origin ; and (2) provided for the segre- vation.and payment into the Philippine treasury -of the entire tax collected on Philippine coconut oil. Tracing the progréss of the oil processing tax statutg from its inception _ . as Section 602 of the Revenue Act of 1934, to its final enact-_ ment as Section 60214 thereof, the Congressional debates and reports all evidence the same legislative purpose of protecting the American farmers’ products against oils brought in from outside the United States. The debates _ show that it was the intention of Congress; in enacting Sec- - tion 6021, to exténd to foreign oils the same type of process- ing tax as had already been levied upey the American farm- _ ers’ products/ by the Agricultural Adjustment Act, and to use such tax as a substitute for a protective,tariff..* * * + Congressional Record, Vol. 78, pages 2513-2529; 2614-2658: ,* 6308-6324-6314-6315-6380."" ~~ wo | '. The majority rely for’ their decision largely .upon two _ guide posts‘but tliese do not seem to me to point to the con- _: , cusion.which the majority reach. ‘The first is the rule that a statute is presumed to operate prospectively unless the . contrary a, is declared. I am quite willing to coneede ° that this rule is applicable to Section 602%. Its application, - - howevér, should merely result in imposing the tax upen those processings within the statutory definition which ac-— tually a place-dfter the effective date of the act, not in [fol. 62]\modifying the definition so as’ to inipose the tax ‘upon transactions which upon the normal application of the: rule would have been exempt. . ipa ._ The second guide post to which the majority refer is _ Treasury Regulation 48 interpreting Section 6021. The regulation defines .‘‘first doniestic processing” as “‘the first use in fhe United States on or after the effective date of the .. act.’” But the act itself defined ‘‘first domestic processing”’ as ‘‘the first\use in the United States, in-the manufacture 23170. | i a 56 or ‘ production of an-article intended for. sale, of ‘the article with respect to which the tax is imposed, ‘but does not include the use of palm oil in the manufacture of tin plate.’”. It will be observed that iy the statutory definition there is no sug- gestion of’a reference to the. effective date of the act. It seems to me. that in importing such a reférence the regula- tion goes bevond its rightful field of interpretation and into the realm of amendment. Consequently I think that the _Tegulation is invalid and that its application violates the " settled tule, te which, however, the courts too frequently pay only lip service, that ambiguities in a revenue statute ~ must be construed strictly against the Government and that doubts therein must be resolved in aan taxpayer. A true Copy.. Teste: ss ° —— —, Clerk of the United States “Cirenit Court of Appeals for the Third Circuit. (fol. 63] In tHe Unirep Srares Crevrr Court or APPEALS FoR THE Tutrv Crecuit, Ocroper Term, 1941 No.:7791 | Covoate-PaLaouive-PEet Company, Appellant, vs. 3 Unrrep Srates or AMERICA On Appeal from the District Court of the United States, for the District, of Delaware > This cause came on to be heard on the transcript of record - frou the Distfict Court of the United States, for the District of Delaware, and was argued by counsel. On consideration whereof, it is now here ordered and ad- judged by this Court that the judgment of the said District Court in this case be, and the same is hereby affirmed. | John Biggs, Jr., Circuit Judge. _ August 21, 1942. : Endorsements: Order Affirming Judgment. + Received & Filed Aug. 21, 1942, Wm. P. Rowland, Clerk. : 47 87 (fol. 64] In THE UNITED Srares Crrcuir Court or APPEALS .” FOR THE Turrp Circuit, Ocroner TERM, 1941 \No. 7792 CoLe@aTe-PALMOLIVE-PEET Company, Appellant, aa Vs. - Unrrep States or AMERICA Op Appeal from the District Conn of the United States, for the District. of elaware _ This canse came on to be heard on the transcript of record from-the District Court of the United States, for the District . - of Delaware, and was argued by counsel. On consideration whereof, it is now here ordered and ad- _ judged by this Court that: the judgment of the said District Court in this case be, and the same is hereby affirmed. John Biggs, Jr., Circuit Judge. August 21, 1942. - Endorsements: Order Affirming a ae Received & © - Filed Aug. 21, 1942. - Wm. P. Rowland, Clerk. 4 | . \ (fol. 65] In tae Unirep States Circvir Cover or Apprats” * por THE Tarrp Crrcvit Nos. 7791 and. 7792 Corgate-PaLMoLive-PEeT Company, Plaintiff-Appellant, _ Vs. Tue v niTED States oF AMERICA, Defendant- Appellee Deedes Biggs and Goodrich, Cireuit Judges Upon appheation of counsel for appellant it is hereby Ordered that the time for filing a petition for rehearing in the above entitled cause be and the same hereby is ex- tended to and including October 5, 1942. For the Court, John Biggs, Jr., Circuit Judge. September. 3, 1942. EndorsementsOrder Extending Appellant’s -Timé for Filing Petition for Rehearing to October 5, 1942. Re- ceived & Filed Sept: 3, 1942. Wm. P. Rowland, Clerk. ‘ 45 s 58 {fol. 66] In tur Unrrev States Circuir Court or APPEALs FOR THE THirp Crrcurt, OctoseR: Tera, 1941 Nos. 7791 and 7792 Coreare-Pansscusve-Paat Cobrany, Plaintiff-Appellant, vs. Tue Unrrep Srates or America, Defendant Petition For SECOND REHEARING The appellant respectfully petitions (a) for a second ve. hearing en banc. (in view of the fact that the rule of ap. ‘proval by statutory reenactment or amendment as. an nonneed by a majority of fhe Court in this case is at variance with the rule heretofore’ announced by this.Court, ‘as well as in view of the other grounds below) or (b) i! that be not granted, for a second rehearing by the Court. as heretofore constituted in this ease. The right of the Court to sit en banc is well settled. ((Teavtile Mills Cor) Vv. Commissioner, 117 F. (2d) 62; affirmed 314 U. S. 326, 86 1. Md. 242.) This petition is made upon the followin grounds ; 1. The majotity of the ( ourt are mistaken as to the fact. respecting the 1936 amendment. ae ———§ 2. Presumably under the influence of that mistake tli majority have failed to give full meaning and effect. to iil! {fol. 67] the words of that amendment, as under established rules of construction should be done; That amendment. can not possibly: constitute legislative approval of the Com. missioner’s regulation interpreting “first’’ to mean ‘‘firs! after the effective date of the tas”*, “3, The conclusion of the Court ‘with respect’ to legisla- tive approval is not sustained by either of the eases cited in the majority opinion on rehearing. 4. The rule adopted i in the majority opinion is contrary ‘to the rule of approval by. re-enactment as stated and ap plied by the Supreme Court. 5. The rule of approval by amendment annonneed the’ majority ‘opinion is contrary to the rule heretofore . a ; . 59 : 49 aunounced in this Court and leaves the law on that point in this: Cireuit in doubt. 6. .The majority of the Court erred in holding that the principle of prospective operation of statutes requires that ‘first’? be construed as meaning “first after the effective date of the tax.’’ . The majority of the Court weve in rejecting the fac- wi indicia of the intent of Congress. The Court recog- nizes that Section 602% was derived largely from the Agricultural Adjustment Act and that ‘*the first domestic processing’’ was thére construed to mean the first in point © of time; but the majority of the Court holds that the same langnage in Section 602%, intended to supplement the Agri- cultural Adjustment Act, should not be similarly construed. 8, The ‘majority of the Court erred in refusing to apply the principle of donbt. . Counsel apscceiate the great consideration which the _ Court has already extended to appellant. We should not |fol. 68] under ordinary circumstances ask any further in- dulgenee. But,the circumstances, are not ordinary. ~ It is further ordered that the order denying certtorari be, and the same is hereby, vacated ; and that the pétition for writ of certiorari herein be, and the. same is hereby, granted, — and the case is transferred to the summary docket. It is further ordered that the duly certified copy of the transcript of the proceedings. below which accompanied the ‘_ petition shall be treated: as though filed in response to such writ. _ June 14, 1943. - Mr. Justice Roberts took no part in the consideration or ‘atelaions of this application. (fol. 64} Sursaue Court oF THE ie STATES, Oc TOBER TERM, 1943 No. 39° [Title omitted ] ORDER ALLowIne CEerRTIoRARI—J une, 14, 1943 _. On Petition for Writ of Certiorari to the United States Cireuit Court of Appeals for the Third Ciréuit. | A petition for rehearing having been filed ‘in this case uporedbe denial of a petition for writ.of certiorari; Upon consideration thereof, it is ordered by this Court that the - ‘petition for. rehearing be, and the same is hereby, granted. 438-39 >. . . rd 54 f- - It is ser ordered that the order denying certiorari be, and thé same is hereby, vacated; and that the petition for writ /of certiorari herein be, and the same is hereby, granited, and the case is transferred to the summary docket. Ait is further ordered that the duly certified copy of the Aranscript of the proceedings below which accompanied the petition shall be treated as though filed in response to such rit. . June 14, 1943. | a Mr. Justice Roberts took no part in the consideration or decision of this application. Endorsed on Cover: File; Nos. 47,408, 47,409. U. S. Cir- cuit Court of Appeals, Third Circuit. Term No. 38. Col- ' gate-Palmolive-Peet Company, Petitioner; vs. The United States of America. Term No. 39. Colgate-Palmolive-Peet Company, Petitioner, vs. The United States of America. Petition for writs“of certiorari and exhibit thereto. Filed April 10, 1943. Term-No. 38 O. T. 1943, 39 O. 'F.1943. (6°38) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386403_0224%3A1. Public record. Not legal advice.