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(d) An addition of not less than 8 nor more than 50 per cent upon the total cost thus ascertained.
And the statute declares that in no case shall such merchandise be appraised at less than the total cost of production as thus ascertained.
The decisive question here is whether the above provisions have been adhered to by the appraising board. We think they have not. It was the duty of that board to ascertain the cost of the silk when it reached the hands of Martin of Lyons, the manufacturer, as at that time it was the material to be fabricated. Instead of finding such cost the appraisement board found and has stated it has found the market value of the ecru.
We do not agree with the importer's contention that the item of general expense and profit charged to Martin of Lyons by the throwster and dyer was not properly included in ascertaining the cost of these operations. The amount paid for such operations was a part of the cost of fabrication to the manufacturer, Martin of Lyons. But the item 10.55 francs for rolling, including as it did the item of profit, was more than the actual cost of that operation to the manufacturer, hence the profit of 1.43 francs could not be included in the cost of the rolling, and then be subjected to a further increase of 8 per cent, as was done in this case.
We recapitulate a lawful method of ascertaining the cost of production of the imported merchandise.
The cost of the silk when it was first delivered to Martin of Lyons should be ascertained. This would be what was paid therefor in this country plus the cost of transportation, insurance, and the other charges is any (none are claimed) incident to such delivery.
The cost of fabrication would include the amounts paid to the throwster and dyer. To the cost of material ascertained, as already pointed out, should therefore then be added what was paid for throwing and dyeing and to the aggregate amount thus ascertained 10 per cent should be added for general expenses prior to the time the yarn was rolled.
As already appears the undisputed evidence accepted by the appraisement board shows that the cost of the rolling operation to Martin of Lyons, the manufacturer, was 7.57 francs and its general expenses incident thereto 1.55 francs. This 1.55 francs should be accepted as the actual general expense of that operation. It exceeds the 10 per cent provided by the statute for estimated general expenses and, having been found to be true, must be taken as the general expense of that operation instead of an estimated 10 per cent therefør.–Austin, Baldwin & Co. v. United States (7 Ct. Cust. Appls. 186; T. D. 36505).
Therefore, to the aggregate cost of material and fabrication ascertained as above pointed out, the sum of 7.57 francs plus 1.55 francs; that is; 9.12 francs, should be added and to the resulting amount, the total cost of production, the appraisers were authorized and required by the statute to add not less than 8 nor more than 50 per cent thereof, and then to appraise the importation at not less than the amount thus ascertained. The failure of the board to follow the law and adopt this method or its equivalent in reappraising the merchandise, renders its appraisement illegal and void.
The classification board did not consider this aspect of the case, but apparently based its judgment in overruling the protest upon the view that there was conflicting evidence before the appraisement board as to the cost of the ecru, as to which the judgment of that board must be regarded as final. With that conclusion upon such an assumed state of facts we do not disagree but, as already pointed out, the method of ascertaining the cost of production adopted by the appraisement board, not being in accordance with the statute, opens it to a successful challenge by the importer.
The judgment of the Board of General Appraisers is reversed.
HOYT, SHEPSTON & SCIARONI v. UNITED STATES (No. 2276).
Mochi, whether made from rice or from rice and barley, whether put up in tins or cut into cubes and dried, is not rice, barley or wafers.—Hoyt, Shepston & Sciaroni v. United States (12 Ct. Cust. Appls. 7; T. D. 39888).
United States Court of Customs Appeals, January 24, 1924.
APPLICATION for rehearing; decision rendered November 17, 1923 (12 Ct. Cust.
Appls. —; T. D. 39888). (Denied.) Frank L. Lawrence (Martin T. Baldwin of counsel) for appellants.
William W. Hoppin, Assistant Attorney General (John A. Kemp, special attorney, of counsel), for the United States. Before Martin, Presiding Judge, and Smith, BARBER, BLAND, and HATFIELD,
Associate Judges. Per curiam:
The petition for a rehearing in this case claims that the case involved two different articles, namely, mochi or canned boiled rice and socalled wafers consisting of rice and a very small percentage of barze.
Only two witnesses were called on behalf of the importer and both testified that the name “mochi” was applied to the product made up of rice and a small percentage of barley and to the product made from rice alone.
IT. D. 3999
Whether the commodity is made from rice or from rice and a small percentage of barley, the undisputed testimony discloses that the rice in the one case and the rice and barley in the other were cooked and reduced to a pulp, thereby producing a new article which was neither rice nor barley. The reasoning of the opinion applies with equal force to mochi made from rice and to mochi made from rice and barley and to both products whether put up in tins or cut into cubes and dried.
The petition for a rehearing must therefore be denied.
TURNER & CO. ET AL. v. UNITED STATES (No. 2264).1
1. COMPONENT MATERIAL OF CHIEF VALUE.
In determining the component material of chief value, it has been invariably held by unmistakable implication that where the manufacturer himself fabricates any one of the component materials in order to bring it to a condition ready for use in the article, the aggregate value of the original material plus the expenses of labor, etc., incurred in bringing it to its finished condition should be taken as “the value” of that material; and that the price which such component material when ready for use might bring, if sold as a separate commodity,
would not enter into the calculation. 2. VACUUM BOTTLES-COMPONENT MATERIAL OF CHIEF VALUE.
The manufacturer of vacuum bottles, dutiable according to the component material of chief value by virtue of paragraph 386, tariff act of 1913, bought the metal containers for 8.65 marks and made the glass bottles for 5.80 marks. It was shown that he sold the glass bottles for 9 marks. The metal, and not the glass, was the component material of chief value.
United States Court of Customs Appeals, January 24, 1924.
APPEAL from Board of United States General Appraisers, Abstract 4565i.
Allan R. Brown for appellants.
William W. Hoppin, Assistant Attorney General (John A. Kemp, special attorney, of counsel), for the United States.
[Oral argument October 4, 1923, by Mr. Brown ard Mr. Hoppin.) Before Martin, Presiding Judge, and Smith, BARBER, and BLAND, Associate
Judges; HATFIELD, Associate Judge, participating in the decision by agreement of counsel.
MARTIN, Presiding Judge, delivered the opinion of the court:
The merchandise now upon appeal consists of thermos bottles. Each of these is composed of a blown-glass bottle incased in a metal container made of iron and aluminum. The appraiser reported that they were dutiable at the rate of 45 per cent ad valorem as nonenumerated articles composed in chief value of blown glass, under paragraph 84, tariff act of 1913. The collector accordingly assessed duty at that rate.
1 T. D. 39997.
The importers protested against the assessment, claiming that the articles were composed in chief value of metal, not glass, and were therefore dutiable at the rate of only 20 per cent ad valorem under paragraph 167 of the same act.
The protest was heard upon evidence by the Board of General Appraisers, and was overruled. The importers appealed from that decision.
The issue presented by the record is a narrow one. It is conceded by the parties that the importation is a nonenumerated article dutiable at the rate which would be chargeable upon it if it were composed wholly of the component material thereof of chief value." (Par. 386, tariff act of 1913.) It thus becomes necessary to determine which is its component material of chief value. It is admitted that this competition lies between the glass of which the inner bottle is made and the metal composing the outer container, there being no other material of substantial value entering into the article.
The thermos bottles were made in Germany. The manufacturer did not himself fabricate the metal containers but purchased them in their finished state ready for use from other manufacturers who made a specialty of them. The price paid for the containers thus purchased was 8.65 marks each. The glass bottles, however, were entirely fabricated by the manufacturer of the thermos bottles. These when finished ready for use cost him 5.80 marks each, which included the cost of materials, labor, general expenses, and every outlay of whatever description incurred in their manufacture. The manufacturer also made sales of similar glass bottles manufactured by him, the selling price in such cases being 9 marks each. This price of course was designed to cover not only the cost of manufacturing the glass bottles, but also the cost of selling them, and a profit upon the transaction. The manufacturer, however, made no separate sales of the metal containers when purchased by him, but used all of them in the construction of the thermos bottles.
It may be repeated that the manufacturer of the imported articles manufactured the glass portion of each at a cost of 5.80 marks and purchased the metal part at a cost of 8.65 marks. If these facts stood alone it would plainly follow that the metal part would be the component material of chief value in the article. But as above stated the manufacturer made sales of similar glass bottles as separate commodities at the price of 9 marks each. The Government contends that this selling price should be taken as the true value of the glass as a component material in the thermos bottles, and accordingly that glass must be heid to be the component material
of chief value therein. This contention was in substance sustained by the board, and it was upon that view that it overruled the protest.
We are constrained to disagree with this decision of the board. The statutory provision in question reads as follows:
* *; and on articles not enumerated, manufactured of two or more materials, the duty shall be assessed at the highest rate at which the same would be chargeable if composed wholly of the component material thereof of chief value; and the words "component material of chief value," wherever used in this section, shall be held to mean that component material which shall exceed in value any other single component material of the article; and the value of each component material shall be determined by the ascertained value of such material in its condition as found in the article.
The foregoing provision appeared in identical language in the tariff act of October 1, 1890, and has been reenacted without change in every tariff revision since that time. It has been the subject of numerous decisions by the board and the courts, and although the present question has never been directly decided it has invariably been held by unmistakable implication that where an article is dutiable according to its component material of chief value, and the manufacturer himself fabricates any one of the component materials in order to bring it to a condition ready for use in the article, the aggregate value of the original material, plus the expenses of labor, etc., incurred in bringing it to its finished condition, should be taken as the "value” of that material within the sense of the paragraph, and that the price which such component material when ready for use might bring, if sold as a separate commodity, would not enter into the calculation.
In the leading case of Seeberger v. Hardy (150 U. S. 420) the merchandise was opera glasses composed of metal, shell, and glass lenses. They were dutiable at the rate applicable to their component material of chief value. It appeared that the foreign manufacturer had bought the metal in the shape of ingots, the shell in the natural form of mother-of-pearl, and the glasses in the rough state in which they leave the cast. It was held that the component materials should be compared in value in their condition when ready to be placed together into the finished opera glasses. The court said, “While it may be true that to a certain extent the Government may be at the mercy of the importer's witnesses in estimating the value of the labor put upon the raw material as it goes into the completed article, this difficulty can not be allowed to defeat the plain object of the enactment."
In the case of United States v. Meadows (2 Ct. Cust. Appls. 143; T. D. 31665) the merchandise was slippers composed of cotton and leather, and the question was which was the component material of chief value. This was ascertained by taking the several values of the original materials and adding thereto the costs incident to