Opinion
No. D-785.
June 5, 1933.
George M. Morris, of Washington, D.C. (Harry C. Kinne, of Chicago, Ill., and Kix-Miller, Baar Morris, of Washington, D.C., on the brief), for plaintiff.
Ralph C. Williamson and W.W. Scott, both of Washington, D.C., for the United States.
Before GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.
Suit by the Universal Battery Company against the United States.
Judgment for the plaintiff.
This case having been heard by the Court of Claims, the court, upon the report of a commissioner and the evidence, makes the following special findings of fact:
1. The plaintiff, Universal Battery Company, is a corporation duly organized under the laws of the state of Illinois, with its principal offices in the city of Chicago. It is now and during the time involved herein was engaged in the manufacture and sale of storage batteries and storage-battery parts.
2. On and between March 30, 1919, and October 31, 1923, the plaintiff paid the aggregate sum of $54,682.43 to the collector of internal revenue for the First District of Illinois, at Chicago, as manufacturers' excise taxes for the period from March, 1919, to September, 1923, both months inclusive, under the provisions of title 9, section 900, of the Revenue Act of 1918 ( 40 Stat. 1122), and title 9, section 900, of the Revenue Act of 1921 ( 42 Stat. 291).
3. The following tabulation shows the months for which the excise taxes referred to in finding 2 hereof were paid, the dates upon which they were paid, the amounts of taxes paid on completed batteries, the amounts of taxes paid on battery parts sold separately, and the total taxes paid on both completed batteries and on battery parts sold separately:
---------------------------------------|--------------------|---------------|--------------|-----------|------------- | Date of remittance | Date receipt | Tax paid on | Tax paid | Total tax Period for which paid | | issued | batteries | on parts | paid ---------------------------------------|--------------------|---------------|--------------|-----------|------------- | | | | | March 1919............................ | Mar. 30, 1919 | June 7, 1919 | $ 680.42 | $ 102.68 | $ 783.10 April 1919............................ | Apr. 30, 1919 | June 17, 1919 | 402.25 | 423.85 | 826.10 May 1919.............................. | May. 30, 1919 | July 9, 1919 | 346.68 | 480.47 | 827.15 June 1919............................. | June 30, 1919 | Aug. 6, 1919 | 122.81 | 414.79 | 537.60 July 1919............................. | July 30, 1919 | Sept. 6, 1919 | 90.56 | 493.72 | 584.28 August 1919........................... | Aug. 30, 1919 | Oct. 8, 1919 | 229.92 | 467.55 | 697.47 September 1919........................ | Sept. 30, 1919 | Nov. 12, 1919 | 77.87 | 487.74 | 565.41 October 1919.......................... | Oct. 30, 1919 | Dec. 4, 1919 | 207.20 | 608.17 | 815.37 November 1919......................... | Nov. 30, 1919 | Jan. 21, 1920 | 147.66 | 477.59 | 625.25 December 1919......................... | Dec. 30, 1919 | Jan. 26, 1920 | 161.14 | 475.23 | 636.37 | | | ____________ | __________| ____________ | | | 2,566.31 | 4,431.79 | 6,998.10 | | | | | January 1920.......................... | Jan. 30, 1920 | Feb. 24, 1920 | 204.67 | 603.00 | 807.67 February 1920......................... | Feb. 29, 1920 | Mar. 17, 1920 | 130.65 | 608.39 | 739.04 March 1920............................ | Mar. 30, 1920 | Apr. 20, 1920 | 808.92 | 765.73 | 1,574.65 April 1920............................ | Apr. 30, 1920 | June 12, 1920 | 819.58 | 749.00 | 1,568.62 May 1920.............................. | May 30, 1920 | July 7, 1920 | 732.86 | 829.76 | 1,562.62 June 1920............................. | June 30, 1920 | Aug. 16, 1920 | 628.51 | 438.08 | 1,066.59 July 1920............................. | July 30, 1920 | Sept. 4, 1920 | 417.06 | 761.63 | 1,178.69 | Aug. 16, 1920 | ............. | (Assessment for penalties paid) | | |______________|___________|_____________ | | | 6,208.60 | 9,187.38 | 15,395.98 | | | | | August 1920........................... | Sept. 30, 1920 | Oct. 8, 1920 | 396.50 | 1,005.20 | 1,401.70 September 1920........................ | Oct. 30, 1920 | Nov. 6, 1920 | 352.50 | 1,074.14 | 1,426.64 October 1920.......................... | Nov. 30, 1920 | Dec. 14, 1920 | 387.62 | 926.62 | 1,314.24 November 1920......................... | Dec. 30, 1920 | Jan. 10, 1921 | 516.48 | 952.01 | 1,468.49 December 1920......................... | Jan. 30, 1921 | Feb. 16, 1921 | 313.21 | 962.76 | 1,275.97 January 1921.......................... | Feb. 28, 1921 | Mar. 10, 1921 | 159.89 | 559.10 | 718.99 February 1921......................... | Mar. 30, 1921 | Apr. 7, 1921 | 340.81 | 983.41 | 1,324.22 March 1921............................ | Apr. 30, 1921 | May 5, 1921 | 847.47 | 1,329.57 | 2,177.04 April 1921............................ | May 30, 1921 | June 15, 1921 | 492.30 | 1,192.79 | 1,685.09 May 1921.............................. | June 30, 1921 | July 13, 1921 | 518.93 | 1,076.48 | 1,595.46 June 1921............................. | July 30, 1921 | Aug. 11, 1921 | 526.38 | 1,031.89 | 1,558.27 July 1921............................. | Aug. 30, 1921 | Sept. 3, 1921 | 507.08 | 952.92 | 1,460.00 August 1921........................... | Sept. 30, 1921 | Oct. 4, 1921 | 615.59 | 1,241.75 | 1,857.34 September 1921........................ | Oct. 30, 1921 | Oct. 27, 1921 | 617.08 | 1,283.45 | 1,900.53 October 1921.......................... | Nov. 30, 1921 | Dec. 3, 1921 | 644.02 | 1,280.56 | 1,924.58 November 1921......................... | Dec. 30, 1921 | Jan. 4, 1922 | 422.09 | 920.36 | 1,343.25 December 1921......................... | Jan. 30, 1922 | Jan. 30, 1922 | 298.94 | 849.43 | 1,148.37 | | |______________|___________|_____________ | | | 14,166.34 |$26,809.82 | 40,976.16 | | | 31.26 |...........| 31.26 | Aug. 16, 1920 |...............|______________| |_____________ | | | 14,197.60 |...........| 41,007.42 | | | | | January 1922.......................... | Feb. 28, 1922 | Mar. 1, 1922 | 454.78 |...........| 454.78 February 1922......................... | Mar. 31, 1922 | Apr. 1, 1922 | 427.37 |...........| 427.37 March 1922............................ | Apr. 27, 1922 | Apr. 28, 1922 | 768.17 |...........| 768.17 April 1922............................ | May 29, 1922 | June 3, 1922 | 923.82 |...........| 923.82 May 1922.............................. | June 30, 1922 | July 10, 1922 | 862.90 |...........| 862.90 June 1922............................. | July 28, 1922 | Aug. 2, 1922 | 680.26 |...........| 680.26 July 1922............................. | Aug. 29, 1922 | Sept. 8, 1922 | 601.93 |...........| 601.93 August 1922........................... | Sept. 30, 1922 | Oct. 4, 1922 | 679.41 |...........| 679.41 September 1922........................ | Oct. 30, 1922 | Nov. 9, 1922 | 782.00 |...........| 782.00 October 1922.......................... | Nov. 29, 1922 | Dec. 7, 1922 | 734.89 |...........| 734.89 November 1922......................... | Dec. 29, 1922 | Jan. 4, 1923 | 618.85 |...........| 618.85 December 1922......................... | Jan. 29, 1923 | Feb. 1, 1923 | 496.74 |...........| 496.74 January 1923.......................... | Feb. 28, 1923 | Mar. 7, 1923 | 656.71 |...........| 656.71 February 1923......................... | Mar. 29, 1923 | Apr. 6, 1923 | 483.70 |...........| 483.70 March 1923............................ | Apr. 28, 1923 | May 5, 1923 | 741.48 |...........| 741.48 April 1923............................ | May 29, 1923 | June 6, 1923 | 862.37 |...........| 862.37 May 1923.............................. | June 28, 1923 | July 6, 1923 | 685.37 |...........| 685.37 June 1923............................. | July 31, 1923 | Aug. 14, 1923 | 518.73 |...........| 518.73 July 1923............................. | Aug. 31, 1923 | Sept.12, 1923 | 516.22 |...........| 516.22 August 1923........................... | Sept. 29, 1923 | Oct. 4, 1923 | 556.48 |...........| 556.48 September 1923........................ | Oct. 31, 1923 | Nov. 1, 1923 | 622.83 |...........| 622.83 | | |______________|___________|_____________ | | | $27,872.61 |...........| $54,682.43 ---------------------------------------|---------------------|---------------|--------------|-----------|--------------4. On July 19, 1922, plaintiff filed a claim for refund, No. 253659, of $26,809.82, the manufacturers' excise tax paid by it on battery parts sold separately during the period from March, 1919, to December, 1921, both months inclusive. Said claim for refund was subsequently allowed in full, and the sum of $26,809.82, with interest in the amount of $360.63, from January 19, 1923, to April 8, 1923, was refunded to the plaintiff.
5. On January 16, 1924, the plaintiff filed a further claim for refund with the Commissioner of Internal Revenue in the amount of $34,282.14. Of this sum, $27,841.35 represented the tax paid by it on the sale during the taxable period involved of completed batteries, which it considered commercial commodities and therefore not subject to the tax imposed by section 900 (3) of the Revenue Acts of 1918 and 1921. The balance of the amount involved was claimed on the ground that interest computed on the amount allowed in the plaintiff's refund claim No. 253659, above referred to, was erroneously figured. The said claim for refund was rejected in full on April 5, 1924.
6. Of the $27,841.35 claimed by the plaintiff as paid upon completed storage batteries, $2,257.51 was received more than four years prior to January 15, 1924, when the claim for refund was filed. Payments in the sum of $25,583.84 were received within the period four years prior to the filing of the said refund claim.
7. The storage batteries involved are those generally referred to as "starting and lighting batteries" or "starting, lighting, and ignition batteries." Such batteries usually consist of three or more storage cells, giving an operating voltage of six or more volts, and are used to furnish the starting and ignition current for any internal-combustion engine or for any lighting or ignition service within the limitations of their respective electrical capacities to do the work required.
The current output of a battery depends upon the size and number of plates employed in each cell, while the terminal voltage of the battery depends upon the number of cells.
A cell regardless of its size nominally delivers approximately two volts, so that a battery of any desired voltage may be assembled by properly connecting together a sufficient number of cells. A storage cell is made of an uneven number of positive and negative prepared lead plates, placed in a hard-rubber compound jar and filled with a solution of sulphuric acid and water called "electrolyte," over which is fitted a cover to prevent the electrolyte from spilling. The plates are composed of metallic grids pasted with oxides of lead or lead and lead sulphate which are converted electrochemically into the active materials of the finished plate which take part in chemical reactions with the electrolyte, as a result of which chemical energy is transformed into electrical energy. By the reverse reactions electrical energy can be stored as chemical energy. The positive plates are alternately placed between the negative plates, and insulators or separators of corrugated wood or rubber are inserted between them to keep them out of contact. The frame of each plate is provided with a lug, by means of which the plates of like polarity are burned to lead alloy connecting straps, so that the plates of the cell are formed into two groups, one positive and the other negative. Each connecting strap is provided with a post which extends through the cell cover, the post of the positive connecting strap thereby becoming the positive terminal post, and the post of the negative connecting strap thereby becoming the negative terminal post of each cell, and by means of which connection is made to the adjoining cell, or to the circuit in connection with which the battery is to be used. The completed battery is formed by assembling the rectangular-shaped cells sidewise or endwise in a wooden or hard-rubber compound box fitted with handles, and connecting the cells in series by joining the positive terminal post of one cell to the negative terminal post of the next cell by means of intercell connectors, so that the current from one cell must pass through all of the others in order to return to where it started, leaving one post in each of the two end cells. To those posts, one positive and one negative, are attached the terminals to which the two cables through which the battery receives and delivers energy are in turn attached.
8. Storage batteries utilizing the chemical characteristics of the batteries above described have been in use since 1880 or 1881. The batteries of the period 1880-1900 were of the large, nonportable type, using large glass jars as containers for their cell structures, and were used for train lighting and in connection with power stations. The development of the small portable type of storage battery, in which the hard-rubber compound jar was substituted for the glass jar of the earlier nonportable battery, now generally used to supply current to the starting motors and for the ignition, lighting, operating the electric horn of automobiles, motortrucks, and motorcoaches, and for various other purposes, occurred during the period beginning 1900.
Batteries of the same type constructed to yield a higher voltage and current output are utilized for operating electric motors of electrically propelled vehicles.
The use of electric storage batteries in connection with automotive vehicles began in the early part of the present century, when they were used for ignition service. Those batteries were of the then existing lead-acid-paste portable type. In 1911 a prominent manufacturer began to equip automobiles with electric starting, lighting and ignition systems, and within a relatively short period the use of such systems became almost universal.
9. Storage batteries for combined starting and lighting service have two ratings, one indicating their lighting ability and the other indicating their engine-starting ability. The flow of electric current from a battery through a circuit is called the "discharge." The volume of current flow is measured in amperes. The capacity of a storage battery is measured in ampere hours. "Ampere-hour capacity" is a term used to express the amount of current that can be had from a battery of a given size over a given time or period. The ultimate rate at which the energy is discharged by the battery is determined by the resistance of the circuit of which the battery is a part.
The size of the plates determines the amperage output of the battery. The capacity of the battery increases in proportion to the number and the size of the plates. Where a high rate of discharge is desired, as is the case when a battery is used for engine-starting services, viz., supplying current to an electric motor which revolves the crank shaft of the engine, a battery of relatively large ampere-hour discharge capacity is required. The ideal starting and lighting battery is one which will deliver the maximum amount of current with the least amount of voltage drop.
The capacity of a cell of any given size for high discharge service may be increased by substituting a greater number of thinner plates for a smaller number of thicker plates and using thinner separators in the same container; also by using a soft paste as opposed to a hard paste, the soft paste by reason of its porosity giving an additional surface area. Where the service requirement is for a low rate of discharge, such as for lighting and ignition, radio, and kindred uses, a battery having a smaller number of thicker plates and using a hard paste as opposed to a soft paste will develop a more desirable capacity and possess a longer life than a battery having a larger number of thinner plates and using a softer paste and thinner separators.
10. A battery intended for starting, lighting, and ignition service, because of the great quantity of current drawn during short periods, namely, for starting, must have not only sufficient capacity but must have relatively thin soft textured plates to furnish the larger surface area necessary to quick release of power for starting torque. It must also have large and heavy connecting straps, intercell connectors, lugs, terminals, and connecting wires, or cables in order to carry the large quantity of amperage of current necessary to do the work without heating or excessive loss of energy. It is important that such a battery be of sufficiently rugged construction to withstand the vibration and hard usage to which batteries used in connection with the starting, lighting, and ignition systems of automobiles, motortrucks, motorcoaches, fire engines, motorboats, tractors, and other conveyances or machines of relatively similar size and character propelled by an internal-combustion engine are subject. ignition in the starting, lighting, and ignition.
There is a substantial variance in the quantity of current consumed for the several different uses to which a battery may be put. The current drawn for lighting and systems used on automobiles, motorboats, airplanes, tractors, concrete mixers, road-making machinery, farm and home lighting plants, and the operating of the many electrical contrivances thereon, may be but 8 to 10 amperes maximum, while the starting current demanded for turning the engine in these various machines may vary from 125 to 400 amperes, depending on existing conditions, including the temperature of the engine and the viscosity of the oil in the crank case of the engine. Therefore, due to the fact that a battery used in connection with a starting, lighting, and ignition system, must at all times be capable of providing sufficient current to start the engine under varying conditions, its useful life is short as compared to a battery the duty of which is to give a substantially constant low ampere discharge.
11. In order to transfer the current of a battery to the point where the current is required, it is necessary to attach terminals to the terminal posts of the battery and to then attach to those terminals wires or cables extending from the electrical devices to be operated. The size or diameter of the cable or wire which is used to transfer the current or electrical energy of the battery to the device for which the electrical energy is desired, together with the size and shape of the connectors and terminals with and to which the cable or wire is attached to the battery and to the said device, controls the use which may be made of the battery, and it is accordingly incumbent upon the person installing the battery to select the proper connectors, terminals, and cables. Whether a starting and lighting battery is to be used for a combined high and low discharge service as is the case where it is used in connection with an automotive starting, lighting, and ignition system, or whether it is to be used solely for a low discharge circuit, cannot be known until after the terminals and cables have been attached to the terminal posts.
12. During the period involved plaintiff manufactured and sold and offered for sale a large variety of storage batteries. During the year 1922 it issued a number of bulletins and pamphlets, among which were the following:
"Bulletin No. 80-B. Universal Starting, Lighting, and Ignition Batteries. A battery for every make of car.
"Bulletin No. 90-B. Universal Parts for Starting, Lighting, and Ignition Batteries. `A part for every make of battery.'
"Bulletin No. 75-A. Universal Nu-Seal Storage Battery for Farm Power and Light Plants.
"Bulletin No. 25-A. Universal Storage Batteries for Electric Vehicles.
"Bulletin No. 11-A. Universal Heavy Duty Batteries, Stationary Type in Open Glass Jars.
"Bulletin No. 130. Universal Replacement and Repair Parts Suitable for Delco-Light Batteries.
"Bulletin No. 81. Universal Heavy Duty Batteries for Trucks and Tractor Lighting Service."
The excise taxes herein sought to be recovered are those paid by plaintiff upon sales of all types of its starting, lighting, and ignition batteries which could possibly be used in automobiles, busses, tractors, and trucks in the taxable class of vehicles. Those batteries are illustrated and described in the plaintiff's Bulletin No. 80-B, hereinabove referred to and in evidence herein as Plaintiff's Exhibit 2. Excise taxes were not paid on the four types of radio batteries illustrated on page 45 of the said bulletin and the sealed glass-cell batteries for farm light plants illustrated on page 49 thereof, because by reason of their respective special designs and capacities they could not be used for ordinary starting, lighting, and ignition service.
The top of each page of said Bulletin No. 80-B carried the following caption: "A Battery for Every Car — A Part for Every Battery." On page 4 of the said bulletin, under the heading "Universal Batteries for Every Make and Model of Car," it was stated:
"There is a `Universal' battery for every make and model of car. On pages 8 to 28, inclusive, will be found a list of cars arranged alphabetically in which each model is given with the type and number of `Universal' battery to be used as a replacement.
"Universal batteries are interchangeable with all other makes. A list showing Universal types of batteries equivalent to those of other makes will be found on pages 46 to 47. This is the most complete comparative battery type list ever published and should be kept in a convenient place for reference."
The various types of starting and lighting batteries, illustrated and described in the said bulletin differed from each other as to voltage, amperage, number of plates per cell, cell assembly, and length, width, height, and weight.
On page 8 of the said bulletin, under the heading "Universal Batteries for All Makes and Models of Cars," and immediately preceding the long list which includes various makes and models of automobiles and trucks, fire engines, and hearses of domestic and foreign manufacture, and one make and model of tractor, it was stated: "This list shows the correct Universal battery with proper terminal for each make and model of automobile."
Following that index, six pages of the plaintiff's Bulletin No. 80-B are devoted to eighty illustrations depicting various types of Universal replacement battery assemblies with arrows indicating the direction of wires to electrical system on car, and following those pages are a number of pages on which such details of design of the plaintiff's several types of Universal starting batteries, as volts, number of plates per cell, cell assembly, etc., capacity at 5 amperes rate lighting load, dimensions (including handles) of length, width, and height, charging rates at start and finish, and net weight, are stated and illustrated.
The several types of batteries were fundamentally of the same construction, one type differing from another only in its discharge capacity. This difference of discharge capacity was necessary with the different makes of automobiles for which the batteries were recommended. Each battery of a different discharge rate was given a type number and its rating of discharge to thereby distinguish it for its particular automobile service.
On page 40 of the said bulletin the plaintiff's "Universal batteries for motor trucks and tractors," are illustrated and described in detail, and on page 48 of the same bulletin the plaintiff's "Universal batteries and parts for electric vehicles" are illustrated and described with equal detail.
The list in the plaintiff's Bulletin No. 80-B, hereinabove referred to, as showing "Universal" types of batteries equivalent to those of other makes, was designed to indicate the particular type of "Universal" starting and lighting battery which corresponded with and should be used in replacement of various types of starting and lighting batteries manufactured by twelve other manufacturers.
The plaintiff's starting, lighting, and ignition batteries were largely manufactured and sold with either straight or tapered terminal posts. Some of them, however, such as the VL-243, recommended for the 1912 Cadillac, the 1913 Cole, the 1913 Hudson, the 1913 Oakland, and the 1913 Oldsmobile, were built with drilled posts. The BS-613-J, recommended for the 1913 Cadillac and the 1913, 1914, and 1915 Republic, was built with special posts, and the THD-611-B, recommended for 1921 and 1922 Yellow Cabs, was also built with special posts to conform to the requirements of the several makes and models of automobiles for which they were so recommended.
13. The large and complete line of batteries manufactured by the plaintiff during the period involved resulted from the plaintiff's endeavors to keep pace with the competition of other battery manufacturers who were offering batteries to meet the exact size and capacity requirements of battery users. Different sizes were required to fit in different compartments and to meet the space requirements of the different uses to which the batteries were put. Two different sizes would fit the great majority of automobiles then on the market. The plaintiff did not make the containers or boxes for its batteries, but purchased the standard boxes from the manufacturers of such boxes. These boxes differed in dimensions from the standard car-equipment batteries and were not built with the special holding down equipment employed on batteries primarily intended for use in automobiles.
14. The plaintiff did not at any time during the period involved supply batteries to any manufacturer of automobiles to be used as original equipment. The plaintiff's batteries were sold through distributors, jobbers, and dealers in automobile tires and accessories, farm lighting plants, radio sets, and electrical goods. The batteries were sold for and used upon Kohler farm lighting plants for the starting engine, and on the McDonald light plant, the "Homelite" portable electric light and power plant made by the Simms Magneto Company, and for the direct supply of current to farm light plants; for starting and lighting motorboats; for farm tractor lighting; for signal systems, electric clock systems, burglar-alarm systems, and door-bell systems; for radios; house telephones; lighting of road machinery and ditch diggers; and for school and factory bells, as well as for the starting, lighting, and ignition systems of automobiles, trucks, and other automotive vehicles. In all these uses, the batteries on which the tax was paid delivered their current just as effectively in nonautomobile devices as they did when employed on automobiles; they functioned just as well in other respects with each of the nonautomobile devices as they did with automobiles; no complaints were received that the batteries were not as well adapted for use on these devices as they were for use on automobiles.
15. The plaintiff's most popular selling batteries were its Nos. MS-611-B and MS-613-B. The MS-611-B was a six-volt battery having 11 plates per cell, and the MS-613-B was a six-volt battery having 13 plates per cell. In both batteries the cells were assembled side by side. Those two types, as did all other starting and lighting batteries manufactured and sold by the plaintiff during the period involved herein, contained plates 1/8 inch in thickness in their cell structures. The MS-613-B type, by reason of its greater number of plates per cell, was slightly larger and possessed a somewhat higher capacity than the MS-611-B type.
During the period involved the plaintiff did manufacture and sell 3/32-inch plates, but only as replacement plates to be used in the repair of batteries of other manufacturers. It rejected the recommendation of its engineer that it adopt the 3/32-inch plates in its own batteries to thereby increase the capacity and give a greater starting torque on the ground that such a change would shorten the life of its batteries and make them less well suited for slow discharge work.
The plaintiff's batteries were made with plain terminal posts, tapered or straight, which would take any type of connector and terminal cable adapting the battery for any use. The plaintiff's batteries were never sold with any terminal connectors attached. Makers of batteries for use as standard automobile equipment manufactured a battery with 13 thinner plates better adapted for giving a greater starting torque where the plaintiff's battery of the same outside dimensions, used only the 11 thicker plates and was of lower capacity. Where makers of batteries primarily adapted for use in automobiles employed 15 thin plates in their batteries, the plaintiff's battery of the same outside dimensions used but 13 plates. The plaintiff did not manufacture a thinner-plate battery until after the period for which the tax was paid.
16. It was estimated by officials of the plaintiff that between 70 and 85 per cent. of all batteries sold by it during the taxable period involved were of its said types MS-611-B and MS-613-B, and it was likewise estimated by battery dealers and distributors of plaintiff's batteries that at least that percentage of the batteries sold by them was of those two types.
One of the plaintiff's representative distributors, selling between 1,200 and 2,000 batteries annually during this period, sold 60 to 65 per cent. of these batteries for purposes other than for use upon automobiles. Approximately 30 to 60 per cent. of the annual sales of a representative dealer who sold from 400 to 600 batteries a year, during the period in question, were for these nonautomobile uses. These batteries were commercial articles for these nonautomobile uses, and were commonly sold in the ordinary course of business.
17. There was nothing in the design or construction of the plaintiff's starting and lighting batteries which prevented their use for the nonautomotive purposes above referred to, or for other nonautomotive uses where the electrical requirements were comparable or sufficient.
The same starting and lighting battery would under identical climatic, atmospheric, and service conditions function equally well in conjunction with an identical starting system whether that system were used in connection with an automobile, motorboat, a stationary gas engine, or road machinery, or any other device with which such starting system might be used.
With the exception of the several starting services before referred to, the various devices and apparatus in connection with which the plaintiff's starting and lighting batteries were either used or sold for use required but a relatively small amount of current at low discharge rates compared with the requirements of the respective starting services.
The introduction of a line of specially designed radio batteries for 1925 interfered but little with the sale of certain of the plaintiff's types of starting and lighting batteries for radio service. The sales price differential in favor of the plaintiff's starting and lighting batteries over its specially designed radio batteries partially accounts for the continued demand for its starting and lighting batteries for that use.
18. The plaintiff's batteries were not specially designed for use upon automobiles, but were equally adapted to a variety of uses other than upon automobiles and automobile trucks and were commonly sold for and commonly put to such uses. None of the batteries sold by the plaintiff upon which the tax was paid were manufactured with any characteristic which made them adaptable for use in automobiles and automobile trucks only or prevented the use of these batteries for nonautomobile purposes. None of them were so designed or constructed as to make them primarily adapted for use on automobiles, automobile trucks, automobile wagons, or motorcycles.
The plaintiff sues to recover the sum of $30,884.34, of which sum $27,841.35 represents excise taxes paid upon the sale of electric storage batteries manufactured by it. The remaining $3,042.99 represents additional interest alleged to be due on a refund of taxes made to plaintiff on July 19, 1923, of $26,809.82, erroneously collected on the sale of battery parts. This item of the claim is abandoned by plaintiff in the brief, and the only question presented is the plaintiff's right to recover the taxes paid on the sales of completed batteries during the taxable period involved.
The challenged taxes were paid between March 30, 1919 and October 31, 1923. The claim for refund was filed on January 16, 1924. Consequently that portion of the taxes paid prior to January 16, 1920, is barred. The amount paid subsequent to that date was $25,583.84.
The sole issue is whether plaintiff's batteries were parts for automobiles within the meaning of section 900 of the Revenue Acts of 1918 and 1921 (c. 18, 40 Stat. 1122; c. 136, 42 Stat. 291), under the provisions of which the taxes were imposed and collected. These sections are identical and read:
"Sec. 900. That from and after January 1, 1922 [1921 Act], there shall be levied, assessed, collected, and paid upon the following articles sold or leased by the manufacturer, producer, or importer, a tax equivalent to the following percentages of the price for which so sold or leased —
"(1) Automobile trucks and automobile wagons (including tires, inner tubes, parts, and accessories therefor, sold on or in connection therewith or with the sale thereof), 3 per centum;
"(2) Other automobiles and motorcycles (including tires, inner tubes, parts, and accessories therefor, sold on or in connection therewith or with the sale thereof), except tractors, 5 per centum;
"(3) Tires, inner tubes, parts, or accessories for any of the articles enumerated in subdivision (1) or (2), sold to any person other than a manufacturer or producer of any of the articles enumerated in subdivision (1) or (2), 5 per centum."
The applicable Treasury Regulations issued for the administration of sections 900 of these respective acts are identical, and read: "Definition of parts. — A `part' for an automobile truck, automobile wagon, or other automobile chassis or body, or motorcycle, is any article designed or manufactured for the special purpose of being used as, or to improve, repair, or replace, a component part of any such vehicle, or article, and which by reason of some peculiar characteristic is not such a commercial commodity as would ordinarily be sold for general use, or which is primarily adapted only for use as a component part of such vehicle or article."
The Supreme Court, in Universal Battery Company v. United States, 281 U.S. 580, 50 S. Ct. 422, 423, 74 L. Ed. 1051, approved this administrative definition of the term "parts" as used in the Revenue Acts of 1918 and 1921. The court said: "Certainly it would be unreasonable to hold that articles equally adapted to a variety of uses and commonly put to such uses, one of which is use in motor vehicles, must be classified as parts or accessories for such vehicles."
The findings show that the taxed batteries in this case were sold and used for a great variety of purposes other than for use in automobiles, and that they were as equally adapted to such uses as they were to use in automobiles. These facts bring the case squarely within the rule announced by the court in Atwater Kent Mfg. Co. v. United States, 62 Ct. Cl. 419; General Lead Batteries Co. v. United States, 60 F.(2d) 177, 75 Ct. Cl. 605; and U.S. Light Heat Corporation v. United States (Ct.Cl.) 3 F. Supp. 861, decided to-day. These cases are parallel with the instant case in their essential facts and are controlling. See, also, Milwaukee Motor Products, Inc., v. United States, 66 Ct. Cl. 295; W.M. Dutton Sons v. United States, 59 F.(2d) 839, 75 Ct. Cl. 326; Anthony Company v. United States, 54 F.(2d) 165, 56 F.(2d) 481, 73 Ct. Cl. 758; C.F. Routzahn, Col. v. Willard Storage Battery Co., decided May 9, 1933, C.C.A., Sixth Circuit, 65 F.(2d) 89; and McCaughn, Col., v. Electric Storage Battery Co., 63 F.(2d) 715, decided January 31, 1933, C.C.A., Third Circuit.
The plaintiff is entitled to recover and judgment is ordered to be entered in its favor against the United States in the sum of $25,583.84, with interest as provided by law.
BOOTH, Chief Justice, did not hear this case on account of illness and took no part in its decision.