611.5731/87

The Assistant Secretary of State (Sayre) to the Norwegian Minister (Morgenstierne)

My Dear Mr. Minister: I regret that there has been delay in replying to your letter dated June 30, 1934, in regard to the tax on whale oil. The questions raised in your letter required considerable investigation.

In regard to the question of whether the tax on whale oil, imposed by Section 602 of the Revenue Act of 1934, is an internal tax or an import tax or duty, I quote below excerpts from a recent letter from the Treasury Department indicating that the tax was intended to be and has been adjudged by court decision to be a tax on importation.

“The Department has received your letter of August 14 (Le 611.5731/79), with enclosure of a copy of a note from the Norwegian Minister, in which he suggested that the tax of 3 cents per pound imposed on imported whale oil under section 601 of the Revenue Act of 1932, as amended by section 602 of the Revenue Act of 1934, is an internal tax, rather than an import tax or duty.

“The Minister concludes that, if the tax is an internal one, its imposition on oil imported from Norway, but not on like oil of United States origin, is in violation of Article VIII of the Treaty of Friendship, Commerce and Consular Rights of 1928 between the United States and Norway. You accordingly ask to be advised whether this tax on whale oil is administered and collected as an import tax or duty or as an internal tax.

“Section 602 of the Revenue Act of 1934, providing in part for a tax on the importation of whale oil (except sperm oil), contains an express provision that:

‘The tax on the articles described in this paragraph shall apply only with respect to the importation of such articles after the date of the enactment of the Revenue Act of 1934 …’

“Not only does the tax apply only with respect to imports, but subsection (b) of section 601, Revenue Act of 1932, provides that the taxes provided for in that section, to which section 602 of the Revenue Act of 1934 is an amendment, shall be treated for the purposes of all provisions of law relating to the customs revenue, with certain exceptions [Page 654] not material to your inquiry, as a duty imposed by the Tariff Act of 1930.19

“That the tax is denominated a tax on importation, rather than a duty, seems to be immaterial. The American courts in many instances, several of which are cited in the case of Faber Coe & Gregg (Inc.) v. United States, 19 C. C. P. A. 8, T. D. 44851, have held that taxes, however named, if imposed on imports while in customs custody, are customs duties.

“It follows that this Department holds that the tax on whale oil in question is a customs duty for the purposes of all provisions of law, including treaties of the United States, relating to the customs revenue, except as specifically provided in the statute, and that the said tax is not in any respect an internal tax.”

I am [etc.]

Francis B. Sayre
  1. 46 Stat. 590.