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I have examined the opinion of January 2, 1900, in the light of the decision of the court in the Fairbanks case, and have carefully considered the arguments advanced by counsel for the railroads. I see no reason to change the conclusion reached by Attorney-General Griggs. The proper effect of the decision in the Fairbanks case is merely to eliminate the discriminating stamp tax against foreign bills of lading treated strictly as such; but a bill of lading which is in part domestic, given for transportation within the United States as well as for export, may be taxed upon the domestic part.
In my opinion, all bills of lading for goods transported by rail from place to place within the United States ought to have a 1-cent stamp attached, regardless of the ultimate destination of the goods.
P. C. KNOX.
JOHN K. RICHARDS,
The SECRETARY OF THE TREASURY.
While paragraph 181 of the tariff act of July 24, 1897 (30 Stat., 166), which imposes a duty on imported lead ores, contemplates the determination of the quantity of metal in the ore by assay, by paragraph 182 of that act the determination of the quantity of metal contained in imported lead bullion is to be by official weighing only, and the application of assay to lead bullion under the current Treasury regulations for bonded smelters and refiners is without warrant of law.
DEPARTMENT OF JUSTICE,
SIR: Your letter of March 25, inclosing a copy of a letter from the collector of customs at New York relative to the present practice of assaying imported lead bullion treated in a bonded smelter and refiner in order to determine the quantity of dutiable metal, cites paragraphs 181 and 182 of the tariff act of 1897, providing for duty on "lead-bearing ores of all kinds" and "lead dross and lead bullion, * *
respectively, and cites section 29 of the same act providing for the bonding of smelting and refining warehouses. You inclose a copy of the current regulations relative to such warehouses, and ask for my opinion on the question whether these regulations are in accordance with law in not providing for the assessment of duty on the imported weight of lead bullion transferred to a bonded smelter.
Paragraph 181 relates especially to lead ores, and assesses a specific duty on the "lead contained therein." It then provides that on all importations duties shall be estimated at the port of entry and bond given for transportation by bonded common carriers to sampling and smelting establishments; that there the ores shall be sampled under Government supervision and assayed by a Government assayer, and the entries liquidated thereon unless the ores are sent to a bonded warehouse to be refined for exportation.
Paragraph 182 assesses a higher specific rate upon lead dross, lead bullion, or base bullion, and lead in other forms, making no provision for assay; that is, the duty is assessed on gross weight.
Section 29 permits the bonding of smelting and refining works for treatment of "ores or metals in any crude form," imported into the United States to be smelted or refined for exportation. Such merchandise may be removed on importation into the bonded establishment in which smelting or refining or both are carried on, without payment of duties. A quantity of refined metal must each day be set aside equal to 90 per cent of the imported metal smelted or refined that day, and shall not be taken from the works except for transportation to another bonded warehouse or for exportation, although it may also be removed for domestic consumption under Treasury regulations upon entry and payment of duties, the exportation of the 90 per cent aforesaid entitling the ores and metals imported to admission without payment of duties.
The collector's letter objects to the conclusion of G. A. 5032 (which construed section 29 exhaustively) only so far as sustaining the practice under the regulations of arriving at the designated percentage of refined metal under section 29 in the case of lead bullion as well as lead ore, upon the
basis of the quantity of pure metal as determined by assay. The collector contends that since assay is required only for lead ore (par. 181) and lead bullion is ordinarily dutiable on weight alone without assay (par. 182), and section 29 makes no mention of assay, this test to determine the quantity of imported metal is erroneously applied to lead bullion, resulting in an unwarrantable loss to the revenue, and consequently that the regulations should be amended to agree with the law.
Section 29 and earlier forms of the same law have attached to the tariff schedules special provisions encouraging the reduction of imported ores and metals in this country. Glancing at the schedules separately, and the executive and judicial rulings, it is apparent that there has been much uncertainty under the differing language of former tariff acts in arriving at the proper test of quantity for taxation in the case of lead ores and lead bullion. Lead bullion is a fusion of metals, the product of primary smelting abroad, containing about 97 per cent pure lead by weight. (United States v. Guggenheim Smelting Co., 112 Fed. Rep., 517.) But it is not necessary to review the doubts under former laws as to classification of lead-bearing ores and lead bullion, and as to quantity test by gross weight or net contents (see, for example, G. A. 1595, 2002, 3262; Balbach Smelting Co. v. United States, 81 Fed. Rep., 950; Guggenheim Smelting Co. case, ut supra), for the current tariff act makes it clear that all lead ores are dutiable on the lead contained and that lead bullion is taxed as pig lead. Ordinarily, then, such imported bullion is subject to duty on gross weight as lead, unless being treated in bond under section 29 that section has modified this rule of dutiability.
The law on smelting and refining metals under bond was generally the same under the tariff acts of 1890 and 1894 as under the current act (sec. 24, act of 1890; sec. 21, act of 1894). The only substantial difference is that the effect of the current act, by requiring segregation of 90 per cent. of the smelted or refined product instead of the entire product (in order to receive the benefit of exportation), is to give the importer and manufacturer an allowance for "wastage."
The regulations have been modified accordingly, and are now more detailed (cf. T. D. 10585 with T. D. 19501).
None of the laws on smelting and refining in bond provides explicitly for test by assay in the estimations of quantity or quality contemplated or necessarily implied; but the power of the Secretary of the Treasury to make rules and regulations is broadly given and appears to cover the entire course of proceeding from transfer into the warehouse to exportation or withdrawal for consumption; and there is no doubt that the former as well as the present regulations prescribe the determination by assay of the quantity of dutiable refined metal, and this method is applied to crude metals as well as ores. Nor is there any doubt that lead
bullion is a crude metal.
The test by assay was formerly controlling in the collection of duties upon a consumption withdrawal as well as upon exportation (par. 4, T. D. 10585). But now (par. 7, T. D. 19501), under a consumption withdrawal, duty is exacted on the entire importation, which appears to mean that in such case, involving crude metals and not ores, assay does not affect the question, but gross weight is the rule. This leaves the point to be considered in case of direct exportation and transportation for rewarehouse and ultimate exportation. Paragraphs 2, 6, 8 (current regulations), and the form of bond for establishing a smelting and refining warehouse (Form F), show clearly that assay is applied equally throughout the entire field to crude metals as well as ores. An illustration will show how the method in vogue operates to the detriment of the Government. On an importation of 2,000,000 pounds of lead bullion, assay shows, say, 97 per cent lead, equaling 1,940,000 pounds. On exportation of 90 per cent of this under the law, 1,746,000 pounds, the remainder, 254,000 pounds, is admitted free. On the other hand, on the gross-weight basis, the amount set aside for exportation would be 90 per cent of 2,000,000 pounds, or 1,800,000 pounds, which would entitle 200,000 to be admitted free. There is a loss, then, of duty at the rate of 2 cents per pound on the difference between 200,000 pounds and 254,000 pounds, amounting to $1,147.50. Where assay shows a
lower percentage than in the illustration given, a correspondingly larger loss to the revenue results.
Now, the necessity of the assay test in the case of ores, as provided in paragraph 181 of the Dingley Act, is obvious, and, on the other hand, it is certain that ordinarily it is neither necessary nor customary for crude metals or metals in pigs to be assayed for purpose of duty. There appear to be no assay provisions in the tariff schedules for any crude metals, but the rule of dutiability by gross weight is applied. This fusion of metals known as lead bullion or base bullion (although, being intermediate between ores and refined metals, it may appear to invoke assay naturally and properly) has been associated for duty purposes with pig lead and other forms of substantially pure lead. Indeed, the merchandise is itself substantially pure lead, containing a very small percentage of other metals and impurities. It seems to me that the law contemplates the determination of the quantity of metal in lead ore by assay and in lead bullion by official weighing only.
Under the foregoing circumstances I am of the opinion that the application of assay to lead bullion under the current regulations for bonded smelters and refiners is without warrant of law, and that the regulations should be revised accordingly. The general authority to frame regulations given by section 29 can not have the effect of nullifying a necessary inference drawn from other parts of the same law, especially since construction should seek to establish all parts of the law as consistent and coherent if possible. Therefore my answer to your question must be in the negative. Very respectfully,
The SECRETARY OF THE TREASURY.
P. C. KNOX.