Appeal from the District Court of the United States for the Eastern District of Pennsylvania; William H. Kirkpatrick, Judge.
Before BUFFINGTON and DAVIS, Circuit Judges, and NIELDS, District Judge.
This is an appeal from a judgment of the District Court holding that the tax was illegally levied, assessed, and collected on the batteries made and sold by the appellee by virtue of section 900 of the Revenue Acts of 1918 and 1921, 40 Stat. 1122, 42 Stat. 291. This section provides:
"That 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 appellee made and sold to persons other than the manufacturer or producer of automobiles batteries, some of which were used in automobiles and others were used otherwise, and the question is whether or not these batteries were "parts" or "accessories" of the vehicles mentioned in subdivisions (1) and (2) of the above section within the meaning of subdivision (3) thereof.
Subdivisions (1) and (2) contemplate that the parts and accessories mentioned therein will be sold with the vehicle by its manufacturer, and, where this is done, the tax is paid by him. In subdivision (3) it is contemplated that the parts and accessories will be sold separately from the vehicle by their manufacturer and the tax is to be paid by the manufacturer of the parts and accessories.
Articles primarily adapted for use in motor vehicles and not equally adapted to other uses are to be regarded as parts and accessories within the meaning of subdivision (3), quoted above. Universal Battery Co. v. United States, 281 U.S. 580, 50 S. Ct. 422, 74 L. Ed. 1051.
Were the batteries in question, on which the tax was levied and paid, primarily adapted for use in motor vehicles and not equally adapted to other uses for which they were made, advertised, and sold?
The learned trial judge found that, "as to the specific articles upon the sale of which the taxes were imposed, beyond the fact that they were electric storage batteries there is no evidence as to their characteristics or what they were ultimately used for." He further expressly found:
"3. That the parts of the electric storage batteries upon which the taxes in suit were paid were exactly the same as the parts of the storage batteries manufactured by the plaintiff in 1893 or 1894, and the only changes in the parts themselves are the changes naturally due to the refinement in art of manufacturers developed during that period and to competition in price. None of these refinements made the batteries peculiarly adapted to use on automobiles, but they continued to be equally adapted to use on any device where the duty requirements were the same.
"4. That the uses of electric storage batteries manufactured by the plaintiff and upon which the taxes were paid, other than the use on automobiles, were not incidental to the use of automobiles.
"5. That the storage batteries manufactured by the plaintiff, and upon which the taxes in suit were paid, were not peculiarly adapted only to automobiles, but were equally well adapted to use in stationary engines and marine engines, and for other purposes where the duty required was the same, and were so used.
"6. That the storage batteries manufactured by the plaintiff, and upon which the taxes in suit were paid, were not primarily adapted to use only on automobiles.
"7. That the storage batteries manufactured by the plaintiff, and upon which the taxes in suit were paid, were interchangeable for use in connection with automobiles or for use in connection with ...