A person seeking a credit must show that the excise tax for which he seeks a credit has been paid to the United States and by whom it was paid, otherwise it would result in a person either getting a credit for moneys never received by the United States, or having more credits allowed than taxes received into the Treasury of the United States.
For a like reason the requirement that the amount of tax paid, for which credit is sought, should be shown. From 1932 through 1943, the percentages of excise taxes levied on the selling prices of the taxable articles have varied from 2% to 5% on automotive truck chassis; from 3% to 7% on other chassis, and from 2% to 5% on parts and accessories. With varying rates on the same used component a taxpayer ought to show the amount of tax paid on a particular component for which he seeks credit.
Likewise, the requirement that the date the tax was paid for which credit is sought must be shown, is not unreasonable, for to obtain a credit a tax must have been paid when the article was first sold.
Finally, the requirement that evidence be furnished by the taxpayer seeking the credit showing that the article on which the excise tax credit is sought was used in the manufacture of another taxable article is not unreasonable. Under Section 3443 of the Code the taxpayer is entitled to a credit for the tax previously paid, only if the article was used by him as material in the manufacture of, or as a component part of, a taxable article.
All of the foregoing requirements by the Commissioner follow and are in accordance with the provisions of Section 3443(a)(1) and I cannot say they are unreasonable. Because of the delegation by Congress to the Commissioner in subsection (b) of Section 3443 to make such Regulations, the Regulations have, unless wholly unreasonable, the force and effect of law. Commissioner v. Lane-Wells Co., 321 U.S. 219, 223, 64 S. Ct. 511, 88 L. Ed. 684; Helvering v. Reynolds, 313 U.S. 428, 433, 434, 61 S. Ct. 971, 85 L. Ed. 1438, 134 A.L.R. 1155; Fawcus Machine Co. v. United States, 282 U.S. 375, 378, 51 S. Ct. 144, 75 L. Ed. 397; Brewster v. Gage, 280 U.S. 327, 335, 50 S. Ct. 115, 74 L. Ed. 457. This is particularly true when the Regulation has been, as here, consistently adhered to for many years. Spring City Foundry Co. v. Commissioner, 292 U.S. 182, 189, 54 S. Ct. 644, 78 L. Ed. 1200; Universal Battery Co. v. U.S., 281 U.S. 580, 583, 50 S. Ct. 422, 74 L. Ed. 1051; Duquesne Club v. Bell, 3 Cir., 127 F.2d 363, 365, 143 A.L.R. 1377; Miller v. Commissioner, 4 Cir., 144 F.2d 287.
The taxpayer contends that the information required in the Regulations is impossible of attainment. The impossibility of proving the material facts upon which the right to relief depends leaves a claimant, upon whom the burden rests, with an uninforceable claim and that misfortune must be borne by him, as it must in other cases, as the result of failure of proof. Burnet v. Houston, 283 U.S. 223, 51 S. Ct. 413, 75 L. Ed. 991; John Wanamaker v. Commissioner of Internal Revenue, 3 Cir., 62 F.2d 401, 402; Eaton v. American Chain Co., 2 Cir., 63 F.2d 783, 786; Long v. Commissioner of Internal Revenue, 9 Cir., 96 F.2d 270, 272; Lee Wilson & Co. v. Commissioner of Internal Revenue, 8 Cir., 111 F.2d 313, 318; Hague Estate v. Commissioner of Internal Revenue, 2 Cir., 132 F.2d 775, 778; Union Packing Co. v. Rogan, D.C.S.D. Cal., 17 F.Supp. 934, 941.
In lieu of submitting evidence in line with the information required in the Regulations the taxpayer presents a formula. The formula purports to compute the tax on the something 'new' which has been added to the worn-out motor, with credit to be computed to the extent that any of the additional (new) parts were tax paid. Under the formula, instead of providing for a credit, it is proposed to tax only those items which combined make up the selling price, and which have never been taxed or sold tax-free before. By use of the formula the taxpayer is seeking not a credit, as provided in Section 3443(a)(1), but rather an overpayment under Section 3443(d). The formula contended for by the taxpayer has no regard to the excise tax, if any, paid by the prior manufacturer on the used parts utilized, and has no regard to the cost or monetary value of the 'used' parts. Under the formula only a portion of the taxpayer's cost of rebuilding, overhead, and profit is subjected to tax, the balance being attributed to the 'used' part despite the fact that the excise tax is levied on the sales price of a rebuilt motor, and a sales price usually includes a manufacturer's total cost of production, including overhead and profit. As demonstrated on the blackboard at time of the hearing and in Exhibit B to the taxpayer's trial memorandum, on an 85 horsepower motor selling for $ 68.05, on which the excise tax due is $ 3.40, the taxpayer asks under the formula, solely for tax purposes, a selling price of $ 45.90 and an excise tax due thereon of $ 2.30. In other words, the formula reduces the sales price of the rebuilt motors with a resulting decrease of the excise tax due on the sales price of the rebuilt motor. The effect of the formula results in the taxpayer's claim being one for refund of an overpayment, instead of a credit. Refunds of overpayment of excise taxes are governed by Section 3443(d). This section provides that for a refund of an overpayment to be allowable the taxpayer must establish that it bore the burden of the tax. The evidence shows that the taxpayer collected the excise taxes it paid to the United States from the purchasers of the rebuilt motors. Therefore, even if the use of the formula for computing the excise tax due on a rebuilt motor were recognized, the taxpayer would not be entitled to recover because of the provisions of Section 3443(d). See, United States v. Standard Oil Co., 6 Cir., 158 F.2d 126; Establishments Rigaud, Inc., v. Hoey, 2 Cir., 136 F.2d 1000; Gay Games v. Smith, 7 Cir, 132 F.2d 930; Andrew Jergens Co. v. Conner, 6 Cir., 125 F.2d 686; L. T. Piver, Inc., v. Hoey, 2 Cir., 101 F.2d 68.
For the foregoing reasons the taxpayer is entitled only to a refund of a credit for excise taxes paid by it to the manufacturers of the 'new parts' utilized by it in the production and sale of the rebuilt motors. This amounted to One Hundred, Forty Four and 26/100 ($ 144.26) Dollars. An Order may be submitted accordingly.
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