carbonate rocks (not specifically provided for at a 5 percent or 15 percent rate of percentage allowance) which are used or sold for use for purposes for which the calcium carbonate content is a major requirement. For example, the term 'calcium carbonates' includes limestone which is not of chemical or metallurgical grade and which is used or sold for use for cement manufacture or soil treatment. However, the term 'calcium carbonates' does not include any carbonate mineral which is identifiable as dolomite, marble, stone, oyster shells, or clam shells with the commonly understood commercial meaning of those terms.
'Limestone, chemical, and metallurgical grade -- Limestone which contains a calcium carbonate and magnesium carbonate content totaling 95 percent or higher by weight. For this purpose, the term 'limestone' does not include any carbonate mineral which is identifiable as a mineral falling within a more specific classification such as dolomite, marble, oyster shells, or clam shells.'
It is extremely difficult to determine exactly what Congress meant by the term 'chemical grade limestone.' In the legislative hearings there is testimony
to the effect that limestone for metallurgical or chemical purposes is of infrequent occurrence and constitutes 'an insignificant proportion of all limestone products.'
There is also the statement of the Senate Finance Committee that 'the names of all the various enumerated minerals are of course intended to have their commonly understood commercial meaning.'
The Tax Court has had its own troubles with the term chemical grade limestone, saying in one case.
'The record shows that limestone which is at least 95 per cent pure, (i.e. having 95% Carbonates) free from toxic impurities, and containing not more than 1 per cent moisture is known in industry and commerce as chemical grade limestone,'
and in another:
'There apparently is no generally accepted and commonly understood commercial meaning of metallurgical or chemical grade limestone.'
Although both the old and the new regulations classify cement rock as calcium carbonates which as such are entitled only to the lower rate of depletion, it is taxpayer's contention that its limestone is chemical grade for the reason that it is used in a chemical industry, to wit, the manufacture of cement, in which the stone undergoes changes in composition to become cement.
From the testimony of plaintiff's expert Dr. Herbert F. Kriege it appears that the term 'chemical grade limestone' is not limited in its meaning to limestone having 95% Or more calcium carbonate or total carbonates, and that the term includes limestone suitable for and actually used for the manufacture of cement. In this connection, Exhibit E to the Stipulation filed September 15, 1959, demonstrates that there is a wide variation in the calcium carbonate and magnesium carbonate content of the limestone which plaintiff uses to manufacture cement.
At Sandt's Eddy, Pennsylvania, the calculated total carbonates in the limestone quarried by plaintiff for making cement fall to a low of: calcium carbonate 74%, magnesium carbonate 5%. In addition, plaintiff's expert Mr. James L. Todd used the term 'chemical stone' to describe limestone containing between 85% And 92% Calcium carbonates. This stone is taken from two strata of a quarry of the Solvay Process Division of Allied Chemical Corporation at Jamesville, near Syracuse, New York, and used in the manufacture of soda ash, which is a chemical industry.
The testimony of the government's principal expert was weakened on cross-examination. It was weakened particularly by his statement that although he would desire to call chemical-grade limestone something having 97 or 98% Total carbonates, 'The reason I have a 95-per-cent figure (of total carbonates to define chemical grade limestone) is because it is the proposed policy of the Internal Revenue Service (since embodied in the new regulation) to use a 95-per-cent figure.' This is an attempt to adjust facts to a (proposed) regulation, and casts serious doubts upon the testimony of the witness.
While the term chemical grade limestone indicates a type of limestone of a higher degree of purity than its common commercial form, it appears that the new regulation which requires a calcium carbonate and magnesium carbonate content of 95% Or more, in the light of the evidence in the present case, is '* * * an attempted addition to the statute of something which is not there. As such the regulation can furnish no sustenance to the statute,' United States v. Calamaro, 354 U.S. 351, 359, 77 S. Ct. 1138, 1143, 1 L. Ed. 2d 394 (1957). The new regulation, therefore, will not be followed.
I find as a fact that taxpayer's limestone at all quarries over which a dispute exists is chemical grade limestone. Taxpayer is entitled to percentage depletion at the rate of 15% On all such limestone. Judgment will be entered in its favor.
Plaintiff may submit an order in accordance with this opinion.