2. SAME-LEGALITY-REVIEWABILITY,

A so-called converters' commission was contended to have been improperly included by the appraising officers in the dutiable value of merchandise. Held that the appraisement might be re-examined, and that evidence was admissible to show the nature of such commission.

[Ed. Note. For cases in point, see Cent. Dig. vol. 15, Customs Duties, § 196.]

On Application for Review of a Decision of the Board of United States General Appraisers.

Curie, Smith & Maxwell (W. Wickham Smith, of counsel), for importers.

J. Osgood Nichols, Asst. U. S. Atty.

HAZEL, District Judge. In this controversy it is claimed that the refusal of the Board of General Appraisers to receive evidence to show the illegality of the appraisement proceedings was error. According to the importers they had paid a commission of 21⁄2 per cent. to a commissionnaire in the purchase of the goods. The appraising officers, however, advanced the actual value of the merchandise by disallowing any deduction for commissions. The United States Attorney contends that the invoices do not show the payment of a commission, that the payment of the percentage was in fact paid to the vendor of the merchandise, and therefore, the collector, under the provisions of the tariff act, correctly treated the alleged commission as part of the invoiced value, and subject to duty. Evidence was given to show that, in arriving at the amount of duty, the collector considered the market value or wholesale price at the time of exportation in the country from whence the merchandise was imported, and that, in arriving at such value, he complied with the provisions of sections 10, 13, and 19 of the customs administrative act of June 10, 1890 (Act June 10, 1890, c. 407, 26 Stat. 136, 139 [U. S. Comp. St. 1901, pp. 1922, 1924, 1932]) which required him to take into consideration the costs and charges to complete the shipment.

The importers offered to show before the board the payment of a commission for services rendered in the purchase and shipment of the goods; but to this evidence the government objected. The board sustained the objection, and the case was submitted. An application. has been made to this court for a review of the decision of the board subsequently rendered. The testimony of five witnesses is printed in the record showing that the merchandise was bought from so-called converters at the price stated in the invoice plus 22 per cent. commission. It also appears that customarily the converter after receiving an order has the goods manufactured, then dyed and finished, and, when ready for transportation, he forwards them, and charges an agreed price, including the commission. The board decided that the action of the appraising officers holding that the item for commissions. was not independent of the market value of the goods was final and conclusive in the absence of fraud or illegality in the proceeding, and accordingly the testimony referred to was excluded. Upon the authorities of Muser v. Magone, 155 U. S. 240, 15 Sup. Ct. 77, 39 L. Ed. 135; United States v. Herrman, 91 Fed. 116, 33 C. C. A. 400; 152 F.-37

Robertson v. Frank Bros. Co., 132 U. S. 17, 10 Sup. Ct. 5, 33 L. Ed. 236; Oberteuffer v. Robertson, 116 U. S. 499, 6 Sup. Ct. 462, 29 L. Ed. 706, and United States v. Beer (C. C. A.) 150 Fed. 566, I think the evidence should have been received and considered. In the Muser Case, the Supreme Court substantially held that, although the valuation as fixed by the appraisers is final it may, nevertheless, be attacked for want of power to make it, or where the appraisers are disqualified from acting or items have been included independent of the actual value. In United States v. Beer, supra, the Circuit Court says: "As was pointed out in Robertson v. Frank Bros., 132 U. S. 17, 10 Sup. Ct. 5, 33 L. Ed. 236, the general rule that the decision of the local appraiser is final and conclusive unless reviewed by proceedings for reappraisement is sub ject to the qualification that if the appraiser proceed upon a wrong principle, contrary to law, and this be made to appear, his appraisement is not unimpeachable."

Hence, I conceive the rule to be that market values returned by the appraisers, though ordinarily not subject to attack, may nevertheless be re-examined, and the importers' remedy is by protest, whenever a nondutiable amount is included in such market value, or an indedependent item has been improperly considered, or where the appraiser omitted to make an inspection and examination upon which he based his appraisal. But it is contended by the government that the payment of the commission by the importers in the circumstances is wholly immaterial, inasmuch as the appraisers have clearly found the price charged for commission was in fact a part of the purchase price, and was included in the foreign market value. The evidence upon this point taken in this court is not persuasive of the claim that the appraisers erred in their action to ascertain the real market value. Although the proofs indicate that a commission is customarily paid to a so-called converter, and was paid in this case, yet the invoice indicates that such converter or agent was in fact the vendor of the merchandise. It does not clearly appear that the market value in the foreign country from where the goods were exported was different than that fixed by the appraisers.

The decision of the Board of General Appraisers is affirmed.

UNITED STATES v. HENSEL, BRUCKMANN & LORBACHER.
(Circuit Court, S. D. New York. January 18, 1907.)

No. 4,181.

DUTIES-CLASSIFICATION-LACE PAPER-PRINTED MATTER-INCI

1. CUSTOMS
DENTAL PRINTING.

So-called lace paper, which is used in decoratively packing confectionery, etc., is not brought within the provision for printed matter in Tariff Act July 24, 1897, c. 11, § 1, Schedule M, par. 403, 30 Stat. 189 [U. S. Comp. St. 1901, p. 1673], by reason of having names and addresses of merchants printed thereon. Said provision does not cover matter on which the printing is but a subordinate feature.

2. SAME MANUFACTURES OF PAPER.

So-called lace paper doilies, covers, tops, etc., used in packing confectionery, etc., which are composed of paper perforated with ornamental

designs and printed with the names and addresses of merchants, are not dutiable as paper, under Tariff Act July 24, 1897, c. 11, § 1, Schedule M, par. 402, 30 Stat. 189 [U. S. Comp. St. 1901, p. 1672], but as manufactures of paper, under paragraph 407, 30 Stat. 189 [U. S. Comp. St. 1901, p. 1673.] On Application for Review of a Decision of the Board of United States General Appraisers.

For decision below, see G. A. 6,260 (T. D. 26,992), which reversed the assessment of duty by the collector of customs at the port of New York.

J. Osgood Nichols, Asst. U. S. Atty.

William B. Dungan, for importers.

HAZEL, District Judge. The merchandise consists of sheets of paper of different sizes, the centers of some of which are plain, with perforated and embossed border in resemblance of a lace pattern, sheets of perforated paper with the name and address of a merchant printed thereon, perforated paper for decorating raisin boxes, and confetti stamped from large sheets of paper. Duty was assessed thereon by the collector at 35 per centum ad valorem, under paragraph 407 of the act of 1897 (Act July 24, 1897, c. 11, § 1, Schedule M, par. 403, 30 Stat. 189 [U. S. Comp. St. 1901, p. 1673]), as manufactures of paper, or of which paper is the component material of chief value. The importers protested and claimed that the goods were dutiable at 25 per centum, under paragraph 402, as paper not specially provided for, or as printed matter, under paragraph 403, or as surface-coated paper, under paragraph 398. The Board of General Appraisers decided that the doilies, lace tops, and vinetas, which have no printing thereon, and the confetti, were articles manufactured from paper, and dutiable under paragraph 407, while the so-called lace paper, top and side pieces for raisin boxes or cartons, and doilies, with printing thereon, were dutiable, under paragraph 403, as printed matter. The government has made application for review to this court.

Reliance is placed by the United States Attorney upon the case of Kraut v. United States (C. C.) 134 Fed. 701, affirmed 142 Fed. 1037, 71 C. C. A. 684, in support of the contention that the articles are in fact manufactures of paper, and not printed matter. The importers urge that the printing on the paper bags in the Kraut Case was merely incidental, and did not to any extent affect their usefulness as bags, while in this case the purpose of printing upon the lace papers the name of the merchant using the same was to advertise the commodity to which they were applied as wrappers, covers, or side pieces of wrappers. The facts, however, do not sustain this contention. The primal object of the lace paper is the ornamentation or decorative feature. The proofs show that the articles are manufactured by placing sheets of the desired quality of paper under a steel die, and the figures, designs, or lace patterns are produced by being stamped or cut with the press. This operation is not thought to come within the category of "printing," as that term is defined in Arthur v. Moller, 97 U. S. 365, 24 L. Ed. 1046. The facts show that the raw paper is the article of chief cost in the finished product; the cost of stamping being about 25 per cent., and the market price of the importation is estimated at treble the cost of manu

facture. The finished articles are used as doilies, covers, wrappers for raisins, side and end pieces of raisin wrappers or confectioners' supplies. The articles have been materially changed from paper. They have in fact lost their character of paper, and the printing on the exhibits, considering their primal purpose, is a subordinate feature. They are essentially different from labels or visiting cards having printed matter, ornamentation, or finished borders thereon, which manifestly serve an entirely different purpose, and the printing unquestionably is the important feature. Hence, this case is thought to be controlled by the principle of the Kraut Case.

The decision of the board, therefore, is modified, and the conclusion of the collector on the specified articles approved.

UNITED STATES v. THREE PACKAGES OF DISTILLED SPIRITS. (District Court, E. D. Pennsylvania. March 22, 1907.)

No. 7 of 1904.

INTERNAL REVENUE-FORFEITURE OF SPIRITS-INFORMATION.

An information for a forfeiture of distilled spirits for violation of Rev. St. §§ 3289, 3455 [U. S. Comp. St. 1901, pp. 2132, 2279], held bad on demurrer, as not sufficiently definite to disclose to the court or claimant the precise nature of the act charged to be a violation of the statute.

[Ed. Note. For cases in point, see Cent. Dig. vol. 29, Internal Revenue, 133.]

On Demurrer to Amended Information for Forfeiture.

J. Whitaker Thompson and Walter C. Douglas, Jr., for the United States.

Furth & Singer, for claimants.

J. B. MCPHERSON, District Judge. The amended information now before the court, which seeks to forfeit three packages of distilled spirits for alleged violation of the revenue laws, contains three counts, of which the first count need not be considered, since the government concedes it to be demurrable. The second and third counts are as follows:

"(2) For that heretofore, to wit, prior to the seizure of the said three packages, they and each of them were then and there so stamped, branded, and marked as to show that their contents were distilled spirits manufactured by the Philadelphia Pure Rye Whisky Distilling Company, and had been duly inspected, and that all the provisions of the internal revenue laws in respect to the same had been complied with; whereas the said packages then and there contained something else than the contents which were therein when the said packages had been so lawfully stamped, branded, and marked by an officer of the revenue, to wit, compound liquor, manufactured by the mixing and compounding of distilled spirits with caramel, also called burnt sugar, and the said packages, then and there stamped, marked, and branded as aforesaid, with their contents as aforesaid, were on the 2d day of March, A. D. 1904, sold and shipped by the said Abe Strouse and Elias Wineland, trading as aforesaid, unto one John Birkman. Wherefore the said three packages and their contents are forfeitable to the United States by virtue of section 3455 of the Revised Statutes.

"(3) For that heretofore, to wit, prior to the seizure of the said three packages, certain distilled spirits, to wit, a compound liquor manufactured by the mixing and compounding of distilled spirits with caramel, also called burnt sugar, were found in each of said three packages, each of said packages then and there containing five gallons or more of said compound distilled spirits, with out having thereon the marks and stamps required therefor by law, to wit, the stamps and marks for rectified spirits. Wherefore said packages are forfeitable to the United States by virtue of section 3289 of the Revised Statutes."

To these counts the claimants have assigned the following grounds of demurrer :

"(2) That the second article of said amended information is indefinite, obscure, vague, and uncertain, in that it is not made clear whether the 'something else' which is alleged to have been in the packages aforesaid at the time they were sold and shipped by the said Abe Strouse and Elias Wineland, trading as aforesaid, was a compound liquor manufactured by the mixing with caramel, or burnt sugar, of other distilled spirits than the distilled spirits which were originally inspected in said packages, or whether the 'something else' referred to, and alleged to be a compound liquor, consisted only of the distilled spirits which had originally been inspected in said packages, to which there had been added caramel, or burnt sugar.

"(3) That the third article in said amended information is indefinite, obscure, vague, and uncertain, in that it is not made clear whether the compound liquor alleged to have been manufactured by the mixing of distilled spirits with caramel, or burnt sugar, and charged to have been found in each of said three packages, consisted of other distilled spirits than the distilled spirits which were originally inspected in said packages, to which burnt sugar or caramel had been added, or whether it referred to the distilled spirits which were originally inspected in said packages, to which caramel or burnt sugar had been added."

It is apparent, I think, that the demurrer must be sustained. The information is certainly capable of being construed to charge that the claimants mixed caramel or burnt sugar with other spirits than the liquor received from the distilling company, using for this purpose the packages in which the spirits that came from the distillery had been, or were, contained. The claimants admit that, if the proof sustained this charge, a good ground for forfeiture would be established. But the information is also capable of being construed to charge that the liquor found in the packages when they were seized was compounded by mixing caramel or burnt sugar with the very spirits that were received from the distilling company, and that the compounding took place in the packages thus received. It is clear, from the argument of the United States attorney, that the government desires to raise the question whether the mixing of caramel or burnt sugar with distilled spirits, without affixing the stamps required when liquor is rectified, comes within the purview of the third paragraph of section 3244 of the Revised Statutes [U. S. Comp. St. 1901, p. 2096], and especially within the final clause of the paragraph, which declares that:

Every person who, without rectifying, purifying, or refining distilled spirits, shall, by mixing such spirits, wine, or other liquor with any materials, manufacture any spurious, imitation, or compound liquors for sale, under the name of whiskey, brandy, gin, rum, wine, spirits, cordials, or wine bitters, or any other name, shall be regarded as a rectifier, and as being engaged in the business of rectifying."