The opinion of the court was delivered by: CAMPBELL
CAMPBELL, District Judge.
This suit was brought by the plaintiff to recover the sum of $4,964.16 plus interest, collected by the Collector of Internal Revenue as taxes on the processing of sunflower oil under Section 602 1/2 of the Revenue Act of 1934, and under that section as amended by Section 702 of the Revenue Act of 1936, 26 U.S.C.A. Int.Rev.Acts, pages 778, 779, between October 19th, 1934, to February 13th, 1937.
During the time in question the taxpayer dealt in edible oils at 253 Hamilton Avenue, Brooklyn, New York, and for that period of time he filed no federal tax returns of any kind.
After an exhaustive investigation, a Deputy Collector in Internal Revenue, pursuant to Section 3176 of the Revised Statutes, 26 U.S.C.A. Int.Rev.Code § 3612, filed on behalf of the plaintiff a tax return for the entire period relating to the plaintiff's liability with respect to the processing of sunflower oil. In August, 1938, the Commissioner of Internal Revenue made an assessment against the plaintiff in the aggregate sum of $61,208.40 made up as follows: $44,316.51 for processing taxes on 1,477,217 pounds of sunflower oil at 3 cents perpound, $11,079.12 for a 25% penalty and $5,812.77 interest accrued to the date of assessment. Thereafter the sum of $4,984.16 was collected from the plaintiff in partial satisfaction of the assessment. Thereafter, and on October 25th, 1939, plaintiff filed a claim for a refund on the asserted ground that "Deponent never processed any Sun Flower oil". The Commissioner, by letter of November 14th, 1939, gave notice to the plaintiff of the rejection of the claim for refund.
By Section 602 1/2 of the Revenue Act of 1934 a tax of 3 cents per pound was imposed upon the "first domestic processing" of sunflower oil and other oils, and "processing" was defined as any "use in the United States, in the manufacture or production of an article intended for sale, of the article with respect to which the tax is imposed". By Section 702 of the Revenue Act of 1936 the tax on sunflower oil with respect to sunflower oil imported into the United States after August 20th, 1936, was terminated, but the tax was continued as to sunflower oil brought into the United States prior to that date.
The mixing by the taxpayer of sunflower oil with coloring and flavoring matter in the production of an article intended for sale constituted a "processing" within the meaning of the statute, and the taxpayer became liable for a tax of 3 cents per pound measured upon the sunflower oil which entered into the processing.
A presumption of correctness attaches to the determination of the Commissioner of Internal Revenue that the taxpayer is liable for the processing taxes of the character here involved. Welch v. Helvering, 290 U.S. 111, 54 S. Ct. 8, 78 L. Ed. 212.
The taxpayer, as plaintiff and moving party has the burden of rebutting that presumption, and establishing his case, that is, that he is entitled to a refund of the amount of $4,964.16 and did not become liable for the payment of the taxes with respect to the processing of sunflower oil at 3 cents per pound during the taxable period.
Neither in his claim for a refund, nor in this action, did the taxpayer challenge the computation of the amount of the tax, contend that the sunflower oil purchased by him was not subject to the tax, or allege any ground of recovery other than that he did not process sunflower oil, that is, that he did not mix sunflower oil with coloring or flavoring matter, or any other substance.
A taxpayer is limited to the ground of recovery asserted in his claim for refund. Real Estate Land Title & Trust Co. v. United States, 309 U.S. 13, 17, 18, 60 S. Ct. 371, 84 L. Ed. 542; United States v. Felt & Tarrant Mfg. Co., 283 U.S. 269, 272, 51 S. Ct. 376, 75 L. Ed. 1025.
It is true, that no witness was produced by the Government, who saw the plaintiff process sunflower oil.
It was impossible to determine who were the customers by an examination of the books, or from the testimony given by the plaintiff while on the stand.
The following facts, produced on behalf of the Government, rise much higher than mere suspicion, and the fair inference to be drawn therefrom, in view of all the evidence, oral and documentary, which I have considered supports the assessment made by the Commissioner of Internal Revenue. Helvering v. National Grocery Co., 304 U.S. 282, 58 S. Ct. 932, 82 L. Ed. 1346; United Business Corporation v. ...