The opinion of the court was delivered by: GODDARD
This is a suit to recover the sum of $ 2.00 representing an excise tax alleged to have been illegally and erroneously assessed and collected under Section 2400 of the Internal Revenue Code which was added by Section 552 of the Revenue Act of 1941, effective October 1, 1941, as amended by Section 310 of the Revenue Act of 1943, 26 U.S.C.A. § 2400. It is a test case.
The court makes the following Findings of Fact:
1. Warrin China & Glass Co., Inc. is, and was at the time hereinafter referred to, a New York corporation with its principal place of business in this district.
2. William J. Pedrick was at the time the tax return referred to below was made and the tax paid, and at the time that this action was commenced, the Collector of Internal Revenue for the Second District of the State of New York, and had his place of business and residence in the Southern District of New York.
3. On October 24, 1947, Warrin China & Glass Co., Inc. sold at retail a silver-plated glass pitcher having a retail price of $ 10.00 and, in accordance with the aforementioned Section 2400, collected from the purchaser 20% of the purchase price.
4. On or about November 3, 1947 plaintiff filed with William J. Pedrick Collector of Internal Revenue, a retail dealer's excise tax return and paid to him the sum of $ 2.00 as the retail dealer's excise tax upon the sale of the silver-plated pitcher above referred to.
5. Thereafter the plaintiff repaid the sum of $ 2.00 to his customer.
6. On November 3, 1947 the plaintiff filed with the defendant a claim for the refund of said tax.
7. By letter dated March 30, 1948, the Commissioner of Internal Revenue notified the plaintiff that said claim for refund was rejected.
8. Neither the defendant nor the Collector of Internal Revenue has refunded to the plaintiff the said $ 2.00 or any part thereof.
9. Thereafter this action for refund was properly commenced against William J. Pedrick; and, upon his death, the present defendant, Rea Forham Pedrick, as Administratrix of the Estate of William J. Pedrick, deceased, was substituted as defendant.
10. The glass pitcher sold by the plaintiff was designed, sold, and used for the storage, service, and preparation of beverages and is a duplicate of Exhibit 2 in evidence.
11. The glass pitcher sold by the plaintiff was plated by the following process:
(a) A steel plate is etched with the design.
(b) A silver paste or flux is ground in a pharmacist's bowl. The paste consists of the following ingredients, mixed according to formula: beeswax and tallow, borax, powdered lead and powdered silver. To these ingredients, a thinner- turpentine- is added.
(c) This paste is then applied on the etched steel plate. The etched steel plate with the paste applied is then placed in a press with a piece of transfer tissue that is a special paper used in the silver deposit process. This tissue is pressed against the steel plate by a roller press which causes the transfer of the silver paste in design from the steel to the tissue.
(d) The tissue is then placed against the glass pitcher, rubbed smooth by hand and the design is transferred thereby from the tissue to the surface of the glass pitcher.
(e) The tissue is then soaked with water and peeled from the pitcher, leaving affixed thereto the silver paste in design.
(f) The various designs on the pitcher are connected by a single tract of paste, and the pitcher ...