The opinion of the court was delivered by: COOPER
Plaintiff taxpayer and the Government each moves for summary judgment in its favor pursuant to Rule 56, F.R.Civ.P., 28 U.S.C.A. Upon these cross-motions, the basic issue raised is whether § 4061 of the Internal Revenue Code of 1954, 26 U.S.C.A. § 4061, authorizes imposition of an excise tax on the initial sale in this country of foreign cars irrespective of whether such imported cars are used or new.
Plaintiff, a New York corporation hereinafter referred to as 'Slavenburg,' commenced this action in October, 1961, challenging the validity of certain manufacturers' or importers' excise taxes assessed against it and collected by the Government for the second and third quarters of 1960 pursuant to § 4061 of the Internal Revenue Code of 1954.
In essence, the burden of the complaint is that the Government improperly and without authority applied the excise tax provisions of § 4061 to sales by Slavenburg in the United States of several hundred allegedly 'used' Volkswagens manufactured in and imported from Germany. Plaintiff asserts that this tax may not lawfully be levied on the sale of such 'used' cars and accordingly seeks to recover the sum of $ 37,650.45, which it contends the Government erroneously assessed and collected, plus interest.
Jurisdiction is invoked and plainly exists under the provisions of 28 U.S.C.A. § 1346(a)(1), which provides that
'The district courts shall have original jurisdiction, concurrent with the Court of Claims, of any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, * * *.'
Concededly, Slavenburg engaged in commercial financing in connection with the importing of foreign cars to the United States for sale to automobile dealers and the public. During 1960, Slavenburg financed the importation of at least 264 Volkswagens from West Germany for sale in this country; and the tax authorities determined that the sales of these cars in the United States would be taxable under 4061 of the Internal Revenue Code of 1954.
Thereafter, while the cars were in the possession of Ocean Imports, Inc., the District Director of Internal Revenue found that collection of the taxes was in jeopardy; and accordingly he caused jeopardy assessments to be made and levied upon the 264 Volkswagens.
Slavenburg, which claimed either ownership of or a security interest in the Volkswagens entitling it to possession, sought to have the vehicles released from the liens and levies of the Government in order that it might sell them. Consequently, Slavenburg entered into an agreement with the District Director in which it consented to payment of the excise tax upon its sales of the Volkswagens and explicitly acknowledged and recognized that under the prevailing circumstances it would be deemed the 'importer' for such excise tax purposes. (See Exhibit 1.) In connection with these sales, Slavenburg subsequently paid to the District Director of Internal Revenue, Newark, New Jersey, the sum of $ 37,650.45, which it now seeks to recover.
As the complaint discloses, plaintiff nowhere disputes its status as 'importer' for excise tax purposes under these circumstances; and no genuine issue of triable fact exists in that respect. See, also, 26 U.S.C.A. § 4219.
The sole basis upon which plaintiff challenges the legality of the excise tax imposed upon its sales of the Volkswagens is the contention that the tax does not apply to the sale of 'used' or 'second-hand' imported cars. (See Complaint, para. para. 5, 9)
Upon this ground, plaintiff filed a timely claim for refund of the $ 37,650.45, plus interest, with the District Director of Internal Revenue, Newark, New Jersey. By letter dated May 5, 1961, however, the District Director disallowed plaintiff's claim, ruling that the excise tax applied to the initial sales in the United States of used imported cars and further that, in any event, the automobiles in question were actually new automobiles. On June 20, 1961, the District Director served plaintiff by certified mail with an official notice of such disallowance; and on October 4, 1961 plaintiff commenced this suit.
Plaintiff contends First, that § 4061 of the Internal Revenue Code of 1954 imposes no tax upon the sale of used or second-hand imported automobiles and, Second, that the particular Volkswagens it sold were used or second-hand cars, and hence not subject to excise tax upon their sale in this country.
The Government on the other hand asserts that the tax imposed by § 4061 applies to the initial sale in the United States of all imported cars, regardless of whether they are new or second-hand.
In addition, the Government also takes the position that the imported Volkswagen automobiles sold by ...