The opinion of the court was delivered by: MISHLER
This is an action for refund of taxes paid. Plaintiff is and was at all times relevant to this action a corporation organized under the laws of the State of New York and having its principal place of business at 61-50 Maurice Avenue, Queens, New York, within the Eastern District of New York. Plaintiff seeks the recovery of $10,094.49, principal and interest, that amount having been assessed against plaintiff as unpaid manufacturer's excise taxes for the period beginning on October 1, 1961 and ending December 31, 1966. Payment of the assessment was made in 1967 and a claim for refund was duly filed in 1968 on which no action has yet been taken by the Internal Revenue Service. Jurisdiction in this court is proper under 28 U.S.C. § 1346 (a) (1).
The case comes to this court on stipulated facts, the only issue being one of law.
Plaintiff makes and sells truck bodies. The bodies are made to order for plaintiff's customers, who purchase truck chassis and have them delivered to plaintiff's place of business in Queens. Plaintiff then builds the body, attaches it to the chassis, and delivers the finished truck to the customer.
Plaintiff has three classes of customers: 1. Consumers -- these are individuals or firms who use the truck purchased from plaintiff in their trade or business; 2. Retailers -- (Dealers) -- these are firms which resell the trucks purchased from plaintiff to others who actually use the trucks; 3. Renters -- these are individuals or firms which are in the business of renting or leasing trucks to other individuals or firms who use the trucks in their trade or business.
Plaintiff sells the same type of truck to each of the above classes of customers at the same price.1
In computing the excise tax due on its sales of truck bodies pursuant to 26 U.S.C. §§ 4061, 4216, plaintiff used as its tax base, during all the period in question, 100% of its sales price on sales to retailers and 75% of its sales price on sales to consumers and renters. The government denied the taxpayers' claim of 75% of the sales price to renters as its tax base and computed the assessment on 100% of the sales price to renters as the tax base for the imposition of the manufacturer's excise tax.
Plaintiff argues that the sales it made to renters were sales at retail within the meaning of 26 U.S.C. § 4216 and that it was thus allowed to use a constructive sales price in computing its excise tax liability on those sales. Plaintiff further argues that where there are no sales to wholesale distributors, as in its case, the proper constructive sales price to be used is 75% of the retail price.
Defendant admits, for the purposes of this suit only, that the sales to renters were sales at retail. (Defendant's Trial Brief, p. 4). However, defendant resorts to a complex argument to the effect that, even where plaintiff's sales to renters characterized as "retail" sales, the tax base for excise tax purposes should still be 100% of the sales price. Alternatively, defendant argues that if a constructive sales price is warranted, it should be established by the "cost plus 10 percent" rule.
The question presented to this court is thus how to establish a constructive sales price pursuant to 26 U.S.C. § 4216 (b) (1) where the price of the goods to consumers is the same as it is to retailers (i.e., at wholesale), and where there is no established course of trade between the manufacturer and wholesale distributors.
Since 1932 there have been provisions in the various revenue statutes and codes for a manufacturers' excise tax to be placed on sales by a manufacturer of automobile truck bodies.
In the 1954 Code, which is applicable to the instant case, the section which imposes the tax is § 4061 (a). The language of this statute is relatively simple:
(a) Automobiles -- There is hereby imposed upon the following articles (including in each case parts or accessories therefor sold on or in connection therewith or with the sale thereof) sold by the manufacturer, producer, or importer a tax ...