Before HASTINGS, Chief Judge, and DUFFY and SCHNACKENBERG, Circuit Judges.
SCHNACKENBERG, Circuit Judge.
Following our reversal (266 F.2d 58, 267 F.2d 802) of a judgment of the district court in favor of Cory Corporation, a Delaware corporation, in consolidated suits for refund of excise taxes collected on sales of air conditioners in 1954 and 1955, the United States Supreme Court, 363 U.S. 709, 80 S. Ct. 1331, 4 L. Ed. 2d 1508, revered this court, and held, at page 711, 80 S. Ct. 1333 that the horsepower test is a permissible on and that the revenue rulings which were in force from 1948 to 1959 were not void. The Supreme Court mentioned, at page 712, 80 S. Ct. at page 1333 that the district court had found that "Among engineers, the horsepower of a motor does not mean its nominal horsepower rating but means the actual horsepower which the motor will deliver continuously under its full normal load". It pointed out that we did not reach that question nor review that finding in view of our conclusion that the horsepower test was not valid. The case was remanded to this court for consideration of that and any other questions which may remain.
1. Accordingly, on this record, we accept the horsepower test as valid. The question then arises whether the Commissioner, in applying that test, adopted the engineers' definition of the horsepower of a motor as the actual horsepower which the motor will deliver continuously under its full normal load, or its nominal horsepower rating. We shall refer to these measurements as the "actual horsepower" and "rated horsepower" tests respectively.
Under date of September 26, 1947, the Commissioner, having solicited the views of the air conditioning industry, received a letter from the Air Conditioning and Refrigerating Machinery Association, reading, in part, as follows:
"The term 'self-contained' is one which has had a broad and somewhat loose connotation as a trade term in the industry. It has been applied to the small, portable air conditioner, and it has been used to describe a thousand-horsepower centrifugal refrigeration unit such as is used for air conditioning purposes. It seems probable that, in writing Section 3405(c) of the Internal Revenue Code [26 U.S.C.A. § 3405(c)], Congress used the term 'self-contained air conditioner' in attempting to describe the portable, plug-in electric appliance known as a room air conditioner, similar in general concept to the commonly-used household refrigerator.
"For purposes of taxation, it is desirable that there be available a definition, as exact as possible, of the article subject to tax.The only truly 'self-contained air conditioner' being marketed today, so far as we know, is the room air conditioner (room cooler). * * *"
On December 12, 1947, Deputy Commissioner Bliss wrote the York Corporation, a manufacturer of air conditioners:
"* * * The Bureau has recently had occasion to re-examine its position with respect to the scope of the tax on 'self-contained air-conditioning units' imposed under section 3405(c) of the Internal Revenue Code with a view to determining whether it would be possible to formulate a legally sound definition of the term which could be simply applied and which would have uniform application throughout the air-conditioning industry.
"From a consideration of section 3405(c), it appears that the law could, with justification and without regard to other factors, be interpreted to include within its scope any air-conditioning assembly which is so constructed that all of its mechanical components are housed in a single cabinet. To give effect to such an interpretation of the law, the term 'self-contained air-conditioning unit' could be defined as follows:
"'A self-contained air-conditioning unit within the meaning of section 3405(c) of the Internal Revenue Code is an encased assembly of a condensing unit with other components which serves as a means for ventilation and for cooling, dehumidifying, cleaning, and circulating air.'
"The foregoing definition does not take into consideration such additional factors as to whether the unit may be installed in the room to be conditioned and may be used without ducts for the distribution or return of the conditioned air. One of the principal difficulties in the way of formulating a definition which would give effect to these additional factors and which, at the same time, would be susceptible of fair and easily understood application in the industry is the variety of conditioning units being manufactured and the varied claims made by manufacturers with respect to the functioning and use of the units produced by them. In general, however, it is believed from the information available that these additional factors may be fairly reduced to a test expressed in terms of the rated horsepower capacity of the compressor motor used in the air-conditioning unit. If these additional factors are to be taken into consideration in fixing the scope of the law, the term 'self-contained air-conditioning unit' could be defined as follows:
"'A self-contained air-conditioning unit within the meaning of section 3405(c) of the Internal Revenue Code is an encased assembly of a condensing unit with other components which (1) has a compressor motor, the rated capacity of which is 5 h.p. or less, and (2) serves as a means for ventilation and for cooling, dehumidifying, cleaning, and circulating air.'
"The Bureau desires to extend to the industry an opportunity to be heard and to express its views in the matter. Accordingly, the Bureau would appreciate receiving a statement of your views at the earliest practicable date. Similar letters are being addressed to each manufacturer of air-conditioning units of which there is a record in this office." (Italics supplied.)
Replying to that letter, the York Corporation on January 15, 1948, wrote to the Commissioner a detailed letter, offering a definition of a self-contained air conditioner, within the meaning of § 3405(c):
"* * * 'A self-contained air conditioner, within the meaning of section 3405(c) of the Internal Revenue Code, is a factory made encased assembly primarily designed for free delivery of air, and for installation in a window or in front of a window; containing means for moving outside air through its condenser; and having means for ventilation and for cooling, dehumidifying, cleaning, and circulating the air of a room; and having a total motor horsepower of less than one horsepower or a total cooling capacity of less than 10,000 Btu's per hour at standard American Society of Refrigerating Engineers test conditions as set forth in ASRE Circular No. 16 dated June 1940.'
"We believe the suggested definition is sufficiently broad in its scope to include without exception all selfcontained air conditioning units which are now being manufactured. The definition gives recognition to the fact that some units function by means other than electric motor driven compressors. The horsepower limitation was inserted for purpose of facilitating administration, inasmuch as it is not feasible from an engineering standpoint to employ a motor of greater horsepower capacity in a self-contained air conditioning unit.
"* * * we attended a special meeting called of industry members at which time the problem was discussed fully.
"The definition that we have suggested was unanimously adopted by all who attended, and was formulated with the realization of the administrative problems involved as well as the fundamental question of what constitutes a self-contained air conditioning unit as the ...