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June 14, 1968


The opinion of the court was delivered by: Marovitz, District Judge.


This is an action seeking refund from the United States, of manufacturers' excise taxes assessed and collected pursuant to the provisions of Section 3406(a)(1) of the Internal Revenue Code of 1939, and Section 4161 of the Internal Revenue Code of 1954.*fn1 The original complaint of plaintiff Norton Manufacturing Company, relied on 23 separate claims for refund filed with the Internal Revenue Service. All of such claims were disallowed by the Commissioner. The parties have since stipulated that claims 1-10 were not filed timely enough, so that only claims 11-23, which total $50,422.51,*fn2 remain for decision. The parties have filed cross-motions for summary judgment. Plaintiff's motion is supported by several affidavits and a number of documentary exhibits. The parties have agreed to a stipulation of facts, which sets forth all of the essential facts, and presents the narrow issue involved.

The dispute is essentially a semantic one. Section 4161 provides for the collection of a 10% manufacturers' excise tax "upon the sale of fishing rods, creels, reels, and artificial lures, baits and flies (including parts or accessories of such articles sold on or in connection therewith, or with the sale thereof) * * *".

For about twenty years, plaintiff has been in the business of importing lengths of bamboo cane, which fall into two classifications; those eight to ten feet long, and those eleven feet or longer. The eight to ten foot lengths are cut into two sections by plaintiff, and the longer lengths are cut into three sections. The lengths of bamboo are cleaned, straightened, if necessary, and ordinarily varnished. After cutting they are fitted with either brass, aluminum or steel ferrules of a screw-lock type or of a tapered self-locking type. A small wire loop is fitted at the far end of the last piece of the bamboo, which is used to tie or secure a fishing line. The fisherman merely locks the lengths together before using. The bamboo is cut into lengths solely for ease of transportation, but performs exactly the same fishing function as would an uncut length of bamboo.

Plaintiff contends that its product constitutes a "fishing pole" rather than a "fishing rod," and is not subject to the tax imposed by sections 3406(a)(1) and 4161.

An identical factual situation has previously been presented to two United States' Courts of Appeal, which have reached opposing conclusions on the issue. In Commerce-Pacific Inc. v. United States, 278 F.2d 651 (9th Cir. 1960), the Ninth Circuit upheld the district court's finding that jointed bamboo cane poles, virtually identical to the ones in issue, constituted "fishing rods" and were subject to the § 3406 excise tax. On the other hand, in Simmons v. United States, 308 F.2d 938 (5th Cir. 1962), the Fifth Circuit reversed the district court's entry of a directed verdict to the effect that identical poles constituted "fishing rods" under § 3406 as a matter of law. Although not expressly ruling on the merits, and only holding that at least a question of fact for the jury existed, the Court strongly asserted its own view that jointed bamboo poles are not "fishing rods" subject to taxation.

The question is pre-eminently one of statutory interpretation. But the legislative history affords little clue to the intent of the lawmakers, if indeed there was any consideration of the scope of the term "fishing rods". In 1918, Congress first imposed excise taxes on sporting goods. Included were "fishing rods and reels" and the statute ended with a catch-all clause including "and all similar articles commonly or commercially known as sporting goods". The tax was repealed, but was re-enacted in 1932, again reciting "fishing rods and reels" with the same catch-all phrase. The 1932 tax was repealed in 1938.

The Internal Revenue Act of 1941, which amended the 1939 Code, again imposed an excise tax, but the phrase used in the Act was enlarged to "fishing rods, creels, reels, and artificial lures, baits and flies" (the same as the present statute), and this time there was not a catch-all clause. This was Section 3406(a)(1) of the 1939 Code. In proceedings before the House Ways and Means Committee, Congressman Reed stated on June 30, 1941: "The tax will be imposed on a specific list of items, as set forth in the Bill rather than on sporting goods as a class. This is to avoid confusion." 87 Cong.Rec. 6486, 77th Cong., 1st Sess.

The 1954 Internal Revenue Code carried over the same language used in the 1941 amendment to the 1939 Code, and changed the section number to 4161.

In 1965, the excise tax on all classes of sporting goods was repealed except as to "fishing rods, creels, reels and artificial lures, baits and flies". The Senate Finance Committee Report on Pub.L. 89-44 explained that the 1941 excise tax had singled out certain items of sporting equipment for taxation, and left other items untaxed, which represented a discriminatory tax on limited forms of recreation. The Bill before Congress eliminated this source of discriminatory tax treatment on all of the sporting goods items except "fishing rods, creels, reels and artificial lures, baits and flies". The Report explains that the tax on fishing rods, etc., was retained because the revenue therefrom was distributed to aid the states in their conservation programs, pursuant to 16 U.S.C. § 777b.

The history offers no explicit help in resolving the issue before the Court. However, it makes clear that § 4161 and its predecessor were designed to impose a tax on a "specific list of items". The law is relatively clear that a taxing provision, as opposed to an exemptive provision, should be construed strictly against the Government and any doubt should be resolved in favor of the taxpayer. Gould v. Gould, 245 U.S. 151, 38 S.Ct. 53, 62 L.Ed. 211 (1917); Tandy Leather Co. v. United States, 347 F.2d 693 (5th Cir. 1965); The Cordon v. United States, 46 F.2d 719, 723 (Ct.Cl. 1931); 1 Mertens, Law of Federal Income Taxation, § 3.07; Cf. Endler v. United States, 110 F. Supp. 945 (D.N.J. 1953).

In Commerce-Pacific, unlike this case, the plaintiff conceded that construction of the words of the statute should be based on their ordinary and everyday meaning. On that basis, the court essentially applied a dictionary definition test to the issue. The dictionary used*fn3 contained the following definitions: "Rod; a support for a fishing line, a fish pole". "Fishing Pole; a slender tapering pole to which a line is attached, used in fishing". "Fishing Rod; a springy tapering rod of wood, split bamboo, steel etc., made with several joints and used in fishing". (emphasis added). In finding for the Government, the Court placed emphasis upon the absence of the term "joints" from the definition of "fishing pole", and stressed the similarity between the definition of fishing rods, which included "joints", and the construction of the jointed bamboo poles in issue. It concluded that the district court's finding of fact on the issue was not "clearly erroneous", and should be affirmed.

Of course, this Court, as a trial court, is not confronted by the same issue as an appellate court reviewing a lower court's finding of fact. We must only determine as a matter of law, an ultimate issue of "fact", as to the construction of a statute. Plaintiff contends, first, that we should ahere to the rationale of Simmons over that of Commerce-Pacific, and second, that under either a standard of ordinary and ...

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