The opinion of the court was delivered by: FORMAN
The above suits were consolidated for trial, and involve actions for the recovery of excise taxes and interest paid by plaintiff upon the sale of Mennen Antiseptic Oil and Kora Konia. The question presented herein is whether or not these products are taxable as sales of toilet preparations within the meaning of Section 603 of the Revenue Act of 1932, 26 U.S.C.A. Int.Rev.Acts, page 608, providing as follows: "There is hereby imposed upon the following articles, sold by the manufacturer, producer, or importer, a tax equivalent to 10 per centum of the price for which so sold: Perfumes, essences, extracts, toilet waters, cosmetics, petroleum jellies, hair oils, pomades, hair dressings, hair restoratives, hair dyes, tooth and mouth washes (except that the rate shall be 5 per centum), dentrifices (except that the rate shall be 5 per centum), tooth pastes (except that the rate shall be 5 per centum), aromatic cachous, toilet soaps (except that the rate shall be 5 per centum), toilet powders, and any similar substance, article, or preparation, by whatever name known or distinguished; any of the above which are used or applied or intended to be used or applied for toilet purposes."
Article 22 of Treasury Regulations 46 promulgated pursuant to the above statute is as follows:
"The tax attaches to the sale by the manufacturer of the articles enumerated in section 603 and similar articles commonly or commercially known as toilet articles, which are used or applied, or intended to be used or applied, for toilet purposes. Any article advertised or held out to be suitable for toilet purposes, or for any purposes for which articles enumerated in the Act are customarily used, will be subject to the tax, regardless of the name by which it may be known or distinguished. The tax attached to the sale by the manufacturer of all preparations which are used or applied or intended to be used or applied for toilet purposes or used in connection with the bath or care of the body, or applied to the clothing as a perfume or to the body as a toilet article.The fact that any particular product, preparation, or substance coming within the scope of the Act may have, or be held out to have, a medicinal, stimulating, remedial, or curative value does not exempt it from the tax, if it is commonly used as an adjunct to the toilet or for toilet purposes.
"The tax will not attach to an article which is not a finished product or is not susceptible of use for toilet purposes but is only suitable for use in the manufacture of articles subject to tax, or to any article or substance which has only an incidental or occasional use as a toilet preparation.
"Toilet soap is taxable whether in the form of a liquid, semiliquid, paste, flake, powder, or cake. Soaps and soap powders advertised or held out as suitable for toilet purposes or for application to the body, or parts of the body, as cleansing agents are taxable. Tolet soap advertised or held out as having medicinal properties, medicated toilet soaps, shaving soaps, creams and powders, and shampoo soaps and soap powders are taxable. A soap used chiefly for removing grease and stains from the hands, though capable of incidental use for cleaning kitchen utensils, is taxable as a toilet soap.Soaps which are made, advertised, held out, and sold primarily for general cleaning or laundry purposes, but which may have an incidental and trivial use as a toilet soap, are not taxable unless advertised or held out as suitable for toilet purposes. Shampoo oils and liquids not containing saponaceous matter are taxable as toilet preparations."
Plaintiff in 1930 placed on the market Mennen Oil to be used in the bath of the newborn baby. Newborn babies sleep about twenty hours daily, and consequently their bodies become dehydrated and their skins dried. In addition, their skins are susceptible to irritations and diseases. Since soap and water baths might have a deleterious effect upon the delicate, infantile skin, oil baths are used in the sanitation of their bodies.Incidentally, there is no novelty in this because as early as Biblical days this method was employed by the Egyptians.It serves as a lubricant for dried skin as well as a cleanser in that it loosens foreign matter attached to the skin which may then be rubbed off.
Shortly after Mennen Oil was placed on the market hospitalization of maternity cases increased and with the view that a medicated oil would prevent the dissemination of contagious skin diseases throughout the nurseries, and would be more appealing to the buying public, plaintiff substituted Mennen Antiseptic Baby Oil for its original product, its name later being changed to Mennen Antiseptic Oil because experience proved that it could be used by adults as well.
It is a compound of peanut oil (in substitution for sesame oil), cottonseed oil and mineral oil, slightly perfumed, containing three active ingredients; hydroquinone (the bactericide), hydroxyquinone (an antiseptic which also prevents rancidity), and chlorbutanol (which prevents itching and burning). The product is a little over 99% oil, and its medicinal ingredients and perfumery constitute less than 1%.
Plaintiff recommends this product for the following uses:
"Prevention and cure of impetigo of the newborn, prevention and cure of diaper rash, prevention and cure of milk crust cradle cap,
"Prickly heat or heat ...