CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE NINTH CIRCUIT.
Stone, Roberts, Black, Reed, Frankfurter, Douglas, Murphy, Jackson, Rutledge
MR. JUSTICE BLACK delivered the opinion of the Court.
This is a suit for refund of a portion of the manufacturers' excise tax on tires paid by the Pacific Goodrich Rubber Company, petitioner's wholly owned subsidiary, pursuant to § 602 of the Revenue Act of 1932.*fn1 The District Court's judgment was for the Government, 48 F.Supp. 453, and the Circuit Court of Appeals affirmed.
F.2d 456. Certiorari was granted on a petition which alleged that the Circuit Court's affirmance rested on its erroneous decision of procedural questions. We were asked in the petition to pass upon these issues: (1) Whether there was a material variance between the claim which had been denied by the Commissioner and that sued upon in the District Court. See R. S. § 3226, as amended; United States v. Andrews, 302 U.S. 517. (2) Whether, if there was such a variance, it had been, or could have been, waived by the Government in the proceedings in the District Court. See United States v. Garbutt Oil Co., 302 U.S. 528. Argument at the bar and in the briefs of both parties was not, however, limited to these narrow procedural problems but also dealt with the merits of the claim for refund. This argument has disclosed that, regardless of the procedural questions, the judgment in favor of the Government can be supported on the ground that under the controlling tax statutes petitioner's claim has no merit. See Helvering v. Gowran, 302 U.S. 238, 245. We pass at once to a consideration of that decisive issue.
Petitioner claims it is entitled to the tax refund under provisions of the Agricultural Adjustment Act.*fn2 Section 9 (a) of that Act authorized the imposition of a "processing tax" on the "first domestic processing" of basic agricultural commodities, including cotton. A proviso at the end of the section granted to manufacturers of certain products, including tires, a deduction from the excise tax on those products because of the payment of the "processing tax" on the cotton used in them.*fn3 Another section
of the Act, § 16, imposed a different tax, equal to the processing tax, on articles held in floor stocks on a certain date for sale or other disposition which articles had been "processed wholly or in chief value" from a basic agricultural commodity.*fn4 This latter section did not grant any deduction from the manufacturers' excise tax because of the floor stocks tax. Nevertheless when the Pacific Goodrich Rubber Company computed its manufacturers' excise tax on tires it claimed deduction on account of the tax which it had paid on floor stocks of cotton fabrics. The Commissioner disallowed the deduction on the ground that, while deductions were allowable for cotton on which a "processing tax" had been paid under § 9 (a), they were not allowable for cotton on which a tax on floor stocks had been paid under § 16. This suit is based on the premise that the deduction proviso of § 9 (a) should be read into § 16.
Within the literal meaning of the Agricultural Adjustment Act a tax on floor stocks was not a "processing tax," and therefore the proviso in § 9 (a) which spoke only of a "processing tax" on cotton was not literally applicable to the tax on floor stocks imposed under § 16. The tax on floor stocks, though complementing the processing tax, was not a tax upon the "processing" of an agricultural commodity but upon articles already processed from such a commodity and held for sale or other disposition on the date when the processing tax on the commodity went into effect. Although the literal language of the Act does not authorize the deduction which it claims, petitioner contends that the purpose of Congress to relieve tire manufacturers from so-called "double taxation" on cotton contained in tires will be defeated*fn5 unless we read into § 16 the proviso of § 9 (a).
With this contention we cannot agree. In the form in which the Agricultural Adjustment Act was introduced in Congress, neither § 9 (a), which authorized the "processing tax," nor § 16, which authorized the floor stocks tax, contained a proviso granting a deduction from the manufacturers' excise tax.*fn6 But § 16 of the bill did provide that under specified circumstances taxpayers subject to the floor stocks tax would be entitled to a tax adjustment in the ...