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February 1, 1971

UNITED STATES of America, Defendant

Augelli, Chief Judge.

The opinion of the court was delivered by: AUGELLI

Plaintiff seeks in this action to recover $29,567.19 paid by it to defendant as retailers' excise taxes for the years 1959 through 1964 and as delinquency return payments and interest relating to those taxes, together with statutory interest on any amounts found to be overpayment. By stipulation, defendant has conceded that plaintiff has exhausted its administrative remedies and that this suit for refund was timely filed. The Court's jurisdiction is invoked under 28 U.S.C. § 1346 (a). The matter has been submitted to the Court on cross-motions for summary judgment. The basic facts have been stipulated. Following oral argument, decision was reserved.

 The facts may be briefly summarized. The plaintiff, Overseas Mailman, Inc. (Overseas), is a New Jersey corporation, with its principal place of business in New Jersey, engaged in the business of offering promotional schemes to various domestic commercial businesses to be used by them in connection with the sale of their products. Overseas would establish connections with various foreign manufacturers of premium or gift items such as Italian Ceramic Ashtrays, Yugoslavian Dolls, German Black Forest Clocks, Cuckoo Clocks, and numerous other items. It would then contact American manufacturers and offer them such gift or premium items to be used as promotional schemes in connection with the sale of such manufacturers' usual products. Agreements were reached with the manufacturers, copies of which are attached to and made part of the stipulation. Typically, the American manufacturer would include a coupon with its own product, offering its customer an opportunity to purchase the foreign premium items. The present case involves the sale of certain German Black Forest Clocks and Cuckoo Clocks, items which both parties to the suit agree are included in the list of items taxable under Section 4001 of the Internal Revenue Code of 1954, 26 U.S.C. § 4001.

 In the promotional scheme, the retail consumer sent the accompanying coupon with a stated consideration to a Post Office Box maintained under the exclusive control of Overseas in Palisades Park, New Jersey. The address on the coupon for the post office box generally included the word "clock" in conjunction with some part of the name of the commercial business from which the purchaser obtained his coupon. There was no indication on such coupon that Overseas was involved in the transaction. Upon receipt of the coupon and proper payment from the consumer, Overseas, pursuant to its prior agreement with Franz Grieshaber, a German clock manufacturer, forwarded an addressed mailing label to him in Germany with a fixed payment for each clock ordered, which included postage and handling. The difference between each consumer's payment in the amount forwarded for the clock was retained by Overseas.

 Throughout the period from 1959 to 1964, the individual contracts between Overseas and the American manufacturers that were made part of the stipulation indicate that the price of the clocks to the consumer differed from time to time, and the amount of money paid by Overseas to Grieshaber likewise varied during this period. Overseas explained that these changes reflected the increased costs of manufacturing, handling and shipping charges. On receipt of the address label and the agreed upon consideration, Grieshaber shipped the clocks directly to the purchaser.

 The only obligation of the American manufacturers involved in these promotional schemes was to design, print and distribute the coupons and other advertising materials employed, and to forward to Overseas any communications received relating to the operation. These manufacturers entered into no direct agreements with Franz Grieshaber, except with respect to some of the contracts between Overseas and the manufacturers, Grieshaber would signify his consent to the terms of the contract by signing a copy.

 The written agreement which Overseas entered into with each of the manufacturers who agreed to this clock promotional scheme generally obligated Overseas:

(1) to warrant that Franz Grieshaber would have a certain quantity of German clocks available for shipment to the United States and that these clocks be of the same quality as a sample shown to said manufacturers;
(3) to assume all financial responsibility for transactions between purchasers and Overseas;
(4) to refund the full clock purchase price to any dissatisfied purchaser;
(5) to refund any import duty, tax or handling charges collected from any clock purchaser;
(6) to maintain product insurance against liabilities arising from personal injury or property damages caused by the clocks;
(7) to assure that all German clocks would be securely packaged and properly stamped in Germany;
(8) to assure that Grieshaber would, on receipt of the addressed mailing label and payment, promptly mail the clock to each purchaser in the United States; and
(9) to accept from purchasers a given price in full payment for each German clock, including ...

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