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ZENITH RADIO CORP. v. UNITED STATES

decided: June 21, 1978.

ZENITH RADIO CORP
v.
UNITED STATES



CERTIORARI TO THE UNITED STATES COURT OF CUSTOMS AND PATENT APPEALS.

Marshall, J., delivered the opinion for a unanimous Court.

Author: Marshall

[ 437 U.S. Page 445]

 MR. JUSTICE MARSHALL delivered the opinion of the Court.

Under § 303 (a) of the Tariff Act of 1930, 46 Stat. 687, as amended, 19 U. S. C. § 1303 (a) (1976 ed.), whenever a foreign country pays a "bounty or grant" upon the exportation of a product from that country, the Secretary of the Treasury is required to levy a countervailing duty, "equal to the net amount of such bounty or grant," upon importation of the product into the United States.*fn1 The issue in this case is whether Japan confers a "bounty" or "grant" on certain consumer electronic products by failing to impose a commodity tax on those products when they are exported, while imposing the tax on the products when they are sold in Japan.

[ 437 U.S. Page 446]

     I

Under the Commodity Tax Law of Japan, Law No. 48 of 1962, see App. 44-48, a variety of consumer goods, including the electronic products at issue here, are subject to an "indirect" tax -- a tax levied on the goods themselves, and computed as a percentage of the manufacturer's sales price rather than the income or wealth of the purchaser or seller. The Japanese tax applies both to products manufactured in Japan and to those imported into Japan.*fn2 On goods manufactured in Japan, the tax is levied upon shipment from the factory; imported products are taxed when they are withdrawn from the customs warehouse. Only goods destined for consumption in Japan are subject to the tax, however. Products shipped for export are exempt, and any tax paid upon the shipment of a product is refunded if the product is subsequently exported. Thus the tax is "remitted" on exports.*fn3

In April 1970 petitioner, an American manufacturer of consumer electronic products, filed a petition with the Commissioner of Customs,*fn4 requesting assessment of countervailing duties on a number of consumer electronic products exported from Japan to this country.*fn5 Petitioner alleged that Japan

[ 437 U.S. Page 447]

     had bestowed a "bounty or grant" upon exportation of these products by, inter alia, remitting the Japanese Commodity Tax that would have been imposed had the products been sold within Japan. In January 1976, after soliciting the views of interested parties and conducting an investigation pursuant to Treasury Department regulations, see 19 CFR § 159.47 (c) (1977), the Acting Commissioner of Customs published a notice of final determination, rejecting petitioner's request. 41 Fed. Reg. 1298 (1976).*fn6

Petitioner then filed suit in the Customs Court, claiming that the Treasury Department had erred in concluding that remission of the Japanese Commodity Tax was not a bounty or grant within the purview of the countervailing-duty statute.*fn7 The Department defended on the ground that, since the remission of indirect taxes was "nonexcessive," the statute did not require assessment of a countervailing duty. In the Department's terminology, a remission of taxes is "nonexcessive" if it does not exceed the amount of tax paid or otherwise due; thus, for example, if a tax of $5 is levied on goods at the factory, the return of the $5 upon exportation would be "nonexcessive," whereas a payment of $8 from the government to the manufacturer upon exportation would be "excessive" by $3. The Department pointed out that the current

[ 437 U.S. Page 448]

     version of § 303 is in all relevant respects unchanged from the countervailing-duty statute enacted by Congress in 1897,*fn8 and that the Secretary -- in decisions dating back to 1898 -- has always taken the position that the nonexcessive remission of an indirect tax is not a bounty or grant within the meaning of the statute.*fn9

On cross-motions for summary judgment, the Customs Court ruled in favor of petitioner and ordered the Secretary to assess countervailing duties on all Japanese consumer electronic

[ 437 U.S. Page 449]

     products specified in petitioner's complaint. 430 F.Supp. 242 (1977). The court acknowledged the Secretary's longstanding interpretation of the statute. It concluded, however, that this administrative practice could not be sustained in light of this Court's decision in Downs v. United States, 187 U.S. 496 (1903), which held that an export bounty had been conferred by a complicated Russian scheme for the regulation of sugar production and sale, involving, among other elements, remission of excise taxes in the event of exportation.

On appeal by the Government, the Court of Customs and Patent Appeals, dividing 3-2, reversed the judgment of the Customs Court and remanded for entry of summary judgment in favor of the United States. 64 C. C. P. A. 130, 562 F.2d 1209 (1977). The majority opinion distinguished Downs on the ground that it did not decide the question of whether nonexcessive remission of an indirect tax, standing alone, constitutes a bounty or grant upon exportation. The court then examined the language of § 303 and the legislative history of the 1897 provision and concluded that, "in determining whether a bounty or grant has been conferred, it is the economic result of the foreign government's action which controls." 64 C. C. P. A., at 138-139, 562 F.2d, at 1216. Relying primarily on the "long-continued" and "uniform" administrative practice, id., at 142-143, 146-147, 562 F.2d, at 1218-1219, 1222-1223, and secondarily on congressional "acquiescence" in this practice through repeated re-enactment of the controlling statutory language, id., at 143-144, 562 F.2d, at 1220, the court held that interpretation of "bounty or grant" so as not to include a nonexcessive remission of an indirect tax is "a lawfully permissible interpretation of § 303." Id., at 147, 562 F.2d, at 1223.

We granted certiorari, 434 U.S. 1060 (1978), and we now affirm.

[ 437 U.S. Page 450]

     II

It is undisputed that the Treasury Department adopted the statutory interpretation at issue here less than a year after passage of the basic countervailing-duty statute in 1897, see T. D. 19321, 1 Synopsis of [Treasury] Decisions 696 (1898), and that the Department has uniformly maintained this position for over 80 years.*fn10 This ...


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