Anheuser-Busch Brewing Assn. v. United States
28 S. Ct. 204, 1908 U.S. LEXIS 1414, 207 U.S. 556 (1908)
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Rule of Law:
For an imported material to be considered "manufactured" into a new article under tariff law, it must be transformed into a new and different article with a distinctive name, character, or use. Merely cleaning, preparing, or treating an article for its ultimate use does not constitute manufacturing if it does not fundamentally change the article itself.
Facts:
- Anheuser-Busch Brewing Association imported corks from Spain, on which it paid customs duties, for use in bottling its export beer.
- After importation, Anheuser-Busch subjected the corks to an extensive treatment process to make them suitable for preserving beer during export.
- The process involved selecting and sorting the corks, branding them, removing dust and germs through an air fan, and then washing and steaming them.
- The corks were then put into a chemical bath of glycerine and alcohol, which was a trade secret, to close up pores and prevent a 'cork taste' in the beer.
- This multi-day treatment was necessary to make the corks soft, elastic, and airtight, ensuring the beer would not spoil or lose carbonation.
- Anheuser-Busch then used these treated corks to seal bottles of beer, which were subsequently exported from the United States.
Procedural Posture:
- Anheuser-Busch Brewing Association filed a claim for $27,000 against the United States in the Court of Claims.
- The claim sought a drawback (refund) of customs duties paid on imported corks used in its exported beer, arguing the treated corks were manufactured articles.
- The Court of Claims decided against Anheuser-Busch and dismissed its petition.
- Anheuser-Busch appealed the judgment of the Court of Claims to the Supreme Court of the United States.
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Issue:
Does the process of cleaning, treating, and coating imported corks to make them suitable for bottling export beer constitute a "manufacture" of a new article under the Tariff Act of 1890, thereby entitling the exporter to a drawback on the duties paid for the raw corks?
Opinions:
Majority - Mr. Justice McKenna
No, the process of cleaning and treating imported corks does not constitute a 'manufacture' of a new article under the Tariff Act. To qualify as 'manufacture,' a process must result in a transformation where a new and different article emerges, having a distinctive name, character, or use. The court's reasoning, relying on the precedent set in Hartranft v. Wiegmann, is that 'manufacture implies a change, but every change is not manufacture.' Here, the extensive treatment was merely a preparation of the corks for their intended purpose; a cork that has been cleaned, steamed, and coated is still fundamentally a cork. It has not been transformed into a new article. The court characterized the process as preparing the 'encasement of the beer,' not creating a new product from the imported material, and thus Anheuser-Busch was not entitled to a drawback.
Analysis:
This case solidifies the legal definition of 'manufacture' for the purpose of customs and tariff law, particularly concerning drawback provisions. It establishes a high bar, requiring a fundamental transformation rather than mere preparation or improvement of an article. The decision limits the ability of companies to claim drawbacks for processes that, while essential for their final product, do not create a genuinely new and different intermediate article. This precedent has guided subsequent interpretations of 'manufacture' in tax, customs, and intellectual property contexts, emphasizing the need for a substantial change in an item's identity.
