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Zenith Radio Corp. v. United States, 437 U.S. 443 (1978)

Zenith Radio Corp. v. United States

No. 77-539

Argued April 25, 1978

Decided June 21, 1978

437 U.S. 443


Petitioner, an American manufacturer of consumer electronic products, filed a petition with the Commissioner of Customs, requesting assessment under § 303 of the Tariff Act of 1930 of countervailing duties on various consumer electronic products exported from Japan to this country. Petitioner contended that the products benefited from bounties or grants paid or conferred by Japan because Japan imposes a commodity tax (an "indirect" tax) on those products when they are sold in that country, but "remits" the tax when the products are exported, any tax paid on the shipment of a product being refunded upon the subsequent exportation. Section 303 provides that, whenever a foreign country pays a "bounty or grant" upon the exportation of a product from that country, the Secretary of the Treasury (Secretary) must levy a countervailing duty "equal to the net amount of such bounty or grant" upon the importation of the product into the United States. After rejection of its request, petitioner filed suit in the Customs Court, claiming that the Treasury Department had erred in concluding that remission of the Japanese tax was not a bounty or grant within the purview of § 303. The Secretary contended that, since the remission of the tax was "nonexcessive" (i.e., not above the amount of the tax paid or otherwise due), § 303 did not require assessment of a countervailing duty. Relying on Downs v. United States, 187 U. S. 496, the Customs Court ruled in petitioner's favor. The Court of Customs and Patent Appeals reversed.

Held: Japan does not confer a "bounty or grant" within the meaning of § 303 on the consumer electronic products by failing to impose a commodity tax on those products when they are exported to this country, while imposing the tax on the products when they are sold in Japan. Downs v. United States, supra, distinguished. Pp. 437 U. S. 450-462.

(a) The Secretary's statutory interpretation that was followed in this case has been consistently maintained since the basic countervailing duty statute was enacted in 1897, and that administrative interpretation is entitled to great weight. See Udall v. Tallman, 380 U. S. 1, 380 U. S. 16. Pp. 437 U. S. 450-451.

(b) The legislative history of the statute suggests that the term

Page 437 U. S. 444

"bounty" was not intended to encompass the nonexcessive remission of an indirect tax. Pp. 437 U. S. 451-455.

(c) The Secretary's interpretation was reasonable in light of the statutory purpose of the countervailing duty, viz., offsetting the unfair competitive advantage that foreign products would otherwise enjoy from export subsidies paid by their governments. In deciding in 1898 that a nonexcessive remission of indirect taxes did not give the exporter an unfair competitive advantage, the Secretary permissibly viewed the remission as a reasonable measure for avoiding double taxation of exports -- once by the foreign country and once upon sale in this country. Pp. 437 U. S. 455-457.

(d) The Secretary's interpretation is as permissible today as it was in 1898. The statute has been reenacted five times with no modification of the relevant language, and the Secretary's position has been incorporated into an international agreement followed by every major trading nation in the world. It is not for the judiciary to substitute its views as to the fairness and economic effect of remitting indirect taxes. Pp. 437 U. S. 457-459.

(e) Downs v. United States, supra, did not involve the issue of whether a nonexcessive remission of taxes, standing alone, would have constituted a bounty on exportation, and is not dispositive of this case. Pp. 437 U. S. 459-462.

64 C.C.P.A. 130, 562 F.2d 1209, affirmed.

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

Page 437 U. S. 445

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