Section 601 is as follows:

"SEC. 601. EXCISE TAXES OF CERTAIN ARTICLES.

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(a) In addition to any other tax or duty imposed by law, there shall be imposed a tax as provided in subsection (c) on every article imported into the United States unless treaty provisions of the United States otherwise provide.

"(b) The tax imposed under subsection (a) shall be levied, assessed, collected, and paid in the same manner as a duty imposed by the Tariff Act of 1930, and shall be treated for the purposes of all provisions of law relating to the customs revenue as a duty imposed by such Act, except that

(1) the value on which such tax shall be based shall be the sum of (A) the dutiable value (under section 503 of such Act) of the article, plus (B) the customs duties, if any, imposed thereon under any provision of law;

"(2) for the purposes of section 489 of such Act (relating to additional duties in certain cases of undervaluation) such tax shall not be considered an ad valorem rate of duty or a duty based upon or regulated in any manner by the value of the article, and for the purposes of section 336 of such Act (the so-called flexible tariff provision) such tax shall not be considered a duty;

"(3) such tax shall not be imposed upon any article imported prior to the date on which this title takes effect; "(4) no drawback of such tax (except tax paid upon the importation of an article described in subsection (c) (4), (5), (6), or (7), shall be allowed under section 313 (a), (b), or (f) of the Tariff Act of 1930 or any provision of law allowing a drawback of customs duties on articles manufactured or produced with the use of duty-paid materials;

(5) such tax (except tax under subsection (c) (4) to (7), inclusive) shall be imposed in full notwithstanding any provision of law granting exemption from or reduction of duties to products of any possession of the United States; and for the purposes of taxes under subsection (c) (4) to (7), inclusive, the term "United States " includes Puerto Rico."

(c) There is hereby imposed upon the following articles sold in the United States by the manufacturer or producer,

or imported into the United States, a tax at the rates hereinafter set forth, to be paid by the manufacturer, producer, or importer.

"(1) Lubricating oils, 4 cents a gallon; but the tax on the articles described in this paragraph shall not apply with respect to the importation of such articles.

"(2) Brewer's wort, 15 cents a gallon. Liquid malt, malt syrup, and malt extract, fluid, solid, or condensed, made from malted cereal grains in whole or in part, unless sold to a baker of use in baking or to a manufacturer or producer of malted milk, medicinal products, foods, cereal beverages, or textiles, for use in the manufacture or production of such products, 3 cents a pound. For the purposes of this paragraph liquid malt containing less than 15 per centum of solids by weight shall be taxable as brewer's wort.

"(3) Grape concentrate, evaporated grape juice, and grape syrup (other than finished or fountain syrup), if containing more than 35 per centum of sugars by weight, 20 cents a gallon. No tax shall be imposed under this paragraph.

"(A) upon any article which contains preservative sufficient to prevent fermentation when diluted, or

"(B) upon any article sold to a manufacturer or producer of food products or soft drinks for use in the manufacture or production of such products.

"(4) Crude petroleum, 1⁄2 cent per gallon; fuel oil derived from petroleum, gas oil derived from petroleum, and all liquid derivatives of crude petroleum, except lubricating oil and gasoline or other motor fuel, 1⁄2 cent per gallon; gasoline or other motor fuel, 212 cents per gallon; lubricating oil, 4 cents per gallon; paraffin and other petroleum wax products, 1 cent per pound. The tax on the articles described in this paragraph shall apply only with respect to the importation of such articles.

"(5) Coal of all sizes, grades, and classifications (except clum and duff), coke manufactured therefrom; and coal or coke briquettes, 10 cents per 100 pounds. The tax on the articles described in this paragraph shall apply only with respect to the importation of such articles, and

shall not be imposed upon any such article if during the preceding calendar year the exports of the articles described in this paragraph from the United States to the country from which such article is imported have been. greater in quantity then the imports into the United States from such country of the articles described in this paragraph.

"(6) Lumber, rough, or planed or dressed on one or more sides, except flooring made of maple (except Japanese maple), birch, and beech, $3 per thousand feet, board measure; but the tax on the articles described in this paragraph shall apply only with respect to the importation of such articles.

"(7) Copper-bearing ores and concentrates and articles provided for in paragraph 316, 380, 381, 387, 1620, 1634, 1657, 1658, or 1659 of the Tariff Act of 1930, 4 cents per pound on the copper contained therein: Provided, That no tax under this paragraph shall be imposed on copper in any of the foregoing which is lost in metallurgical processes: Provided further, That ores or concentrates usable as a flux or sulphur reagent in copper smelting and/or converting and having a copper content of not more than 15 per centum, when imported for fluxing purposes, shall be admitted free of said tax in an aggregate amount of not to exceed in any one year 15,000 tons of copper content. All articles dutiable under the Tariff Act of 1930, not provided for heretofore in this paragraph, in which copper (including copper in alloys) is the component material of chief value, 3 cents per pound. All articles dutiable under the Tariff Act of 1930, not provided for heretofore in this paragraph, containing 4 per centum or more of copper by weight, 3 per centum ad valorem or 34 of 1 per cent per pound, whichever is the lower. The tax on the articles described in this paragraph shall apply only with respect to the importation of such articles. The Secretary is authorized to prescribe all necessary regulations for the enforcement of the provisions of this paragraph."

The question presented is whether coal imported from Great Britain, Germany, and other countries with which

we have most favored nation treaties will be exempted from the tax provided for in section 601 (c) (5) of the Revenue Act of 1932 because of the existence of these treaties and because of the provision in section 601 (a) of the Revenue Act that the import taxes prescribed by section 601 shall be imposed "unless treaty provisions of the United States otherwise provide."

It appears from documents forwarded to me by the Secretary of the Treasury that during the calendar year 1931 exports of American coal into Canada were greater in quantity than imports of coal into the United States, and that the import tax prescribed in the above paragraph numbered five has not been imposed on imports of Canadian coal.

With respect to Great Britain and Germany, the balance of trade on coal during the calendar year 1931 was not in favor of the United States, and therefore coal imported from those countries was, during several months after the statute became effective, considered subject to import tax. Later, upon consideration of protests and diplomatic representations through the State Department, it was determined by the Treasury, under date of November 14, 1932 (T. D. 45991-6), that coal imported from Great Britain and Germany is exempt from the import tax by reason of the most favored nation clauses contained in the treaties between those countries and the United States.

Pending the submission of the question to me, the Treasury Department under date of December 12, 1932, has directed the suspension of liquidation of entries of coal from those countries.

To support the conclusion reached by the Treasury on November fourteenth, it is argued that the clause "unless treaty provisions of the United States otherwise provide" contained in subdivision (a) of Section 601, literally construed, includes within its scope most favored nation treaties, and therefore in effect overrides the provision in subdivision (5) of subdivision (c) of section 601 that the import tax on coal of ten cents per hundred pounds shall be imposed if there is no trade balance favorable to the United States, and shall not be imposed if such balance is favorable.

The contention to the contrary is supported by arguments to the effect that Congress made it clear in subdivi

sion (5) of section (c) that relief from this import duty on coal was only to be granted where a trade balance favorable to the United States existed, and that as we have most-favored nation treaties with most, if not all, of the nations likely to ship coal to the United States, the conclusion reached by the Treasury on November fourteenth would practically nullify the effort of Congress to impose an import tax on the coal, with the result that while imposing the tax in one provision of the law, Congress would have completely withdrawn it by another provision. This contention is also supported by representations as to the legislative history of this statute from which it appears that the clause "unless treaty provisions of the United States otherwise provide" was inserted in the Senate because of the treaty with Cuba (33 Stat. 2136, December 17, 1903); that the only treaty mentioned or discussed in Congress in connection with this legislation was the Cuban treaty, and that the report of the Senate Finance Committee on May 9, 1932, at page 43, explaining the insertion of the clause respecting the treaty provision, said:

"In order that the imposition of these taxes shall not operate as an abrogation of the Cuban reciprocity treaty, subsections (a) and (b) (5) are amended so that the tax shall be subject to the exemption from duty or to the preferential rate granted Cuban products."

Indeed, it must be conceded that there is nothing to suggest that during the consideration of this legislation either House of Congress had in mind most-favored nation treaties or that the clause in this statute respecting treaty provisions would operate, because of such treaties, to prevent generally the imposition of the import tax on coal. The Treasury Department itself seems to have had in mind that only the Cuban treaty was involved, as its first instructions to Collectors of Customs under date of June 20, 1932 (T. D. 45751), with reference to section 601 of this statute referred only to the Cuban treaty so the rates imposed by section 601 (a) are subject to the provisions of the agreement between United States and Cuba, ratified on December 11, 1902; and this letter of instruction granted exemption only to imports from Canada because of the fact that the exports