Latimer v. United States
Headline: Court upholds higher tariff classification for factory sweepings of tobacco, requiring importers to pay full tobacco duty instead of a lower waste rate, increasing costs for businesses importing scrap tobacco into Porto Rico.
Holding:
- Importers must pay full tobacco duty on scrap sweepings, not the lower waste rate.
- Raises costs for businesses importing or selling cleaned tobacco scraps.
Summary
Background
A tobacco manufacturer shipped sweepings and scraps — small pieces broken from brittle leaves — to Porto Rico. These scraps are cleaned and used to make a cheap grade of cigarettes and stogies. A customs officer in Porto Rico labeled the shipment as unmanufactured tobacco and charged 55 cents a pound. The importer protested. The General Board and the District Court of Porto Rico sustained the collector’s classification, and the importer appealed to this Court.
Reasoning
The central question was whether the sweepings were low-value "waste" taxed at 10 percent ad valorem under Schedule N or whether they were taxable as "tobacco, manufactured or unmanufactured" at 55 cents per pound under Schedule F of the Tariff Act of 1897. The Court reviewed earlier decisions and the placement of the 10 percent duty in Schedule N, which covers remnants and by-products of small value. Because the scrap retained the name and quality of tobacco and was used to make cigarettes and stogies, the Court concluded it was still tobacco. The Court therefore treated the material as tobacco under Schedule F and affirmed the lower courts' rulings.
Real world impact
Importers of cleaned tobacco sweepings must pay the tobacco duty rather than the lower waste rate. Businesses that collect, clean, or resell scrap tobacco for cigarettes or stogies will face the higher tariff. The Court affirmed the existing classification and judgment below.
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