G.R. No. L-2839
CALDER & CO., Plaintiff-Appellee, vs. THE UNITED STATES, Defendant-Appellant.

FACTS:
1. Importation and Customs Classification:
– Plaintiff Calder & Co. imported forty-three pieces constituting an “oil mill complete” for extracting oil from copra and other seeds, along with a portable steam engine.
– The Collector of Customs classified the oil mill and steam engine under paragraph 257(b) of Act No. 230 (Tariff Revision Law of 1901) as “other machinery,” imposing a duty of $1 per 100 kilos, not less than 25% ad valorem.
– Plaintiff protested, arguing that the oil mill should instead be classified under paragraph 245 as “machinery for preparing vegetable products of the Islands for the markets,” which carried a lower duty of 25 cents per 100 kilos.

2. Collector’s Ruling:
– The Collector denied the protest, reasoning that machinery extracting oil from coconuts transforms the product into a different article (oil) and thus does not qualify as “preparing vegetable products” under paragraph 245.

3. Court of Customs Appeals Decision:
– The Court of Customs Appeals reversed the Collector, holding that the oil mill and steam engine should be classified under paragraph 245 as machinery for preparing vegetable products.

4. Appeal to the Supreme Court:
– The government appealed, arguing that the oil mill should remain classified under paragraph 257(b).

ISSUE:
1. Whether the oil mill should be classified under paragraph 245 (as machinery for preparing vegetable products) or paragraph 257(b) (as “other machinery”).
2. Whether the portable steam engine (not declared as part of the oil mill) should be classified under paragraph 245 or paragraph 257(b).

RULING:
1. Oil Mill Classification:
– The Supreme Court reversed the Court of Customs Appeals and upheld the Collector’s classification under paragraph 257(b).
– The Court ruled that machinery extracting oil from coconuts transforms the product into a different commodity (oil), which is not merely “preparing” the original vegetable product (copra) for the market.
– Paragraph 245 applies only to machinery that prepares vegetable products in their original form (e.g., rice milling, sugar-making), not those that create entirely new products (e.g., oil from copra).

2. Portable Steam Engine Classification:
– Following its prior ruling in Calder & Co. v. United States (5 Off. Gaz. 465), the Court held that the steam engine must be classified under paragraph 257(b) as “other machinery.”

DISPOSITION:
– The judgment of the lower court was reversed, and the Collector of Customs’ decision was reinstated.
– The case was remanded to the Court of First Instance for entry of judgment in accordance with the Supreme Court’s ruling.

Arellano, C.J., Torres, Willard, and Tracey, JJ., concurred.

(End of Digest)