$161,267.91 of the overassessment shown herein results from the allowance of credit for payment of State estate, inheritance and legacy taxes to the State of New York. In accordance with the provisions of Section 813(b) of the Internal Revenue Code of 1939 that portion of the overassessment bears no interest. 15. On January 31, 1957, the Commissioner issued to the plaintiffs a refund check in the amount of $289,163.07 representing a refund of tax of $255,160.94 together with interest of $34,002.13 on $93,893.03 of the refund but did not allow interest on the balance of the refund in the amount of $161,267.91 for the stated reason, as set out above, that that portion of the refund resulted from the allowance of a credit for State taxes and that section 813(b) of the Internal Revenue Code of 1939 prohibited payment of interest on refunds so resulting. 16. By letter dated February 8, 1957, the plaintiffs demanded interest on the amount of $161,267.91 from December 17, 1950, and on March 11, 1957, the Commissioner rejected that demand. CONCLUSION OF LAW Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that the plaintiffs are entitled to recover and judgment will be entered to that effect. The amount of recovery will be determined pursuant to Rule 38 (c). In accordance with the opinion of the court and on a memorandum report of the commissioner as to the amount due thereunder, it was ordered on July 22, 1960, that judgment for the plaintiffs be entered for $58,401.07. Syllabus GENERAL MOTORS CORPORATION, FRIGIDAIRE DIVISION v. THE UNITED STATES [No. 236-56. Decided May 4, 1960. Defendant's motion for rehearing overruled July 15, 1960] ON THE PROOFS Taxes, excise; credits and refunds; allowance-cost of local advertising. In an action by plaintiff, manufacturer of refrigerators, to recover excise taxes paid on amounts it refunded to buyers to cover part of the cost of advertising its products locally, on the theory that the amounts so refunded constituted an "allowance" for which plaintiff should have a credit against its taxes or an allowable refund of taxes under section 3443 of the Internal Revenue Code of 1939, it is held that plaintiff is entitled to recover since the requirements of section 3443 are met when some part of the purchase price paid for the article is later refunded to the purchaser. Internal Revenue 1143 Taxes, excise; credits and refunds; allowance-what constitutes.Where the seller of merchandise agrees with the buyer that if the buyer, within a specified time, advertises the product locally and in a prescribed manner, the seller will refund to the buyer a set percentage of the purchase price of the article of merchandise so advertised, the refund when made constitutes an "allowance" on the purchase price within the meaning of section 3443 of the Internal Revenue Code of 1939 and may be used as a credit against the excise tax paid on the purchase price by the manufacturer. F. W. Fitch Co. v. United States, 323 U.S. 582, and Ayer Co. v. United States, 93 Ct. Cl. 386, distinguished. Taxes, excise; credits and refunds; allowance; statutes-construction and operation.—The statutory criteria of section 3441 of the Internal Revenue Code of 1939 relative to what elements should be included in the "sale price" subject to excise tax are different from the criteria of section 3443 of the Code relative to what constitutes a discount, rebate or allowance on the basis of the sale price so taxed and which may form the basis for a credit or refund of the excise tax paid. Thus, while the manufacturer's cost of advertising his product may not be excluded from the sale price subject to excise tax under section 3441 of the Code, a percentage of the purchase price refunded at a later date to a purchaser of the product who fulfills his agreement with the seller to advertise the product locally, may be an 625946-62-49 Opinion of the Court 149 C. Cls. allowable credit against the excise tax paid on the purchase price within the meaning of section 3443 of the Code. Internal Revenue 1143 Mr. Newell W. Ellison for plaintiff. Messrs. Henry M. Hogan, Calvert Thomas, J. C. Siegesmund, Jr., Daniel M. Gribbon, and John B. Jones, Jr., were on the briefs. Mr. Harold S. Larsen, with whom was Mr. Assistant Attorney General Charles K. Rice, for the defendant. Messrs. James P. Garland and Philip R. Miller were on the brief. MADDEN, Judge, delivered the opinion of the court: Plaintiff sues for refund of excise taxes exacted on the price for which it sold refrigerators to its distributors. It says it is entitled to deduct, as an allowance, the amount it refunded to the distributors, for transmittal to the retailers, on account of the cost of advertising the product in the localities of the various retailers. It relies on the provisions of section 3443 of the Internal Revenue Code of 1939, which reads: Sec. 3443. Credits and Refunds. (a) A credit against tax under this chapter, or a refund, may be allowed or made (2) to any person who has paid tax under this chapter with respect to an article, when the price on which the tax was based is readjusted by reason of return or repossession of the article or a covering or container, or by a bona fide discount, rebate, or allowance; in the amount of that part of the tax proportionate to the part of the price which is refunded or credited. [26 U.S.C. § 3443, 53 Stat. 417 (1939)] Under this statute, if a manufacturer sells an item at a stated price, but allows the purchaser a discount, before payment, or a refund or credit of a part of the price, after payment, the amount of the discount or refund or credit is deducted from the originally stated price, and a proportionate refund of the tax is given to the manufacturer. The plaintiff's situation seems to fit the text of the statute. The Government, nevertheless, urges that for many reasons the statute does not apply. 749 Opinion of the Court The plaintiff collected from its vendees a stated price for its refrigerators and other products subject to the manufacturer's excise tax, as well as for its products not subject to the tax. It had a "cooperative advertising plan" under which most but not all of its products, including all of its products which were subject to the excise tax, were covered. The plan was that the plaintiff agreed, if a retailer of its products would spend money in advertising locally the plaintiff's products and their availability at the retailer's store, and if his advertising complied with certain standards set by the plaintiff, the plaintiff would pay to the dealer one-half of the cost of the advertising, but not to exceed 114 percent of the plaintiff's "suggested cash installed price.' During the period covered by the instant suit, advertisements using the following media were permissible under the plan: newspapers, radio, television, movie trailers, telephone directories, display materials, exhibits and shows, car cards, tabloids, advertising novelties, circulars, direct mail, and signs. The plan does not obligate a dealer to do any advertising, nor, if he does advertise, to comply with the standards set by the plan. If he does not advertise, or if his advertisements do not comply with the standards, he does not get any payment from the plaintiff. If he is entitled to a payment, he is obliged to submit proof of his claim within the current calendar year or within five months after the end of the year. The effect of the plan was that if a dealer had, for example, bought refrigerators from the plaintiff, or one of its distributors, and paid $5,000 for them and had spent money in local advertising of the refrigerators, the plaintiff would pay him 14 percent of the suggested installed price of the refrigerators, which we will assume to have been $7,500, if he had spent twice or more the amount of the 114 percent. In the example just given the retailer would get back $93.75. The net payment of the dealer to the plaintiff would be, then, not $5,000, but $93.75 less than $5,000. The plaintiff says that, under section 3443, it should get back the excise tax which it paid on the $93.75. We think the plaintiff is right. Its sale of the refrigerators was for $5,000 and it paid the sales tax on that sum, T Opinion of the Court 149 C. Cls. but the price was later "readjusted" by way of a rebate to the purchaser. Section 3443 does not say that it is applicable only to some kinds of rebates, or only to rebates given for some kinds of reasons or purposes. It is, of course, conceivable that there might be situations in which a repayment or credit is given by the manufacturer to the purchaser, but to which section 3443 should not apply because its application would violate the statutory purpose, or would create such difficulties in the administration of the tax laws as to compel a departure from the letter of the statute. Discounts and rebates are given for various reasons but always, we suppose, because the giving of them will be of benefit to the giver. They are, we suppose, always welcomed by the receiver. A discount for prompt payment benefits the giver because it assures him against the loss of the debt, and gives him available working capital. A discount, or a rebate at the end of the year, because of the quantity purchased by the vendee, is good for the seller because it induces the vendee to purchase and dispose of more of the seller's goods. A promised discount on floor stocks in the hands of the vendee at the time of a model change is good for the seller because it reassures the vendee and causes him to maintain adequate stocks even though a model change is anticipated. The Government urges that the plaintiff is buying advertising for its goods when it induces and partly pays for the retailer's advertising. This is, of course, true, but we think it does not distinguish the instant case from other discount and rebate situations which are admittedly covered by section 3443. In the situations referred to above, the vendor is buying the early use of money and insurance against defaults in payment, or is buying additional effort and expense on the part of the retailer to dispose of a large quantity of goods, or is buying assurance that the retailer will maintain an adequate stock of goods so that opportunities for sales will not be missed. One type of excise tax case involving advertising expense has been litigated. In F. W. Fitch Co. v. United States, 323 U.S. 582, the question was whether, under the then-applicable version of section 3441 of the Internal Revenue Code of 1939, |