Westover

This is an appeal by Technicolor Motion Picture Corporation, a corporation, from an adverse judgment of the District Court which denied recovery against Harry C. Westover individually and as Collector of Internal Revenue of a manufacturer’s excise tax amounting to $19,495.57 paid by the appellant on September 14, 1944. Appellant is hereinafter also called “Technicolor,” and appellee “Collector.”

The assessment and collection of such tax claimed under Sections 3406(a) (4) and 3444(a) (1), Internal Revenue Code,’ related to the construction and use by Technicolor of certain equipfnent in its laboratory known as a “transfer machine” which it specially built pursuant to its own design after extensive research, and placed in essential and indispensible use about August, 1944, in its sole business of photographing and processing color motion pictures for commercial use. Technicolor is not otherwise engaged in the business of manufacturing or at all engaged in selling photographic equipment.

However, while the transfer machine is not commercially available to others, it is covered by patents controlled by Technicolor which, while their inventive breadth is not before us, such…