ESTES, District Judge.
The above case having come on before the Court, and having been submitted by the parties for decision on the basis of the pleadings herein and the stipulations, evidence, testimony, and arguments in Acme Brick Company v. United States, Civil Action No. 3312, the Court makes the following Findings of Fact and Conclusions of Law, all of which Findings and Conclusions are applicable to Plaintiff’s taxable year 1954.
Findings of Fact
Plaintiff is a corporation incorporated and doing business under the laws of the State of Texas, with its principal place of business at Fort Worth, Texas, within this District and Division.
This action is brought by plaintiff against defendant pursuant to Sections 1346(a)(1) of Title 28 of the United States Code, Act of June 25, 1948, c. 646, 62 Stat. 689, 933, as amended by the Act of July 30, 1954, c. 648, Section 1, 68 Stat. 589, and is for the recovery of income tax collected from plaintiff by defendant for plaintiff’s taxable year 1954.
Plaintiff keeps its books on the accrual method basis of accounting on a calendar year basis.
Within the time prescribed by law, plaintiff filed its federal income tax return for 1954 and paid the tax shown as due thereon of $633,460.81 by payments of $345,000 on March 14, 1955, and $288,460.81 on June 16, 1955.
Plaintiff owns and operates clay pits, and is engaged in the business of extracting clay from such pits and making brick and tile and, in the ease of the pit at Perla, Arkansas, fire brick and other refractory products, from such clay in plants which are located near each of the pits.
On October 22, 1956, plaintiff filed a claim for refund of income tax for 1954. Such claim for refund set forth the grounds and reasons upon which this suit was brought by plaintiff.
During the year 1954, all of the clay which plaintiff extracted from its pit at Perla, Arkansas, had a pyrometric cone equivalent of 31 and all of the clay which plaintiff extracted from its pit located at Denton, Texas, had a pyrometric cone equivalent of not less than 20. All such clay extracted at Perla and Denton was suitable for use in making fire brick and other refractory products and was refractory and fire clay.
All of the clay extracted by plaintiff from its pits other than those at Perla and Denton during the year 1954 was brick and tile clay.
The following are the processes applied' by plaintiff to the raw brick and tile clay and raw refractory and fire clay in order to put it in the form of burnt brick and tile and fire brick:
(a) The clay is extracted from the ground and transported from the clay pit. to the nearby brick plant.
(b) After it has been removed from the ground, some of the clay is weathered in storage sheds.
[606]*606(c) The clay is crushed and ground to such fineness that it will pass through various mesh screens.
(d) Some of the clay mined at Denton, Perla, and Garrison, Texas, is calcined in a rotary or other kiln. The calcining is done before the final grinding of the clay, and the calcined clay is mixed with other •clay in order to help drying and reduce the shrinkage of the brick and tile in the subsequent burning. At Perla, defective burnt bricks are reground and also added to the raw clay to reduce shrinking. Flint clay is added to plaintiff’s fire clay in making two types of fire brick at Perla.
(e) The clay is next formed in the shape of brick and tile by one of the following three methods:
(1) By the “stiff mud” process, whereby the clay is mixed with water in the pug mill in order to temper the clay, is forced under pressure through various types of dies in long ribbons, and is cut into clay units of the desired size. In .some cases, before the clay is extruded, it passes through an evacuation chamber where air is evacuated from the clay by a vacuum pump.
(2) By the “soft mud” process, whereby the clay is mixed with water in the pug mill, is then placed in molds of the desired shape and size, and is then removed from the molds. More water is added in the pug mill than is added in the ■case of the stiff mud process.
(3) By the “dry press” method, whereiby the clay is mixed with only a small amount of water and is then pressed by machinery into the shape of brick. In the case of one type of fire brick, the clay is extruded as a stiff mud brick and is dried, as described in subparagraph (f). It is then reground and shaped by the dry press method.
(f) After the clay has been formed in the shape of brick and tile, the clay units formed by the stiff mud and soft -mud processes are placed in dryer tunnels, where free water is evaporated from the clay units by the application of heat. When the dry press method is <*ised, a preliminary heating, before the burning, is applied in the kiln to dry the clay units.
(g) After the drying, the clay units are burned in kilns.
(h) The burnt brick and tile are then removed from the kilns.
(i) After it has been removed from the kilns, the burnt brick and tile are stocked and loaded for shipment to purchasers.
The processes applied by plaintiff to its brick and tile clay and refractory and fire clay in order to put such clay in the form of burnt clay products are usual and ordinary ones by which brick and tile clay and refractory and fire clay normally and generally are extracted from the ground and processed into burnt brick and tile and burnt fire brick.
Plaintiff sells the brick and tile clay which it extracts from the ground only in the form of burnt brick and tile. Plaintiff has no opportunity to sell any of its brick and tile clay before it is put in the form of burnt brick and tile. Of the brick and tile clay mined in the United States, there is opportunity for sale of only a negligible quantity before it is put in the form of burnt brick and tile and kindred products. Both in plaintiff’s market area and in the United States as a whole, owners and operators of brick and tile clay pits normally must process their clay into burnt brick, tile, or kindred products in order to obtain a product which is commercially marketable.
Plaintiff is able to sell the refractory and fire clay which it extracts from its pits at Perla and Denton only in the form of burnt brick and tile and burnt fire brick, except for a small amount extracted at Perla which plaintiff is able to sell in the form of other refractory products. Such other refractory products consist of ground fire clay (called dry milled fire clay) sold as a mortar mix in laying up fire brick, and miscellaneous products sold .for special refractory purposes. [607]*607The quantity of refractory and fire clay sold for use as a mortar mix and for other refractory purposes is less than 2% of the refractory and fire clay mined by plaintiff. Less than 1½% of the refractory and fire clay mined by plaintiff is sold in the form of dry milled fire clay. All of the miscellaneous refractory products other than dry milled fire clay are subjected to processes other than those applied to make brick and tile or fire brick from the clay. The processes which plaintiff applies to produce the refractory products other than fire brick are usual and ordinary ones by which such products are normally and generally made.
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ESTES, District Judge.
The above case having come on before the Court, and having been submitted by the parties for decision on the basis of the pleadings herein and the stipulations, evidence, testimony, and arguments in Acme Brick Company v. United States, Civil Action No. 3312, the Court makes the following Findings of Fact and Conclusions of Law, all of which Findings and Conclusions are applicable to Plaintiff’s taxable year 1954.
Findings of Fact
Plaintiff is a corporation incorporated and doing business under the laws of the State of Texas, with its principal place of business at Fort Worth, Texas, within this District and Division.
This action is brought by plaintiff against defendant pursuant to Sections 1346(a)(1) of Title 28 of the United States Code, Act of June 25, 1948, c. 646, 62 Stat. 689, 933, as amended by the Act of July 30, 1954, c. 648, Section 1, 68 Stat. 589, and is for the recovery of income tax collected from plaintiff by defendant for plaintiff’s taxable year 1954.
Plaintiff keeps its books on the accrual method basis of accounting on a calendar year basis.
Within the time prescribed by law, plaintiff filed its federal income tax return for 1954 and paid the tax shown as due thereon of $633,460.81 by payments of $345,000 on March 14, 1955, and $288,460.81 on June 16, 1955.
Plaintiff owns and operates clay pits, and is engaged in the business of extracting clay from such pits and making brick and tile and, in the ease of the pit at Perla, Arkansas, fire brick and other refractory products, from such clay in plants which are located near each of the pits.
On October 22, 1956, plaintiff filed a claim for refund of income tax for 1954. Such claim for refund set forth the grounds and reasons upon which this suit was brought by plaintiff.
During the year 1954, all of the clay which plaintiff extracted from its pit at Perla, Arkansas, had a pyrometric cone equivalent of 31 and all of the clay which plaintiff extracted from its pit located at Denton, Texas, had a pyrometric cone equivalent of not less than 20. All such clay extracted at Perla and Denton was suitable for use in making fire brick and other refractory products and was refractory and fire clay.
All of the clay extracted by plaintiff from its pits other than those at Perla and Denton during the year 1954 was brick and tile clay.
The following are the processes applied' by plaintiff to the raw brick and tile clay and raw refractory and fire clay in order to put it in the form of burnt brick and tile and fire brick:
(a) The clay is extracted from the ground and transported from the clay pit. to the nearby brick plant.
(b) After it has been removed from the ground, some of the clay is weathered in storage sheds.
[606]*606(c) The clay is crushed and ground to such fineness that it will pass through various mesh screens.
(d) Some of the clay mined at Denton, Perla, and Garrison, Texas, is calcined in a rotary or other kiln. The calcining is done before the final grinding of the clay, and the calcined clay is mixed with other •clay in order to help drying and reduce the shrinkage of the brick and tile in the subsequent burning. At Perla, defective burnt bricks are reground and also added to the raw clay to reduce shrinking. Flint clay is added to plaintiff’s fire clay in making two types of fire brick at Perla.
(e) The clay is next formed in the shape of brick and tile by one of the following three methods:
(1) By the “stiff mud” process, whereby the clay is mixed with water in the pug mill in order to temper the clay, is forced under pressure through various types of dies in long ribbons, and is cut into clay units of the desired size. In .some cases, before the clay is extruded, it passes through an evacuation chamber where air is evacuated from the clay by a vacuum pump.
(2) By the “soft mud” process, whereby the clay is mixed with water in the pug mill, is then placed in molds of the desired shape and size, and is then removed from the molds. More water is added in the pug mill than is added in the ■case of the stiff mud process.
(3) By the “dry press” method, whereiby the clay is mixed with only a small amount of water and is then pressed by machinery into the shape of brick. In the case of one type of fire brick, the clay is extruded as a stiff mud brick and is dried, as described in subparagraph (f). It is then reground and shaped by the dry press method.
(f) After the clay has been formed in the shape of brick and tile, the clay units formed by the stiff mud and soft -mud processes are placed in dryer tunnels, where free water is evaporated from the clay units by the application of heat. When the dry press method is <*ised, a preliminary heating, before the burning, is applied in the kiln to dry the clay units.
(g) After the drying, the clay units are burned in kilns.
(h) The burnt brick and tile are then removed from the kilns.
(i) After it has been removed from the kilns, the burnt brick and tile are stocked and loaded for shipment to purchasers.
The processes applied by plaintiff to its brick and tile clay and refractory and fire clay in order to put such clay in the form of burnt clay products are usual and ordinary ones by which brick and tile clay and refractory and fire clay normally and generally are extracted from the ground and processed into burnt brick and tile and burnt fire brick.
Plaintiff sells the brick and tile clay which it extracts from the ground only in the form of burnt brick and tile. Plaintiff has no opportunity to sell any of its brick and tile clay before it is put in the form of burnt brick and tile. Of the brick and tile clay mined in the United States, there is opportunity for sale of only a negligible quantity before it is put in the form of burnt brick and tile and kindred products. Both in plaintiff’s market area and in the United States as a whole, owners and operators of brick and tile clay pits normally must process their clay into burnt brick, tile, or kindred products in order to obtain a product which is commercially marketable.
Plaintiff is able to sell the refractory and fire clay which it extracts from its pits at Perla and Denton only in the form of burnt brick and tile and burnt fire brick, except for a small amount extracted at Perla which plaintiff is able to sell in the form of other refractory products. Such other refractory products consist of ground fire clay (called dry milled fire clay) sold as a mortar mix in laying up fire brick, and miscellaneous products sold .for special refractory purposes. [607]*607The quantity of refractory and fire clay sold for use as a mortar mix and for other refractory purposes is less than 2% of the refractory and fire clay mined by plaintiff. Less than 1½% of the refractory and fire clay mined by plaintiff is sold in the form of dry milled fire clay. All of the miscellaneous refractory products other than dry milled fire clay are subjected to processes other than those applied to make brick and tile or fire brick from the clay. The processes which plaintiff applies to produce the refractory products other than fire brick are usual and ordinary ones by which such products are normally and generally made.
Plaintiff is able to sell less than 2% of the refractory and fire clay which it extracts from the ground before the clay is put in the form of burnt clay products. Before the refractory and fire clay which plaintiff extracts from the ground is put in the form of burnt clay products, plaintiff has no opportunity to sell more than a negligible quantity of such clay.
Before their clay is put in the form of burnt clay products, refractory and fire clay mine owners and operators in plaintiff’s market area have no opportunity to sell more than a negligible quantity of their clay.
In the United States as a whole, more than 75% of the refractory and fire clay mined has to be put in the form of burnt clay products before it can be sold.
In the United States as a whole, more than 90% of the refractory and fire clay mine owners and operators are required to put their clay in the form of burnt clay products in order to be able to sell such clay.
Both in plaintiff’s market area and in the United States as a whole, fire clay mine owners and operators normally are required to put their clay in the form of burnt clay products in order to obtain products which are commercially marketable.
During the year 1954, the selling price of plaintiff’s dry milled fire clay in bulk was as follows:
The burnt brick and tile, burnt fire brick and other refractory products produced by plaintiff are mineral products.
For the year 1954, the sum of 15 per cent of the net sales of the products produced by plaintiff at Perla and Denton and 5 per cent of the net sales of products-produced by plaintiff at its other plants, limited to 50 per cent of the taxable income from the sales of products produced! from each property, is $650,706.68.
Conclusions of Law
This Court has jurisdiction of the-parties and subject matter in this case, and all the procedural requirements for-bringing this suit have been met.
The clay extracted by plaintiff from its-pits at Perla, Arkansas, and Denton, Texas, during the year 1954 was “refractory and fire clay” within the meaning of Section 613 of the Internal Revenue Code of 1954, 26 U.S.C. § 613, and! plaintiff is entitled to a deduction for depletion for each such pit under that Section and Section 611, computed at the-rate of 15 per cent of its “gross income from the property”, limited in the case-of each property to 50 per cent of the-taxable income from such property.
The clay mined by plaintiff from all of' its other clay pits during the year 1954 was “brick and tile clay” within the-meaning of Section 613 of the Internal’ [608]*608Revenue Code of 1954, and plaintiff is entitled to a deduction for depletion for each such pit under that Section and Section 611, computed at the rate of 5 per cent of its “gross income from property”, limited in the case of each property to 50 per cent of the taxable income from such property.
All of the processes applied by plaintiff to its brick and tile clay and refractory and fire clay to obtain burnt brick and tile, burnt fire brick and plaintiff’s other refractory products, are within the meaning of Section 613(c) (2) of the Internal Revenue Code of 1954, “the ordinary treatment processes normally applied by mine owners or operators in order to obtain the commercially marketable mineral product or products.”
In computing its federal income tax for the year 1954, plaintiff is entitled to a percentage depletion deduction equal to 15 per cent of the net sales of its burnt brick and tile, burnt fire brick and other refractory products produced at Perla and Denton, but limited in each case to 50 per cent of its taxable income from such sales of products produced from each property.
In computing its federal income tax for the year 1954, plaintiff is entitled to a percentage depletion deduction equal to 5 per cent of the net sales of its burnt brick and tile produced from each of its properties other than those at Perla and Denton, but limited in each case to 50 per cent of its taxable income from such sales of products produced from each property.
Plaintiff has overpaid its federal income tax for the year 1954 and is entitled to a refund for such year in the amount of $8,339.24, together with interest thereon as provided by law from the date •of payment thereof, June 16, 1955, together with costs.