The U.S. Supreme Court case Bacardi Corporation of America v. Domenech, Treasurer of Puerto Rico et al., 1940 revolved around the issue of discriminatory taxation by Puerto Rico on imported products versus domestic ones. The Bacardi Corporation, a rum manufacturer based in Cuba but with operations in Puerto Rico and the United States, challenged an excise tax imposed by the government of Puerto Rico that was higher for spirits made outside than inside its jurisdiction. The company argued this violated both the Commerce Clause and Equal Protection Clause under U.S Constitution as it discriminated against interstate commerce and treated similarly situated entities differently without reasonable basis respectively. However, the court ruled in favor of Domenech (representing Puerto Rican authorities), stating that since Congress had given power to territories like Puerto Rico to manage their own fiscal affairs including levying taxes on imports from other countries or states within limits set by federal law; such differential treatment did not violate constitutional provisions mentioned above as long as they were within those bounds.

In the dissenting opinion for Bacardi Corporation of America v. Domenech, Justice Black argued that Puerto Rico's tax law did not violate the Equal Protection Clause of the Fourteenth Amendment as it was a legitimate exercise of its power to regulate alcohol sales and consumption. He contended that states have broad powers to control liquor within their borders, including imposing taxes on out-of-state producers or distributors. The majority's decision, he believed, undermined this authority by suggesting such regulations must be uniform across all types of businesses regardless of their location or nature. Furthermore, he disagreed with the majority’s view that Bacardi was being unfairly discriminated against because other companies were also subjected to similar taxes in Puerto Rico.