In the case of J.E. Hathaway & Company v. United States in 1918, the U.S Supreme Court ruled that a customs duty imposed on imported goods was not an unconstitutional tax but rather a legitimate exercise of Congress's power to regulate commerce with foreign nations. The plaintiff, J.E Hathaway & Co., had argued that the duty was essentially a tax and therefore violated Article I, Section 9 of the Constitution which prohibits taxes or duties on exports from any state. However, Justice Joseph McKenna delivered the unanimous opinion for an eight-member court (Justice John Hessin Clarke did not participate), stating that this provision only applied to domestic trade between states and did not extend to international imports or exports.

In the dissenting opinion for J.E. Hathaway & Company v. United States, Justice Holmes disagreed with the majority's interpretation of the law regarding customs duties on imported goods. He argued that a literal reading of the statute would not lead to an absurd result as suggested by the majority and thus there was no need to interpret it differently. According to him, if Congress intended for certain items like gloves in this case, to be exempt from duty when they were part of personal baggage or effects, it could have explicitly stated so in clear terms within its legislation but did not do so here. Therefore he believed that such exemptions should not be read into laws where they are absent and hence these gloves should attract normal custom duties as per existing laws at that time.