Ammex, Inc. v. United States of America Internal Revenue Service
367 F.3d 530
6th Cir.
2004
Check Treatment
Docket

*2 DAUGHTREY, Before MERRITT HOOD, Judge.* District Judges; Circuit * Hood, tucky, sitting by designation. Joseph M. The Honorable Judge the Eastern District of Ken- District data sys-

OPINION Based on the received tem, purchase prepares Fleet Fuel orders HOOD, Judge. District During on behalf Ammex. periods (“Am- Ammex, Inc. Plaintiff-Appellant, issue, purchased both *3 mex”) sued thе United to recover States fuel suppliers, and diesel from several local allegedly motor fuel taxes collected Co., Co., Viking BP Oil including Atlas Oil of, alia, Export violation inter the Oil, Co., Mooney Distributing Peerless and Clause of the United States Constitution. Oil Co. appeals Ammex district now court’s of duty-free nature of its granting Defendants-Appellees’ order mo- operations, requested purchase Ammex summary tion judgment the basis of the fuel tax. The free federal excise standing. lack of For the reasons set however, suppliers, as a condition of Am- below, forth judgment we AFFIRM the fuel, рurchase required mex’s pay- the district court. ment of at federal excise taxes the time purchase. These imposed taxes were I. AND FACTUAL PROCEDURAL the time the fuel was removed from the HISTORY terminal, rack, fuel known the terminal as operates Ammex a “sterile” U.S. Cus- delivery duty-free Ammex’s store. ‍​‌​‌‌‌​​‌‌‌​​‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌​​‌​​‌‌​​​​‌‌‌​​‍warehousе, commonly toms Class 9 bonded practice is consistent with I.R.C. store, duty-free duty-free known as a places legal which incidence of Detroit, enterprise, Michigan. sales point excise tax this the chain of designation The “sterile” means that removing sales transactions. After physical dеsign operation of the facili- rack, fuel third-party from the terminal ty guarantee products directly carriers delivered the fuel to Am- The therein. store is located on West duty-free facility mex’s and unloaded it Lafayette adjacent Street Ambassa- dispensing into Ammex’s fuel tanks. Am- dor Bridge, connects the United purchasing mex’s agent payment remitted States and Canada. Customers entering delivery for the days fuel ten facility necessarily proceed- storage facility. Ammex’s fuel After beyond “point ed return” and delivery, Ammex sold fuel to custom- must exit States. ers who necessarily required were to take it into Canada.

As a duty-free enterprise, sales Ammex permitted export to sell for certain Export The Clause of the United States goods duty-free “duty-free.” goods These prohibits Constitution are sold to customers transport who them any tax on duty-free merchandise. directly lеaving after Canada Ammex’s This proscription constitutional is con- store. At issue the district court case See, firmed federal customs law. Ammex sell gasoline could (8)(E). 1555(b)(3)(C), U.S.C. on a duty-free diesel fuel basis. provisions also cites to several of the In- ternal support Revenue Code in of its purсhased the fuel claim for a refund of the tax with the intention of it for selling gasoline and diesel fuel at issue. from its duty-free store. This store has Gauging system, whereby Automatic Tank In part, ruling relies on letter daily automatically fuel needs are received from the U.S. Customs Service corded and transmitted tо its Port purchasing September Director Detroit dated (“Fleet Fuel, Fuel”). agent, letter, Fleet LLC 2000. In that grant- Ammex was February summary judgment on duty- expand Class permission ed granted July to include On the district court operation free warehouse That summary fuel. let- motion for and diesel Government’s sale Ammex’s, however, in a no- holding revoked ruling, denied ter explan- letter and ruling lacked tice-and-comment seek 1, 2001. The atory dated November note refund of fuel taxes because could not only fuel revocation was that basis of the “an in fact caused de- establish duty nor tax has been neither on which The did not reach the fendant.” court fuel un- duty-free qualify can Judg- merits of the Clause claim. 1555(b)(8)(E), der 19 U.S.C. August ment entered on *4 by Ammex had been assessed feder- 14, 2002, filed mo- August On enjoined from al tax. Customs was reconsideration; motion tion for the was of a its because effectuating revocatiоn 22, the October by denied district court on (“TRO”) order is- temporary restraining appeal 2002. The instant followed. International Trade by Court of sued 23, January on Judge Evan J. Wallach II. OF REVIEW STANDARD dis- subsequently That TRO 2002. was reviews district Court 22, February Judge solved Wallach summary judgment de grant court’s Upsher novo. v. Grosse Pointe Public Seе of the fuel violat- Asserting taxation (6th System, 285 F.3d School Constitution, the the Clause of Export ed Cir.2002). The constitutional and statuto respect Ammex made refund claims with ry presented issues in this interpretation gasoline and fuel for each the diesel law, subject questions case are also The total refund periods tax issue. de review. Johnson v. Economic novo See $647,494 The requested plus was interest. (6th 501, Corp., Dev. 241 F.3d 509 Cir. for Plaintiffs claims two IRS disallowed 2001). first, did not establish reasons: Plaintiff sold con- gasoline that the and diesel fuel III. DISCUSSION sales, second, Ammex stituted the proper did establish that was not Standing Export A. undеr the Clause party refund. to seek controversy” The limita “case 2000, February 3, filed On re tion Article III of the Constitution complaint against the United States and quires only “a court act Service, seeking Internal injury that can be traced redress $647,494.00, plus covery fuel tax of in- defendant, challenged action quarterly periods ending tax terest indepen injury results from 1999, 30, 31, 1999. Am- March and June party of some third dent action Clause mex based its claims Ky. v. E. Simon Court.” Welfare Constitution, I, art. States 26, 41-42, 96 Rights Org., S.Ct. 426 U.S. cl, 6421, 9, 5, 4221, §§ I.R.C. (1976). 1917, The district 48 L.Ed.2d that Ammex had court’s conclusion based, 2001, part, upon fact standing Ammex filed a On November that col that it wаs not the Government summary judgment. motion On No- Plaintiff, tax but rather filed the Government lected vember words, it suppliers. In summary Plaintiffs other judgment. The own motion (the party suppli- a third was the action of court heard the cross-motions for district (the ers), to the opposed challenged Defendant excise tax to the Govern- Government), (nor Plaintiffs al- ment a tax against leged injury. it), but instead tax-included suppliers. It discretion of In satisfy order to the standing suppliers charge Ammex for requirements imposed Article III of the challenged tax amount. Consequently, Constitution, any alleged injury suffered Plaintiff in A plaintiff must havе suffered ac- some the form of increased costs was not tual or threatened due to the occasioned the Government. defendant; alleged illegal conduct of the ‘fairly must be traceable’ how, It is difficult to see “[i]f defen- action; challenged and there must assess, exact, dant lay, did not or other- be a substantial likelihood that the relief any wise collect from plaintiff federal ex- requested prevent will redress or cise taxes on the and diesel fuel plaintiffs injury. during ...,” periods issue Plaintiff Coyne Company, v. American Tobacco proceed can theоry. under this Cir.1999) (6th F.3d (citing Valley *5 States, (Court Inc. v. United No. 99-338T Forge College Christian v. Americans ‍​‌​‌‌‌​​‌‌‌​​‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌​​‌​​‌‌​​​​‌‌‌​​‍2002) Claims, 10, April of Federal p. at Separation State, Church & of for Without an injury-in-fact, by Inc., 473, 752, 464, 454 102 U.S. S.Ct. 70 Government, we hold that Ammex does (1982)). L.Ed.2d 700 Plaintiff claims that not pursue its claim (1) it by suffered an economic in fact based on the Clause. the Gоvernment’s of the chal- (2) lenged tax, since the Govern- tax, imposed ment this is Export” B. Fuel Sold “For (3) Government, traceable to the 6421(c) § 26 provides U.S.C.

reimbursing for paid, the taxes that if gasoline any person is sold for injury will be redressed. exempt certain purposes set forth in Although impose the Government did an 4221(a)(2)-(5), § person is to be excise tax on the fuel that pur- an amount tax equal to the without inter chased at “duty-free and later sold fa- here, 4221(a)(2) § est. As relevant lists as cility,” that tax not against was an exempt purpose, export, sale “for Instead, Ammex. the tax imposed for purchaser resale to a second who, turn, suppliers added the purchaser export.” for The district court amount of the tax to the wholesale of determined that Ammex was not entitled purchased.1 fuel Ammex As noted 6421(c) payments § recover under court, be the district “The tax burden at issue сause, according here is that suppliers, longstanding of Ammex’s adminis not Therefore, Ammex.” Ammex did pay practice,2 trative fuel sold imposed 1. The tax suppliers on Ammex’s level rulings of deference which revenue pursuant 4081(a)(l)(A)(ii) entitled, to 26 U.S.C. be- Ruling long-standing are 69-150 is suppliers cause it was the that rеmoved tax- highly persuasive precedent. Reasonable able fuel from the terminal. agency interpretations carry "at least some persuasive added where force” Chevron is in- partially 2. The district court relied on Reve- applicable. Metropolitan Stevedоre Co. v. 69-150, Ruling specifically holding nue that it Rambo, 1953, 521 U.S. 117 S.Ct. was entitled to Chevron deference. While (1997). 138 L.Ed.2d 327 may appropriate Chevron not be the deference

535 Mead, 228, meaning to control.” 533 U.S. ‍​‌​‌‌‌​​‌‌‌​​‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌​​‌​​‌‌​​​​‌‌‌​​‍at export power for Skidmore, (quoting 121 S.Ct. 2164 323 U.S the statute. 161). 140, 65 S.Ct. provisions tax the excise of the factors dic- Consideration above “export,” extrin do not define of the Cоde tates at least some level deference may be relied on for construction sic aids Ruling is due Revenue 69-150.3 Revenue interpreting rulings are reviewed at the written and 6421(c) 4221(a)(2). purposes of Treasury level of the IRS and same years, the IRS has taken For more than 30 regulations, Depаrtment Treasury as are delivery of fuel into position that a “central board or demonstrating is use supply tank of motor vehicle fuel great “degree ... office” accords fuel, subsequent move and that the of that Mead, 533 care” to their issuance. U.S. foreign country into a ment the vehiсle 236, course, 121 S.Ct. 2164. Of not constitute possesses expertness” “relative IRS fuel excise taxes. purposes of motor facts, particular the Code to application of Ruling Revenue 69-150. complexity given technical is or not Chevron deference Whether Additionally, the fact tax law. See id. here, obviously some applied appropriately Ruling has left 69- IRS agency ruling level deference virtually unchanged over three dec- pointed out Supreme As the Court due. ades demonstrates the soundness Corp., v. Mead Finally, has decision there made. 150 L.Ed.2d S.Ct. any infirmity long- identify failed to this (2001), though agency’s interpreta even *6 standing interpretation of the and sensible deference, tion is not entitled Chevron statutory scheme. may an merit some interpretation long-standing logical Given the form, given the whatever its deference by the agency interpretation of а statute investiga experience, broader specialized charged with its administra- department and information available to ‍​‌​‌‌‌​​‌‌‌​​‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌​​‌​​‌‌​​​​‌‌‌​​‍tions tion, Ruling 69-150 we believe uniformity value of agency, given be power persuade has the should judicial under in its administrative and Hence, in a case such as this. followed requires. law standings of what national court not err conclude that the district did Indeed, in reaffirmed the the Court Mead holding Ammex in that fuel sold Co.,& holding of Skidmore v. Swift export” not “for (1944), 161, L.Ed. 124 65 S.Ct. 4221(a)(2) 6421(c). § § to an weight [accorded that adminis “[t]he in case will particular a trative] “Exporter” Ammex as an C. thoroughness evident depend upon 6416(c) exporter an consideration, allows validity of its reason I.R.C. illegally an collect consistency later of motor fuel to recover ing, its with earlier and Am found that factors ed tax. The district court pronouncements, and all those mex, enterprisе, lacking duty-free sales give power persuade, it if ruling stated that the revenue Aeroquip-Vickers, this Court reversed This Court In Chevron deference. to a rul- issue not entitled to Tax Court’s failure defer revenue However, by examining out the factors set ing, holding Court had Id. that Tax "mischar- Skidmore, "some degrеe the Court concluded that deference accorded acterized the Rul[ing] prop- 82-20 is rulings Aeroquip-Vickers, deference to Revenue revenue ..." Inc. Commissioner, (6th Cir.2003). Id. er.” at 185. 347 F.3d 173 but, an exporter instead retailer CONCURRENCE exportation by the individual facilitated MERRITT, Circuit Judge, concurring. departed country. tail who customers “duty- as a submits its status I Although agree with the result that, enterprise” although free sales means I majority opinion, reached have Canada, it is not a carrier of fuel into it about serious doubts the conclusion that “exporter” must be considered an because bring does arranging its “sole business is for mer- this claim under the Clause of the chandise to be sent to selling Canada It Constitution. seems to me that for the exportation.” for assured purposes standing, alleges that is traceable to the Gov- “duty-free The definition of sales enter- paid ernment. The fact that Ammex prise” demonstrates that Ammex is not an tax to the than to wholesaler rather exporter. Congress a “duty- has defined higher Government does not mean that the enterprise” person free to mean “a sales cannot easily be traced to the sells, for use outside the customs ter- Government’s of the tax for the ritory, duty-free that is merchandise deliv- purposes standing. gas If the were sold ered from bonded warehouse to an air- separate Ammex in a container and not port point exportation or other exit by, gas mixed with the purchaser’s tank of, or on dеparting behalf individuals Canada, entry into presum- it would territory.” customs U.S.C ably count an “export” and there would 1555(b)(8)(D); see also 19 C.F.R. be question has standing. (“A 19.35(a) (duty-free class 9 warehouse I do that standing not think turn should store) be may established issues that go the merits the claim conditionally duty-free merchandise gas likе the ”). ... individuals in separate mixed the fuel tank or definition, According duty-free to the Moreover, I container. do not understand store not itself but export, rather how we can reach the merits the statu- goods duty-free export by sells some- tory implicitly holding that when claim— *7 (i.e., customer). Thus, one еlse Ammex’s pursued through that avenue the is assertion that it an “exporter” is is belied fairly traceable to the yet Government — by the definition itself. The district court hold that Article standing require- Ill’s correctly held that Ammex was not an prevent ments us hearing a constitu- 6416(c). “exporter” under 26 U.S.C. tional claim the same exactly way. the same seems a dis- Constitutionality D. of I.R.C. tinction without difference should lacks to raise not encumber the constitutional law of claim, ‍​‌​‌‌‌​​‌‌‌​​‌‌​‌​‌​‌​‌‌​​‌‌‌‌‌‌​​‌​​‌‌​​​​‌‌‌​​‍Clause this Court need litigate. standing to is decide unconstitu- As for the merits of the Constitutional respect tional with sold to duty- claim, I interpret would free enterprise. “export” in the way Constitution the same majority interprets the statutory IV. CONCLUSION claim, uphold judgment on those reasons, For the above grounds. mentioned “exporter” is not an un- AFFIRM the the district der anymore the Constitution than it is court. gas under the statute. it pours When into car, what is mixing with the tank exporter than

there, it no more of thing same

gas station reaching bridge. blocks

few America,

UNITED STATES

Plaintiff-Appellee, II, DENKINS, Defendant-

Abraham

Appellant.

No. 01-5881. Appeals, States Court

Sixth Circuit. Aug.

Submitted: 6,May Filed:

Decided and