Shell Oil Co. v. United StatesShell Oil Co. v. United States
Tara K. Hogan, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Todd M. Hughes, Deputy Director. Of counsel on the brief was Richard McManus, Office of the Chief Counsel, Customs and Border Protection, United States Department of Homeland Security, of Washington, DC.
Before PROST, MOORE, and WALLACH, Circuit Judges.
WALLACH, Circuit Judge.
Plaintiff-Appellant Shell Oil Company (“Shell“) appeals the decision of the Court of International Trade (“CIT“) holding that Shell‘s drawback claims for Harbor Maintenance Tax (“HMT“) and Environmental Tax (“ET“) were time barred because the requests for drawback were not made within three years of exporting substitute finished petroleum derivatives as required by
I. BACKGROUND
A. Shell‘s Imports and the Drawback Statute
Between 1993 and 1994, Shell imported certain petroleum products (“imports at issue“) upon which custom duties, taxes, and other fees were paid.1 During the
In general, under the current statute,4 Customs is required to provide a drawback of 99% of “any duty, tax, or fee imposed under Federal law upon entry or importation” of imported merchandise if that merchandise (or a “commercially interchangeable” substitute) is subsequently “exported, or ... destroyed under customs supervision; and ... is not used within the United States before such exportation or destruction....”
B. The 1999 Amendments
In 1999, Congress amended the relevant language of the drawback statute (the “1999 amendments“) clarifying the scope of drawback available to include “any duty, tax, or fee imposed under Federal law because of ... importation” in addition to customs duties.
Congress further amended the drawback statute after this court‘s decision in Texport Oil Co. v. United States, 185 F.3d 1291 (Fed.Cir.1999) (”Texport“). In Texport, we interpreted the drawback statute‘s “because of ... importation” language to preclude the payment of drawback on any “duty, tax, or fee that is assessed in a nondiscriminatory fashion against all shipments....” Id. at 1295-97. Accordingly, we held MPF to be eligible for drawback because MPF “is explicitly linked to import activities.” Id. at 1296. In addition, reasoning that HMT is “assessed in a nondiscriminatory fashion against all shipments utilizing ports,” we held HMT to be ineligible for drawback. Id. In a separate decision, we also held ET to be ineligible for drawback for similar reasons. George E. Warren Corp. v. United States, 341 F.3d 1348, 1356 (Fed.Cir.2003) (”Warren“).
Responding to these decisions, in December 2004, Congress amended the drawback statute (the “2004 amendments“). Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. No. 108-429, § 1557(b), 118 Stat. 2434, 2579 (2004). Congress made clear its intent to overturn Texport and eliminate the distinction between taxes and fees that discriminate against imports and those that do not. See S.Rep. No. 108-28, at 173 (2003). The 2004 amendments thus clarified eligibility of certain drawback claims, and thereafter, allowed drawback for any duty, tax, and fee imposed upon entry.
D. This Court‘s Decision in Aectra
In 2009, this court issued its opinion in Aectra, which dealt with issues similar to this case. Like Shell, the importer in Aectra timely filed drawback claims of its import duties without any reference to taxes or fees, within three years of its export of substitute petroleum derivatives. 565 F.3d at 1367. After Customs liquidated the importer‘s drawback entries and refunded the requested import duties in full, the importer filed protests and for the first time sought drawback of taxes and fees more than three years after the date of exportation. Id. at 1368. Customs denied the importer‘s protests and the importer contested the denial at the CIT, where the importer‘s arguments were rejected and Customs‘s denials of the protests sustained. Id.
This court affirmed, noting that the importer offered “no explanation for why it did not include protective claims for [taxes and fees] in its ... drawback claims other than its belief that such claims would not be successful at the administrative level.” Id. at 1367. We ultimately held that the importer was not entitled to relief because it failed to claim drawback of taxes and fees within the statutory three-year period within which all drawback claims must be filed. Id. at 1375.
E. Procedural History of This Case
Shell filed drawback claims associated with the imports at issue in 1995 and 1996. These claims sought drawback only as to
After the statutory three-year period for the filing of drawback claims had expired, on November 7, 1997, Shell filed protests with Customs, seeking drawback as to HMT and ET payments that Shell had made in connection with the imports at issue. Id. Customs denied Shell‘s protests on December 3, 1997, stating:
Under provisions of
19 U.S.C. § 1313(b) &(p) drawback is allowed upon Customs duty paid on imported merchandise. [HMT] ... is an incidental expense incurred upon a vessel entering a harbor. The HMT is not incurred as a result of the importation of merchandise but simply imposed for the use of the harbor. The fee is collected by U.S. Customs for the benefit of the Army Corps of Engineers.
Protest No. 5301-97-100421 (Dec. 3, 1997).
On May 20, 1998, Shell filed a summons at the CIT contesting Customs‘s denial of the HMT and ET drawback claims. The parties filed cross-motions for summary judgment, and on June 20, 2011, the CIT held that Shell‘s claims for drawback of HMT and ET were time barred. See Shell Oil Co., 781 F.Supp.2d at 1339-40. The CIT found that the amendments to the drawback statute did not aid Shell and futility did not toll the statutory time period. Shell appeals the CIT‘s decision. We have jurisdiction pursuant to
II. DISCUSSION
This court reviews a grant of summary judgment by the CIT “for correctness as a matter of law, deciding de novo the proper interpretation of the governing statute and regulations as well as whether genuine issues of material fact exist.” BMW Mfg. Corp. v. United States, 241 F.3d 1357, 1360 (Fed.Cir.2001) (quoting Texaco Marine Servs., Inc. v. United States, 44 F.3d 1539, 1543 (Fed.Cir.1994) (internal citation omitted)). Where the facts are undisputed, application of the appropriate legal standard to those facts is properly a question of law that we review de novo. Former Emp. of Sonoco Prods. Co. v. Chao, 372 F.3d 1291, 1295 (Fed.Cir.2004). When Congress has not directly addressed the precise question of statutory interpretation at issue, we give deference to Customs‘s regulations interpreting portions of a statute that are silent or ambiguous as to that issue. United States v. Haggar Apparel Co., 526 U.S. 380, 392, 119 S.Ct. 1392, 143 L.Ed.2d 480 (1999) (citing Chevron, U.S.A., Inc. v. Nat‘l Res. Def. Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)).
Shell‘s drawback claims for HMT and ET are not timely. The pertinent facts in this case are undisputed. Shell initially filed timely drawback claims for a refund of its import duties only. Customs paid Shell‘s drawback claims in full, refunding 99% of the import duties as requested. More than three years after its export of substitute petroleum derivatives, Shell filed protests with Customs, for the
Shell nevertheless avers that the HMT and ET drawback claims were timely under the 1999 and 2004 amendments. Appellee, the United States, (“Government“) responds, arguing that Shell raises many of the same defenses we rejected in Aectra. The gravamen of the Government‘s contention is that Shell‘s HMT and ET drawback claims were filed outside the three-year statutory window, and therefore, abandoned. As a result, the sole inquiry in this case concerns the propriety of Shell‘s seemingly stale drawback claims as to HMT and ET under
As an initial matter, drawbacks are a privilege, not a right. United States v. Allen, 163 U.S. 499, 504, 16 S.Ct. 1071, 41 L.Ed. 242 (1896); see Swan & Finch Co. v. United States, 190 U.S. 143, 146, 23 S.Ct. 702, 47 L.Ed. 984 (1903) (“Being a governmental grant of a privilege or benefit it is to be construed in favor of the government and against the party claiming the grant.“). Drawbacks “do not compensate for duty overpayments, but instead help enforce the United States’ policy of ‘encouraging domestic manufacture of articles for export and ... allowing those articles to compete fairly in the world marketplace.‘” Hartog Foods Int‘l, Inc. v. United States, 291 F.3d 789, 793 (Fed.Cir.2002) (brackets in original) (citations omitted). As such, the burden is on the party seeking drawback to show that an amount certain is eligible for refund. Placing the burden on Customs to determine the maximum permissible amount for refund in a drawback claim would “create an untenable administrative burden for Customs in its processing of drawback claims.” Aectra, 565 F.3d at 1373 (citation omitted). In addition, “allowing claimants to submit claims piecemeal after the three-year completion window has passed would detract from the ability of Customs to ‘effectively carry out its duties,’ including preventing circumvention of the three-year statutory limit of
Shell first contends that its drawback claims were timely under the 1999 amendments’ six-month re-opened period of limitations because Shell was not required to resubmit a drawback claim during that six-month window when Customs had already rejected the claims at issue on the merits. This court in Aectra observed that the effect of the 1999 amendments was to “creat[e] a six-month grace period in which otherwise untimely claims could be filed or re-filed to obtain relief.” Id. at 1370. Like the CIT, we hold that the plain language of the 1999 amendments requiring “a drawback claim [be] filed within 6 months after the date of the enactment of those amendments[,]” refutes any suggestion that Shell‘s untimely, previously-filed and denied protests sufficed to protect whatever rights to drawback of HMT and ET” that Shell may have had. Shell Oil Co., 781 F.Supp.2d at 1331 (quotation omitted). The undisputed fact remains that Shell failed to raise issues of drawback related to HMT and ET within the three-year statutory window, and those claims were not filed after the enactment and during the grace period of the 1999 amendments.5
Warren does not imply otherwise. See 341 F.3d at 1356. In that case, the importer paid duties, HMT, and ET on imported petroleum, and later exported drawback-eligible substitute merchandise. Id. at 1349. Like Shell, the importer timely submitted drawback claims for import duties, and failed to include in those claims an express request for HMT or ET. Id. at 1349-50. Shortly thereafter and unlike the facts in this case, the importer in Warren filed a protest seeking drawback of HMT and ET within three years of the date of export. Id. at 1349 (emphasis added). Customs denied the protest on the merits.
Accordingly, as we observed in Aectra, Warren “rested on jurisdictional grounds inapplicable here and consequently it was unnecessary for the Warren court to address the effect of § 1313(r)(1) [which imposed the three-year limitations period] on those refund requests.” Aectra, 565 F.3d at 1374 (brackets in original) (internal quotation omitted). Moreover, in Warren, the importer filed its drawback claims as to HMT and ET within the three-year statute of limitations, and therefore, that case does not suggest that a party may, by arguing futility, be excused from the statutory time period. Hence, because Shell failed to act during the six-month grace period, the 1999 amendments are inapplicable in this case.
Next, Shell argues that given the legal framework that existed over the course of the underlying dispute, Shell substantially complied with the steps necessary to claim timely drawback for the HMT and ET payments. Specifically, Shell contends that the then-existing regulation
Shell did not indicate that it wished to seek drawback of HMT and ET until its protests, which were filed outside the mandatory statutory three-year window. Shell‘s argument seems to be that its timely filed claims for drawback of import duties somehow implicitly included claims for drawback of HMT and ET. Such a position is not viable because Customs was not on notice of any claims for HMT or ET within the statutory period. Although Shell contends that Customs had notice, merely setting forth a claim for drawback of import duties does not sufficiently make or preserve a claim for taxes and fees like HMT and ET.
In particular, Shell contends that the regulation in existence at the time of Shell‘s claims did not require an express request for HMT or ET, as did the 1998 regulations we analyzed in Aectra. See Aectra, 565 F.3d at 1372 (interpreting the “correctly calculate” requirement recited in the 1998 regulation,
Moreover, Shell fails to recognize that it sought accelerated payment of its drawback claims. See
Regardless, Shell‘s focus on whether the pre-1998 regulations lacked explicit requirements to list taxes and fees as part of the total amount is misplaced because, as discussed above, Customs does not bear the burden to determine the maximum permissible amount for a drawback claim. Rather, it is on the claimant to place Customs on notice as to the specific amount it is seeking for a refund. As a result, Shell, at a minimum, was required to place Customs on notice that it was seeking drawback for HMT and ET. Because Shell sought accelerated payment, Shell had the additional responsibility of submitting “a computation of the amount due,” including payments for HMT and ET. Shell failed to provide such notice in this case. Hence, Shell‘s contention that it substantially complied with the statute does not salvage its
Lastly, Shell avers that it qualifies under the 2004 amendments’ effective date provision, which deems timely any drawback entry filed before the date of enactment if the liquidation of the entry was not final on that date. Because the 2004 amendments allow any drawback claim that is not final to remain open, Shell argues that the amendment must apply to its drawback claims for HMT and ET. The 2004 amendments applied only prospectively, and to “not yet finally liquidated [entries]” that “already included a timely protective request” for taxes and fees. Aectra, 565 F.3d at 1369-71 (recognizing that the 2004 amendments were not intended to waive the normal three-year limit imposed by the drawback statute). In this case, it is undisputed that Customs liquidated the drawback entry that Shell filed, which did not include a timely protective request for taxes and fees. The later protests as to HMT and ET, as discussed above, were not timely, and as a result, were not protected requests. Accordingly, the 2004 amendments do not apply in this case.
III. CONCLUSION
Shell‘s drawback claims for HMT and ET are time barred, and the 1999 and 2004 amendments do not aid Shell in reviving those claims. Like the importer in Aectra, Shell‘s failure to file protective claims for HMT and ET is fairly attributed to Shell‘s inaction. Accordingly, we affirm the CIT‘s decision sustaining Customs‘s denial of Shell‘s protests.
AFFIRMED