CIT Rules Harbor Maintenance Taxes Illegally Collected are a "Mistake of Fact
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In Esso Standard Oil Co. (PR), v. U.S., the Court of International Trade ruled that Harbor Maintenance Taxes (HMTs) collected on shipments of petroleum products transported from one insular possession to another should not have been collected and should be refunded under 19 USC 1520(c) (which has been repealed, see below).
Between 1993 and 1997, Esso shipped petroleum products from the U.S. Virgin Islands to Puerto Rico, where entries were filed, and duties and fees, including HMT were paid. After liquidation by Customs as entered, Esso requested refunds of the HMT, which were denied. Esso then filed protests of these denials, which Customs also denied on the basis that the refunds could not be issued under 19 USC 1520(c), since there was no mistake of fact, clerical error, or other inadvertence not amounting to an error in the construction of the law.
Prior to 1988, HMT was payable on waterborne shipments between U.S. insular possessions. In 1988, however, the law was changed to provide an exemption from HMT for such shipments. Customs failed to make the administrative changes necessary to implement the new law and continued to collect HMT on these shipments. After review of the records, the CIT stated: (1) that an error clearly occurred; (2) the HMT was not owed; (3) the error was brought to the attention of Customs within one year of liquidation; and (4) the error was an inadvertence.
The CIT ruled this mistake clearly fell within the category of mistakes that may be corrected as a mistake of fact not amounting to an error in the construction of the law under 19 USC 1520 (c).
(Under the Miscellaneous Trade and Technical Corrections Act of 2004 (Public Law (P.L). 108-429), 19 USC 1520(c) was repealed, effective for goods entered, or withdrawn from warehouse, for consumption on or after December 18, 2004. Issues involving clerical errors, mistakes of fact, or other inadvertences previously dealt with under 19 USC 1520(c) are instead covered under 19 USC 1514. It should be noted that the protest filing/amendment period for 19 USC 1514 is now 180 days (from 90 days); which is less than the one year period previously allotted under 19 USC 1520(c).)
CIT Slip Op. 07-171 (dated 11/20/07) available at: http://www.cit.uscourts.gov/slip_op/Slip_op07/07-171.pdf