CAFC Rules on the Overpayment of Harbor Maintenance Tax
In Esso Standard Oil Co. (PR) v. U.S., the Court of Appeals for the Federal Circuit affirmed the decision by the Court of International Trade not to refund the overpayment of Harbor Maintenance Tax collected on shipments of petroleum products transported from one insular possession to another, which had not been protested in a timely manner under 19 USC 1520(c).
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However, the CAFC reversed another portion of the CIT's decision which allowed refunds as correctable errors under 19 USC 1520(c) for overpayments made for HMT on other petroleum product shipments.
(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. Customs then liquidated those entries as entered by Esso, without change and, consequently, without refunding the HMT.
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. Not until May 16, 1997 did Esso realize that possession-to-possession shipments had been exempted from HMT. Esso requested refunds of the HMT, which were denied. Esso then protested these denials, which Customs also denied.)
Esso appealed the CIT's decision that affirmed the decision by U.S. Customs not to refund overpayments of HMT on entries filed between October 3, 1993 and February 6, 1996. Esso did not dispute that it had not notified Customs of these overpayments within the time limit under 19 USC 1520(c). Instead, it offered the Court a number of arguments as to why the time limits should not apply. The CAFC dismissed all of the arguments offered by Esso while affirming the CIT's ruling that the statutory time limits under 19 U.S.C. 1520(c) had to be met.
On cross-appeal, the government challenged the CIT's ruling that Esso's overpayment of HMT on entries filed between October 5, 1996 and March 19, 1997, could be refunded under 19 USC 1502(c).
On review, the CAFC stated that Esso knowingly and repeatedly made HMT payments, had full knowledge of the facts, and genuinely believed that HMT was owed. Thus Esso's payment could not be considered an error under 19 USC 1520(c). In addition, the CAFC stated that in any case, Esso's failure to know the law would not be a correctable inadvertence under 19 USC 1520(c). Accordingly, the CAFC reversed the CIT decision that these HMT overpayments could be refunded 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).)
(See ITT's Online Archives or 12/12/07 news, 07121235, for BP summary of CIT Slip Op. 07-171.)
CAFC decision 08-1212,-1234 (dated 03/16/09) available at: http://www.cafc.uscourts.gov/opinions/08-1212.pdf