CAFC Upholds Denial of "Old" Drawback Claims for MPF and HMT (MPF and HMT Currently Drawback Eligible)
In Aectra Refining and Marketing, Inc. v. U.S., the United States Court of Appeals for the Federal Circuit affirmed the ruling issued by the Court of International Trade that Aectra was not entitled to drawback for Merchandise Processing Fees (MPF) and Harbor Maintenance Taxes (HMT) paid on certain imports.
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From 1987 to 1997 Aectra imported certain petroleum products, upon which customs duties, MPF, and HMT were paid. Under 19 USC 1313(j), Customs is required to provide a refund (drawback) of 99% of any duty, tax, or fee imposed under Federal law upon entry or importation of imported merchandise, if that merchandise is subsequently exported, or destroyed.
(Note that Customs had not allowed drawback for the MPF until the CAFC ruled in July 1999 (Texport Oil Co. v. U.S.) that it was recoverable as drawback. In addition, Customs had not allowed drawback for the HMT until the Miscellaneous Trade and Technical Corrections Act of 2004 amended 19 USC 1313(j) to permit it.)
Claims for drawback must be filed and completed within a three-year period beginning from the date of export or destruction. 19 USC 1313(r)(1) and 19 CFR 191.51(b)(1), provide that a claim for drawback must include all documents necessary to correctly calculate the amount of drawback due.
Aectra's exported petroleum products qualified for drawback of duties paid, and Aectra duly filed a drawback claim on the duties paid within the applicable three-year period.
Aectra did not file for recovery of MPF and HMT, or make any attempt to amend its claims within the three-year period, even though it was aware that Customs' position on HMT and MPF was being actively challenged.
Aectra argued that a drawback claim for MPF and HMT would have been futile, as Customs was certain to dispute the validity of the claim. Aectra also stated that Customs was responsible for its failure to file, as its regulations in effect at the time did not recognize drawbacks of MPF and HMT. However, the CAFC dismissed Aectra's arguments, stating that it should have nevertheless filed "protective" drawback claims for the MPF and HMT.
Aectra futher contended that the 2004 Trade Act suspended the three-year limit on HMT drawback claims. In addition, Aectra argued that the statute does not expressly require that a calculation of the amount of the tax and fee be included in a drawback claim to complete the claim.
On these arguments, the CAFC affirmed the CIT's decision, ruling that the three-year limitation period imposed by 19 USC 1313(r)(1) had not been suspended by 2004 legislation, and cited 19 CFR 191.51 (b), a regulation that went into effect in 1998, which included a requirement for calculation of taxes and fees sought as part of a drawback claim.
(See ITT's Online Archives or January 4, 2008 news, (ref: 08010499) for BP summary of CIT decision denying refund of MPFs and HMTs)
CAFC decision 08-1356 (dated 05/08/09) available at http://www.cafc.uscourts.gov/opinions/08-1356.pdf