CIT Allows Drawback Claims That Were Delayed Due to Erroneous Advice of Customs Official

Between 1998 and 2002, Delphi filed five drawback entries on certain petroleum products it imported and then exported as acceptable substitute finished petroleum derivates pursuant to 19 USC 1313(p). Customs agreed that Delphi was entitled to drawback of ninety-nine percent of the duties it paid on the petroleum products.

Delphi's drawback entries did not include claims for Harbor Maintenance Tax or Merchandise Processing Fees, but included, instead, a statement indicating that they had not included a claim for the applicable HMT and MPF based on their understanding that they could file a protest after receiving their duty drawback. The claim included a further statement that if informed that this understanding was incorrect, an amended drawback claim would be filed.

In May 2003, Customs liquidated Delphi's five drawback entries refunding the full amount of the duty drawback claimed. On June 12, 2003, Delphi filed a protest requesting refund of the HMT and MPF on the five entries at issue. Customs responded to the protest in October 2005 by asking Delphi to recalculate its claims in one of the five entries and to submit new HMT and MPF calculation sheets only with respect to entries filed after June 12, 2000, because the earlier entries were outside the three-year limitation period.

Delphi made three arguments to support their claims for HMT and MPF for the earlier entries: (1) the correspondence included with its original drawback claims was sufficient to protect its HMT and MFP claims; (2) its claims were timely because their protest merely supplemented its earlier claims under 19 C.F.R. 191.52(c); and (3) if the claims were not protected or timely, the cause for such failings was directly attributable to Customs.

On Delphi's first argument, the CIT ruled that the correspondence filed with the original claim was not complete, because it did not include the necessary calculations of the amount of HTM and MPF claimed. On the second argument, the CIT ruled that because Delphi filed its completed claims for HMT and MPF more than three years after the date of exportation and subsequent to liquidation, 19 CFR 191.52(c) did not apply. The CIT stated further that adding calculations for HMT and MPF at a later stage was inconsistent with the Federal Circuit's holding in Aectra that a "complete claim" must include the calculation of the actual fees.

On the last argument, however, the CIT noted that Delphi, justifiably confused by the state of the law, sought assistance from the Supervisory Drawback Liquidator, the person responsible for the implementation of the applicable procedure. Delphi, willing and ready to present the complete claims, was told by this official, however, not to do so until other events transpired, i.e., liquidation, so that a protest could be filed.

Based on these facts, the CIT found that Customs was responsible for Delphi's delayed HMT and MPF filings, and that Delphi's claims for drawback of HMT and MPF were therefore allowed.

Slip Op. 09-139 (dated 12/15/09) available athttp://www.cit.uscourts.gov/slip_op/Slip_op9/09-139.pdf

BP Note

Before 2004, the drawback statue stated that duty, tax, or fees imposedbecause of the importationshall be refunded as drawback. The Federal Circuit Court in Texport held that MPF was eligible for drawback, because it was imposed because of the importation. HMT was ruled not to be eligible for drawback, because it was a general charge against all shipments, regardless of whether they were imports. However, with the enactment of 2004 Trade Act, the statute clarified that both MPF and HMT were eligible for drawback claims.)