BMW Manufacturing v. U.S.

• Decision Date: 05 March 2001
• Docket Number: No. 00-1135,00-1135
• Citation: 241 F.3d 1357
• Parties: (Fed. Cir. 2001) BMW MANUFACTURING CORPORATION, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee
• Court: U.S. Court of Appeals — Federal Circuit

Page 1357

241 F.3d 1357 (Fed. Cir. 2001)

BMW MANUFACTURING CORPORATION, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 00-1135

UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

March 5, 2001.

Sidney H. Kuflik, Lamb and Lerch, of New York, New York, argued for plaintiff-appellant. With him on the brief was David R. Ostheimer.

Jeffrey A. Belkin, Trial Attorney, Commercial Litigation Branch, Civil Division Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were David M. Cohen, Director; Jeanne E. Davidson, Deputy Director; and Todd M. Hughes, Assistant Director. Of counsel on the brief was Richard McManus, Attorney, Office of General Counsel, United States Customs Service, of Washington, DC.

Before MICHEL, LOURIE, and CLEVENGER, Circuit Judges.

LOURIE, Circuit Judge.

BMW Manufacturing Corporation appeals from the decision of the United States Court of International Trade upholding the United States Customs Service's ("Customs'") imposition of the Harbor Maintenance Tax ("the HMT") on merchandise admitted into a foreign trade zone ("FTZ") pursuant to 19 C.F.R. 24.24(e)(2)(iii) (2000). BMW Mfg. Corp. v. United States, 69 F. Supp. 2d 1355 (Ct. Int'l Trade 1999) ("BMW I"). Because we conclude that the Court of International Trade did not err in upholding Customs' regulation, we affirm.

BACKGROUND

BMW is a United States company incorporated in the state of Delaware, and is a wholly-owned subsidiary of Bayerische Motoren Werke Aktiengesellschaft of Munich, Germany. Id. at 2-3. BMW has a facility in Spartanburg, South Carolina, at which it both manufactures motor vehicles and receives motor vehicles that were manufactured overseas. Id. at 3. BMW utilizes both U.S. and foreign components in the vehicles it manufactures at Spartanburg. Id. BMW's Spartanburg facility is a foreign trade subzone.¹ Id. The foreign goods imported into that facility, whether complete motor vehicles or automotive components, are therefore entitled to receive beneficial FTZ treatment. See generally 19 U.S.C. 81a-81u; 19 C.F.R. pt. 146. One such benefit afforded merchandise admitted into an FTZ is the exemption it receives from the customs laws of the United States. 19 U.S.C.A. 81c(a) (West Supp. 2000).

The HMT, contained in title XIV of the Water Resources Development Act of 1986, Pub. L. No. 99-662, 100 Stat. 4082 (1986), is an ad valorem tax on commercial cargo involved in "any port use," including imports. I.R.C. 4461. Customs regulations mandate the imposition and collection of the HMT upon the admission of foreign merchandise into an FTZ. 19 C.F.R. 24.24(e)(2)(iii).² The HMT is to be paid on a quarterly basis by the applicant for admission into the FTZ with a completed Customs Form 349 ("CF 349"). Id. As the party admitting foreign goods into an FTZ, BMW has filed CF 349s with HMT payments in accordance with 19 C.F.R. 24.24(e)(2)(iii). BMW I at 4.

BMW commenced a civil action at the United States Court of International Trade challenging the imposition and collection of the HMT on the merchandise it had imported into its Spartanburg facility, initially asserting four causes of action. Id. Of those four causes of action, BMW ultimately pursued only its claim that the HMT, whether treated as a customs duty or an excise tax, may not be imposed and collected upon foreign goods that are admitted into an FTZ. Id. Both BMW and the government moved for summary judgment. Id. at 1.

The Court of International Trade granted summary judgment in favor of the government and held that 19 C.F.R. 24.24(e)(2)(iii) properly imposes HMT liability on cargo admitted into an FTZ. Id. at 10. The court noted that merchandise admitted into an FTZ is not included among the list of port uses specifically exempted from the HMT under I.R.C. 4462. Id. at 6. The court also found that because the HMT is treated as a customs duty for administration and enforcement purposes only, neither I.R.C. 4462(f)(1) nor 19 U.S.C. 1528 (1994) rendered applicable the customs duty exemption in 19 U.S.C. 81c(a) for cargo admitted into an FTZ. Id. at 7. Finally, after the parties informed the court that BMW paid the international shipping charges for the merchandise at issue, the Court of International Trade, in a separate opinion, concluded that the HMT was properly assessed against BMW because it qualified as either an "importer" or a "shipper" under I.R.C. 4461(c). BMW Mfg. Corp. v. United States, No. 97-03-00396 (Ct. Int'l Trade Sept. 30, 1999).

BMW timely appealed to this court. We have jurisdiction pursuant to 28 U.S.C. 1295(a)(5) (1994).

DISCUSSION

This court reviews a grant of summary judgment by the Court of International Trade "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." Texaco Marine Servs., Inc. v. United States, 44 F.3d 1539, 1543 (Fed. Cir. 1994) (quoting St. Paul Fire & Marine Ins. Co. v. United States, 6 F.3d 763, 767 (Fed. Cir. 1993)). When Congress has not directly addressed the precise question of statutory interpretation at issue, we give deference to Customs' 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, 143 L. Ed. 2d 480, 119 S. Ct. 1392 (1999) (citing Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 842-43, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984)).

BMW argues that the imported merchandise at issue qualifies for the customs duty exemption provided by 19 U.S.C. 81c(a) for goods admitted into an FTZ, and that it is therefore precluded from being assessed with HMT liability. Specifically, BMW contends that this court in IBM Corp. v. United States, 201 F.3d 1367 (Fed. Cir. 2000), construed the "administration and enforcement" language of I.R.C. 4462(f)(1) to include customs laws that deal with the assessment of HMT liability, and therefore that the exemption in 81c(a) applies. BMW further argues that 19 U.S.C. 1528, which states that a tax shall be construed to be a customs duty if the enabling statute contains a provision to the effect that it be so treated, triggers 81c(a) and thus precludes the application of the HMT against the merchandise at issue. Alternatively, BMW argues that even if the HMT is not treated as a customs duty, it is codified as an excise tax. Therefore, BMW asserts, it cannot be assessed with HMT liability because goods admitted into an FTZ are exempt from excise taxes under 81c(a). Finally, BMW argues that even if the HMT may be properly imposed on merchandise admitted into an FTZ, it is neither an "importer" nor a "shipper" under Customs' own definitions of these terms and thus that it was improperly charged with HMT liability.

The government responds that Congress created express exemptions from the HMT for certain port uses under I.R.C. 4462, and therefore that it would have expressly exempted goods admitted into FTZs from the HMT if it had intended to do so. The government argues that the HMT is simply a general charge for the use of certain harbors, which is imposed at the time of cargo unloading without regard to whether the goods are admitted into an FTZ or the customs territory of the United States. The government also contends that the exemption provided by 81c(a) does not apply to the HMT because I.R.C. 4462 directs Customs to treat the HMT as a customs duty for collection purposes only, and because 1528 requires that a tax be expressly designated as a customs duty to be afforded the preferences of the customs laws. Finally, the government argues that Customs' determination that HMT liability should be assessed upon the applicant for admission to an FTZ should be upheld as a reasonable interpretation of the HMT statute.

We agree with the government that merchandise admitted into an FTZ is not exempt from the HMT and that Customs properly applied 19 C.F.R. 24.24(e)(2)(iii) to the cargo at issue. We note at the outset that Congress has provided express exemptions from the HMT for certain port uses. Congress created a "special rule for Alaska, Hawaii, and [United States] possessions" that exempts certain cargo from the HMT in I.R.C. 4462(b). Congress also expressly exempted "bonded commercial cargo entering the United States for transportation and direct importation to a foreign country" from the HMT in I.R.C. 4462(d)(1). It thus appears that Congress expressly provided for the exemption of certain merchandise from the HMT. Where it did not so provide, it is reasonable to conclude that it did not so intend. Expressio unius est exclusio alterius. The absence of any provision specifically exempting goods admitted into an FTZ therefore leads to the conclusion that Congress did not intend such an exemption.

Because the HMT statute itself does not exempt goods admitted into an FTZ, we next turn to BMW's assertion that the HMT should be treated as a customs duty, thereby precluding the application of the HMT to goods admitted into an FTZ under 81c(a). Section 81c(a) reads as follows:

Foreign and domestic merchandise of every description, except such as is prohibited by law, may, without being subject to the customs laws of the United States, except as otherwise provided in this chapter, be brought into [an FTZ] and may be stored, sold, exhibited, broken up, repacked, assembled, distributed, sorted, graded, cleaned, mixed with foreign or domestic merchandise, or otherwise manipulated, or be manufactured except as otherwise provided in this chapter, and be exported, destroyed, or sent into [the] customs territory of the United States therefrom, in the original package or otherwise; but when foreign merchandise is so sent from [an FTZ] into [the] customs territory of the United States it shall be subject to the laws and regulations of the United States affecting imported merchandise . . . .

19 U.S.C.A. 81c(a...