Shell Oil Co. v. United States

Decision Date14 August 2012
Docket NumberNo. 2011–1531.,2011–1531.
PartiesSHELL OIL COMPANY (c/o Gulf Coast Drawback Services, Inc.), Plaintiff–Appellant, v. UNITED STATES, Defendant–Appellee.
CourtU.S. Court of Appeals — Federal Circuit

688 F.3d 1376
34 ITRD 1865
110 A.F.T.R.2d 2012-5573

SHELL OIL COMPANY (c/o Gulf Coast Drawback Services, Inc.), Plaintiff–Appellant,
v.
UNITED STATES, Defendant–Appellee.

No. 2011–1531.

United States Court of Appeals,
Federal Circuit.

Aug. 14, 2012.


[688 F.3d 1378]


George M. Clarke, III, Miller & Chevalier Chartered, of Washington, DC, argued for plaintiff-appellant.
With him on the brief were Daniel P. Wendt and Mary W. Prosser. Of counsel on the brief was Peter A. Lowy, Shell Oil Company, of Houston, Texas.

Tara K. Hogan, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Todd M. Hughes, Deputy Director. Of counsel on the brief was Richard McManus, Office of the Chief Counsel, Customs and Border Protection, United States Department of Homeland Security, of Washington, DC.


Before PROST, MOORE, and WALLACH, Circuit Judges.

WALLACH, Circuit Judge.

Plaintiff–Appellant Shell Oil Company (“Shell”) appeals the decision of the Court of International Trade (“CIT”) holding that Shell's drawback claims for Harbor Maintenance Tax (“HMT”) and Environmental Tax (“ET”) were time barred because the requests for drawback were not made within three years of exporting substitute finished petroleum derivatives as required by 19 U.S.C. § 1313(r)(1) (the “drawback statute”). See Shell Oil Co. v. United States, 781 F.Supp.2d 1313, 1339–40 (Ct.Int'l Trade 2011). Because we find that Shell failed to file timely the HMT and ET drawback claims at issue, we affirm.

I. Background
A. Shell's Imports and the Drawback Statute

Between 1993 and 1994, Shell imported certain petroleum products (“imports at issue”) upon which custom duties, taxes, and other fees were paid.1 During the

[688 F.3d 1379]

same period, Shell exported drawback 2-eligible substitute finished petroleum derivatives. Subsequently, between January 1995 and August 1996, Gulf Coast Drawback Services, Inc., a customs broker to which Shell outsourced its drawback claim services, filed numerous substitution drawback claims with the U.S. Customs and Border Protection (“Customs”) on Shell's behalf.3

In general, under the current statute,4 Customs is required to provide a drawback of 99% of “any duty, tax, or fee imposed under Federal law upon entry or importation” of imported merchandise if that merchandise (or a “commercially interchangeable” substitute) is subsequently “exported, or ... destroyed under customs supervision; and ... is not used within the United States before such exportation or destruction....” 19 U.S.C. § 1313(j), (p). The statute requires all drawback claims to be filed within three years of the date of exportation of the substitute merchandise, and claims that are not completed within the three-year period are “considered abandoned.” Id. § 1313(r)(1). A complete drawback claim consists of “[a] drawback entry and all documents necessary....” Id. During the time of Shell's imports, drawback eligibility of HMT and ET payments, which Shell now seeks, were heavily disputed. See Aectra Refining & Mktg., Inc. v. U.S., 565 F.3d 1364, 1367 (Fed.Cir.2009) (“ Aectra ”) (“[Importer] admits that it was aware that Customs's position regarding the recoverability of ... [Merchandise Processing Fee (“MPF”) ] and HMT was being actively challenged in 1997 and 1998.”) (citations omitted).

B. The 1999 Amendments

In 1999, Congress amended the relevant language of the drawback statute (the “1999 amendments”) clarifying the scope of drawback available to include “any duty, tax, or fee imposed under Federal law because of ... importation” in addition to customs duties. 19 U.S.C. §§ 1313(j), (p) (2000). To effectuate its newly clarified scope, the 1999 amendments suspended the statutory three-year period for the filing of drawback claims, but only as to “drawback claim[s] filed within 6 months after the date of enactment of [the 1999 amendments]” for which the statutory three-year period had expired. 1999 Trade Act, Pub.L. No. 106–36, § 2420(e), 113 Stat. 127, 179 (1999) (emphasis added). The effect of that language was to “creat[e] a six-month grace period in which otherwise untimely [drawback] claims could be filed or re-filed to obtain relief under the amended statute.” Aectra, 565 F.3d at 1370–71 (emphasis added). As a result, importers were authorized to file stale drawback claims of “any duty, tax, or fee imposed under Federal law” paid on imported merchandise “because of its importation” between June 25, 1999 and December 25, 1999. See19 U.S.C. § 1313(j) (2000).

[688 F.3d 1380]

C. The 2004 Amendments

Congress further amended the drawback statute after this court's decision in Texport Oil Co. v. United States, 185 F.3d 1291 (Fed.Cir.1999) ( “Texport ”). In Texport, we interpreted the drawback statute's “because of ... importation” language to preclude the payment of drawback on any “duty, tax, or fee that is assessed in a nondiscriminatory fashion against all shipments....” Id. at 1295–97. Accordingly, we held MPF to be eligible for drawback because MPF “is explicitly linked to import activities.” Id. at 1296. In addition, reasoning that HMT is “assessed in a nondiscriminatory fashion against all shipments utilizing ports,” we held HMT to be ineligible for drawback. Id. In a separate decision, we also held ET to be ineligible for drawback for similar reasons. George E. Warren Corp. v. United States, 341 F.3d 1348, 1356 (Fed.Cir.2003) (“Warren ”).

Responding to these decisions, in December 2004, Congress amended the drawback statute (the “2004 amendments”). Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. No. 108–429, § 1557(b), 118 Stat. 2434, 2579 (2004). Congress made clear its intent to overturn Texport and eliminate the distinction between taxes and fees that discriminate against imports and those that do not. SeeS.Rep. No. 108–28, at 173 (2003). The 2004 amendments thus clarified eligibility of certain drawback claims, and thereafter, allowed drawback for any duty, tax, and fee imposed upon entry. Id. § 1557(b), 118 Stat. at 2579. In particular, the 2004 amendments applied only to any “drawback claim filed on or after [the date of the 2004 amendments' enactment] and to any drawback entry filed before that date if the liquidation of the entry [was] not final on that date.” Id. As such, unlike the 1999 amendments' six-month grace period, the three-year limit on filing drawback claims was left undisturbed. Aectra, 565 F.3d at 1370.

D. This Court's Decision in Aectra

In 2009, this court issued its opinion in Aectra, which dealt with issues similar to this case. Like Shell, the importer in Aectra timely filed drawback claims of its import duties without any reference to taxes or fees, within three years of its export of substitute petroleum derivatives. 565 F.3d at 1367. After Customs liquidated the importer's drawback entries and refunded the requested import duties in full, the importer filed protests and for the first time sought drawback of taxes and fees more than three years after the date of exportation. Id. at 1368. Customs denied the importer's protests and the importer contested the denial at the CIT, where the importer's arguments were rejected and Customs's denials of the protests sustained. Id.

This court affirmed, noting that the importer offered “no explanation for why it did not include protective claims for [taxes and fees] in its ... drawback claims other than its belief that such claims would not be successful at the administrative level.” Id. at 1367. We ultimately held that the importer was not entitled to relief because it failed to claim drawback of taxes and fees within the statutory three-year period within which all drawback claims must be filed. Id. at 1375.

E. Procedural History of This Case

Shell filed drawback claims associated with the imports at issue in 1995 and 1996. These claims sought drawback only as to

[688 F.3d 1381]

the import duties that Shell had paid. Specifically, as the CIT found, “each ‘Drawback Entry’ form (Customs Form 7539) that Shell filed with Customs required Shell to state its ‘net claim’ specifying the precise sum that it sought.” Shell Oil Co., 781 F.Supp.2d at 1318. Shell was found not to have included an express request for HMT and ET in the “net claim” figure that Shell provided on each of the drawback entry forms that it filed with Customs. Id. Based on these representations on the forms, Customs refunded 99% of the import duties as requested. Id.

After the statutory three-year period for the filing of drawback claims had expired, on November 7, 1997, Shell filed protests with Customs, seeking drawback as to HMT and ET payments that Shell had made in connection with the imports at issue. Id. Customs denied Shell's protests on December 3, 1997, stating:

Under provisions of 19 U.S.C. § 1313(b) & (p) drawback is allowed upon Customs duty paid on imported merchandise. [HMT] ... is an incidental expense incurred upon a vessel entering a harbor. The HMT is not incurred as a result of the importation of merchandise but simply imposed for the use of the harbor. The fee is collected by U.S. Customs for the benefit of the Army Corps of Engineers.

Protest No. 5301–97–100421 (Dec. 3, 1997).


On May 20, 1998, Shell filed a summons at the CIT contesting Customs's denial of the HMT and ET drawback claims. The parties filed cross-motions for summary judgment, and on June 20, 2011, the CIT held that Shell's claims for drawback of HMT and ET were time barred. See Shell Oil Co., 781 F.Supp.2d at 1339–40. The CIT found that the amendments to the drawback statute did not aid Shell and futility did not toll the statutory time period. Shell appeals the CIT's...

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