Chrysler Motors Corp. v. US, Court No. 89-05-00252.

• Decision Date: 11 December 1990
• Docket Number: Court No. 89-05-00252.
• Parties: CHRYSLER MOTORS CORPORATION, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

755 F. Supp. 388

14 CIT 807

CHRYSLER MOTORS CORPORATION, Plaintiff, v. UNITED STATES, Defendant.

Court No. 89-05-00252.

United States Court of International Trade.

December 11, 1990.

Ross & Hardies, Joseph S. Kaplan, for plaintiff.

Stuart M. Gerson Asst. Atty. Gen., Joseph I. Liebman, Attorney in Charge, Intern. Trade Field Office, Commercial Litigation Branch, Al J. Daniel, Jr., for defendant.

Beveridge & Diamond, P.C., Alexander W. Sierck, for amici curiae Automotive Parts and Accessories Ass'n, American Iron and Steel Institute, and the Specialty Steel Industry of the U.S.

MEMORANDUM OPINION

CARMAN, Judge:

This action was commenced by plaintiff pursuant to 28 U.S.C. § 1581(a) (1988) contesting the denial of its protest of the liquidation of its drawback entry without the allowance of drawback, which plaintiff sought under section 313 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1313(j) (1988).¹

Defendant now moves pursuant to Rule 56 of the Rules of this Court for summary judgment and to dismiss the complaint. Defendant also moves this Court to strike the affidavit of George C. Steuart, an attorney and former employee of the United States Customs Service, as an attachment to plaintiff's cross-motion for summary judgment on the grounds that the affidavit does not contain competent evidence concerning any pertinent factual matter and that Mr. Steuart's legal opinions concerning the regulations are inadmissable as evidence.

Plaintiff, opposing defendant's motion for summary judgment, cross-moves for summary judgment, requests the Court to declare that the transfer of merchandise to a foreign-trade zone for the purpose of manufacture constitutes exportation (entitling plaintiff to drawback), and contends that T.D. 89-4 is erroneous and unlawful.² Plaintiff further requests this Court to direct that the entry which is the subject of this action be reliquidated with drawback allowed.

Amici support defendant's motion for summary judgment.

FACTS

The following facts are not in dispute. Plaintiff, a manufacturer of motor vehicles in the United States, assembles certain motor vehicles in designated foreign-trade sub-zones within the United States from sub-assemblies of domestic- and foreign-sourced components. Joint Stipulation of Facts (Joint Stip.) at 1. On March 28, 1989, plaintiff filed with defendant Customs Form 7539, Entry No. C38003381-8 seeking drawback pursuant to 19 U.S.C. § 1313(j) (1988) on previously imported duty-paid merchandise which was transferred to a foreign-trade zone for manufacturing. Joint Stip. at 1-2. The drawback entry application of plaintiff stated that the merchandise on which the drawback was sought consisted of 108 pieces described as "shaft assy fwd" (the merchandise), which was imported into the United States on December 23, 1988, by GKN Automotive, Inc. and on which $143.27 was paid in duties. On March 3, 1989, GKN Automotive, Inc. issued a certificate of delivery of imported merchandise to plaintiff covering the merchandise. Plaintiff submitted to Customs an application for admission of the merchandise to plaintiff's foreign-trade sub-zone at St. Louis, where plaintiff elected to treat the merchandise as "non-privileged foreign". Joint Stip. at 2.

The documents submitted by plaintiff to Customs in connection with plaintiff's drawback entry certified that the merchandise was transferred to the foreign-trade zone for the purpose of manufacturing in the same quantity and quality value and packaging as specified in the entry. Joint Stip. at 2.

On April 14, 1989, Customs liquidated the entry and denied drawback, stating as its reasons: "Ruling 218551 revoked by T.D. 89-4, effective February 27, 1989." Joint Stip. at 3.

Plaintiff duly protested the liquidation by Customs without benefit of drawback. Customs denied the protest. Plaintiff then commenced the instant action.

BACKGROUND

Drawback is the reimbursement of duties paid on goods imported into the United States and then used in the manufacture or production of articles which are subsequently exported. Nicholas & Co. v. United States, 7 Ct.Cust.App. 97 (1916), aff'd, 249 U.S. 34, 39 S.Ct. 218, 63 L.Ed. 461 (1919). Customs has defined drawback in its regulations as follows:

`Drawback' means a refund or remission, in whole or in part, of a customs duty, internal revenue tax, or fee lawfully assessed or collected because of a particular use made of the merchandise on which the duty, tax, or fee was assessed or collected.

19 C.F.R. § 191.2(a) (1989).

Drawback is usually permitted upon the exportation of articles manufactured or produced in the United States in whole or in part with the use of imported merchandise, 1 R. Sturm, Customs Law and Administration § 17.1 (3rd ed. 1989). Customs duties are subject to drawback. 19 C.F.R. § 191.3 (1989). Detailed and specific provision for different types of drawback is made by statute and regulation. 19 U.S.C. § 1313(a)-(l) (1988); 19 C.F.R. § 191.4 (1989).³

Congress, which provided for the allowance of drawback claims under 19 U.S.C. § 1313(a)-(l) (1988), delegated authority to issue regulations to the Commissioner of Customs to describe in detail the type of drawback allowed, eligibility requirements, and procedures for filing claims. 19 C.F.R. § 191.1 (1989). Procedures for completion, payment, and liquidation of drawback claims are made by Customs regulations. 19 C.F.R. § 191.61 to .73 (1989). The refusal to pay a claim for drawback is treated as final and conclusive upon all persons, including the United States, unless a protest is filed or unless a civil action contesting the denial of such a protest in whole or in part is commenced in the United States Court of International Trade. See 19 U.S.C. § 1514(c) (1988), 28 U.S.C. § 1581(a) (1988).

The rationale for allowing drawback is to encourage the production of articles for export in the United States, increasing foreign commerce, and assisting American labor and industry. Tide Water Oil Co. v. United States, 171 U.S. 210, 216, 18 S.Ct. 837, 839, 43 L.Ed. 139 (1898); United States v. Int'l Paint Co., Inc., 35 CCPA 87, 90, C.A.D. 376 (1948); United States v. Nat'l Sugar Ref. Co., 39 CCPA 96, 99, C.A.D. 470 (1951).

Drawback of Customs duties was recognized from the earliest times of our Republic. See Act of July 4, 1789, ch. II, §§ 3-4, 1 Stat. 24, 26-27 (1789). Congress has passed laws pertaining to drawback over the years, see Table No. III, 1 Stat. xcii-xciii (1789-1799); Rev.Stat. §§ 3015, 3016-24, 3044, 3049 (1878), and has continued to concern itself with drawback. See supra note 3.

The original Tariff Act of 1930, 46 Stat. 693 (1930), made provision for drawback upon exportation of imported merchandise that had been manufactured in some way in the United States. In 1980, Congress amended the Tariff Act of 1930 and authorized drawback upon imported merchandise that was subsequently exported without being manufactured (same condition drawback). Tariff Act of 1930, Pub.L. No. 96-609, 94 Stat. 3560 (1980) (codified as amended at 19 U.S.C. § 1313(j) (1988)).

Statutory provisions for the treatment of foreign merchandise in foreign-trade zones is set forth in pertinent part at 19 U.S.C. § 81c(a) (1988) 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 a zone 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 customs territory of the United States therefrom, in the original package or otherwise; but when foreign merchandise is so sent from a zone into customs territory of the United States it shall be subject to the laws and regulations of the United States affecting imported merchandise:

....

Provided further, the Third Proviso That if in the opinion of the Secretary of the Treasury their identity has been lost, such articles not entitled to free entry by reason of noncompliance with the requirements made hereunder by the Secretary of the Treasury shall be treated when they reenter customs territory of the United States as foreign merchandise under the provisions of the tariff and internal-revenue laws in force at that time: Provided further, the Fourth Proviso That under the rules and regulations of the controlling Federal agencies, articles which have been taken into a zone from customs territory for the sole purpose of exportation, destruction (except destruction of distilled spirits, wines, and fermented malt liquors), or storage shall be considered to be exported for the purpose of —

(1) the draw-back, warehousing, and bonding, or any other provisions of the Tariff Act of 1930, as amended, and the regulations thereunder; and

(2) the statutes and bonds exacted for the payment of draw-back, refund, or exemption from liability for internal-revenue taxes and for the purposes of the internal-revenue laws generally and the regulations thereunder.

Such a transfer may also be considered an exportation for the purposes of other Federal laws insofar as Federal agencies charged with the enforcement of those laws deem it advisable. Such articles may not be returned to customs territory for domestic consumption except where the Foreign-Trade Zones Board deems such return to be in the public interest. ...

Section 313 of the Tariff Act of 1930, Pub.L. No. 96-609, 94 Stat. 3560 (1980) (codified as amended at 19 U.S.C. 1313(j) (1988)) provides in part:

(1) If imported merchandise, on which was paid any duty, tax, or fee imposed under Federal law because of its importation—

(A) is, before the close of the three-year period beginning on the date of importation —

(i) exported in the same condition as when

...