Air-Sea Brokers, Inc. v. United States

• Decision Date: 05 April 1979
• Docket Number: Appeal No. 78-13.
• Citation: 596 F.2d 1008
• Parties: AIR-SEA BROKERS, INC., Appellant, v. The UNITED STATES, Appellee.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

596 F.2d 1008

AIR-SEA BROKERS, INC., Appellant, v. The UNITED STATES, Appellee.

Appeal No. 78-13.

United States Court of Customs and Patent Appeals.

April 5, 1979.

William E. Melahn, Doherty & Melahn, Boston, Mass., attorneys of record, for appellant.

Barbara Allen Babcock, Asst. Atty. Gen., Washington, D. C., David M. Cohen, Acting Director, Commercial Litigation Branch, Joseph I. Liebman, Sidney N. Weiss, New York City, for the United States.

Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE,^* and MILLER, Judges.

MILLER, Judge.

This is an appeal from the decision and judgment of the United States Customs Court reported at 454 F.Supp. 451, 80 Cust.Ct. 102, C.D. 4742 (1978), which dismissed appellant's action seeking reliquidation of three entries of certain electronic components and their duty-free entry as American goods returned under item 800.00¹ of the Tariff Schedules of the United States ("TSUS"). We affirm.

Background

The merchandise was imported at the port of Boston during 1971 by appellant, a licensed customhouse broker and the importer of record, for the account of H.H. Scott, Inc. Scott, alleged by appellant to be bankrupt, is not a party to the action. The merchandise was classified under various provisions of schedule 6, part 5 of the TSUS, with duties varying from 7 to 12.5 percent.

For goods to be accorded duty-free treatment under item 800.00, the importer is required by 19 CFR 10.1(a) to file various documents.² Appellant never filed the required documents because, it alleges, the Customs Service waived the documentary requirement when it issued a "Missing Document Receipt" (referred to as a Form RC-1-24) with the word "Cancelled" inserted after "Reason for this Slip." Although the two RC-1-24's of record³ were issued on December 26, 1972, the liquidation did not occur until May 1974, at which time appellant paid the duties. Appellant asserts that, during the intervening period, Scott was adjudicated a bankrupt in federal district court, and by the time of liquidation it was too late to file a claim in bankruptcy for the duties paid in Scott's behalf; further, that by the actions of the Customs Service, the United States is equitably estopped from denying the merchandise duty-free entry under item 800.00.

Customs Court

The Customs Court noted that compliance with the documentary requirement of 19 CFR 10.1(a) is mandatory and a condition precedent to recovery unless compliance has been waived, citing Maple Leaf Petroleum, Ltd. v. United States, 25 CCPA 5, T.D. 48976 (1937); also, that the basis for such a waiver is the satisfaction of the district director⁴ by the production of evidence that the merchandise is of American origin. Based on the record,⁵ the court found that the Customs Service did not intend to waive filing of the required documents since the district director was not satisfied that the merchandise was of American origin and had not been advanced in value while abroad. Regarding appellant's contention of equitable estoppel, the court simply said that "plaintiff appellant cannot create a right of recovery that does not exist by invoking the doctrine of equitable estoppel."

OPINION

Appellant argues that because the procedures to be followed by import specialists at the Boston district call for issuance of an RC-1-24 marked with the word "Waived" or "Cancelled" if the documentary requirement is to be waived, receipt by appellant of the RC-1-24's with the word "Cancelled" on them constituted a waiver, irrespective of the actual intent of the district director.

Whether or not a waiver of the documentary requirement occurred is a question of fact, and we have said that our inquiry regarding a finding of fact by the Customs Court "is limited to whether the finding is without evidence to support it or is clearly contrary to the weight of the evidence." Artmark Chicago Ltd. v. United States, 558 F.2d 600, 602, 64 CCPA 116, 119, C.A.D. 1192 (1977). Based on the record before us, we are satisfied that there is sufficient evidence to support the Customs Court's finding that there was no waiver of the documentary requirement. The receipt of the RC-1-24's by appellant, while important, is not conclusive and must be considered in light of all the evidence. Appellant was notified orally that the Customs Service was not satisfied that the merchandise was of American origin; and, at least two weeks prior to issuance of the RC-1-24's, appellant received various notices (form CF 5561, no longer in use) indicating that duties were to be assessed. Although one of appellant's witnesses (a customs broker), when asked to give his opinion regarding the RC-1-24's in question, stated that if further duties were to be assessed the form should have been marked with "Custom Regulation, Noncompliance, duty to be assessed," the witness also stated that the term "Cancelled" meant that the bond was cancelled.

Thus, it appears that while the RC-1-24's were probably incorrectly filled out by the Customs Service (since further duties were to be assessed), the use of the term "Cancelled" is ambiguous and could mean that the bond was cancelled. Also, we note that the two RC-1-24's of record only mention two documents (the foreign shipper's declaration and the certificate of exportation) of the required three documents.⁶ We note further the testimony by an import specialist for the Customs Service that when he told appellant's treasurer that the merchandise would be dutiable unless he could produce the required documentation, the treasurer replied that he was looking to legislation by Congress to obtain relief. Accordingly, we conclude that appellant either knew or should have known that the Customs Service was not waiving the documentary requirement.

Appellant next argues that under the doctrine of equitable estoppel the United States is estopped from assessing duties on the merchandise. It premises this argument on the points that the RC-1-24's (with the word "Cancelled") were issued by persons authorized to act, that it was reasonable for appellant to rely on these documents, and that it was damaged as a result of such reliance because it is barred from filing a claim in the H.H. Scott, Inc. bankruptcy proceeding.

The Government presents these arguments: (1) that under Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380, 68 S.Ct. 1, 92 L.Ed. 10 (1947), a case never overruled by the Supreme Court, the United States can never be equitably estopped; (2) that even in cases which incorrectly applied equitable estoppel, the United States was not...