American Export Lines, Inc. v. United States, Court No. 78-1-00174. C.D. 4864.

• Decision Date: 24 July 1980
• Docket Number: Court No. 78-1-00174. C.D. 4864.
• Citation: 496 F. Supp. 1320
• Court: U.S. Court of Customs and Patent Appeals (CCPA)
• Parties: AMERICAN EXPORT LINES, INC., Plaintiff, v. UNITED STATES, Defendant.

496 F. Supp. 1320

AMERICAN EXPORT LINES, INC., Plaintiff, v. UNITED STATES, Defendant.

Court No. 78-1-00174. C.D. 4864.

United States Customs Court.

July 24, 1980.

Haight, Gardner, Poor & Havens, New York City (M. E. DeOrchis, Brian D. Starer and Nicholas H. Cobb, New York City, on the briefs), for plaintiff.

Alice Daniel, Asst. Atty. Gen., Joseph I. Liebman, Atty. in Charge, Field Office for

Customs Litigation, Washington, D. C. (Madeline B. Kuflik, New York City, on the briefs), for defendant.

RE, Chief Judge:

In this action, plaintiff sues to recover duties assessed on repairs made overseas to its vessel, the C. V. Lightning. On the ground that plaintiff failed to comply with procedural requirements, the defendant has moved to dismiss the action for lack of jurisdiction.

The repairs, for which plaintiff seeks a remission of duties, arose from an unexpected grounding suffered by the vessel as it was departing New York for Europe. Although the crew was able to release the ship in a matter of seconds, the ship's master nevertheless anchored for damage inspection. After inspection by both the ship's crew and an American Bureau of Shipping engineer, the C. V. Lightning was found to be seaworthy, and departed from New York.

After docking at Bremerhaven, West Germany, the vessel underwent another inspection for damage. As a result of this inspection, an American Bureau of Shipping surveyor in Bremerhaven declared the vessel unseaworthy, and required that repairs be made before he would authorize a return voyage.

After the repairs were made, the vessel returned to New York, and pursuant to section 466(a) of the Tariff Act of 1930, as amended, duties were assessed on the cost of the foreign repairs. This statute provides for a duty of 50 per centum to be assessed on the cost of repairs made in a foreign port on a vessel, documented under the laws of the United States, engaged or intended to engage in foreign or coasting trade. Section 466(b)(1)¹ also provides that if the owner of the vessel furnishes good and sufficient evidence that "such vessel, while in the regular course of her voyage, was compelled, by stress of weather or other casualty, to ... make such repairs, to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination," the Secretary of the Treasury may remit or refund the duties. See Suwannee Steamship Co. v. United States, 354 F.Supp. 1361, 70 Cust.Ct. 327, C.R.D. 73-3 (1973).

Plaintiff does not dispute the amount of the duties assessed, but contends that the casualty suffered by the C. V. Lightning, in running aground, falls within the remission provision of section 466(b)(1). Plaintiff asserts that no duties should have been assessed on the cost of the repairs, or, in any event, the duties exacted should be remitted or refunded.

Defendant denies that the grounding of the C. V. Lightning constituted a casualty within the regular course of the voyage. Hence, the defendant contends that plaintiff does not qualify for the remission of duties authorized by section 466(b)(1). Moreover, defendant maintains that, since plaintiff failed to comply with essential procedural requirements, it is not entitled to prosecute this action for remission of the foreign repair duties.

Specifically, defendant maintains that plaintiff failed to comply with two procedural requirements: (1) the regulatory mandate under 19 C.F.R. § 4.14 for filing log abstracts within 90 days after filing petition for remission of repair duties; and (2) the statutory requirement under 19 U.S.C. § 1514 for filing a protest within 90 days after the posting of notice of liquidation.

Plaintiff, on the other hand, contends that (1) the Customs Service failed to comply with its own regulations by not sending plaintiff a denial of its remission petition; and (2) the proper time for initiating a protest for the remission of foreign repair duties is 90 days from denial of the remission petition.

Plaintiff argues that, even if the date of liquidation is held to be the date on which the 90-day period began to run, plaintiff's action was nonetheless filed timely through the letters it sent to Customs within 90 days after liquidation. Plaintiff also maintains that defendant should be estopped from raising any jurisdictional defenses arising from procedural defects, as defendant was instrumental in determining the procedures plaintiff should follow.

The procedure for seeking remission of duties on vessel repairs prior to liquidation is set forth in 19 C.F.R. § 4.14 of the Customs Regulations. Section 4.14 requires filing of Customs Form 3415, Declaration of Foreign Repairs to Vessels, upon entry, and filing of an application for remission of duties within 90 days from the date of entry. Evidence of the compelling nature of the repairs, including abstracts of the ship's log, must be filed within 90 days after the filing of the application. The regulation provides for the customs officials to reach a determination on the application, and to notify the applicant of the determination.

Although various claims have been advanced, the crucial questions presented pertain to the necessary procedures to obtain a remission of duties, and whether the parties have complied with these procedures. It cannot be disputed that confusion existed for both parties as to the proper method to obtain administrative review of the decision to impose assessment of foreign repair duties.

There is a long chronological list of filings and responses between the parties in the attempt to gain remission of duties. After the C. V. Lightning returned to New York, plaintiff filed, on June 27, 1974, a vessel repair entry. On July 1, 1974, plaintiff submitted a letter addressed to the U.S. Customs Service at New York requesting that no duties be assessed on the ship's foreign repairs. Certain required documents were submitted with that letter, but no repair cost breakdown or log abstract was submitted at that time. On August 20, 1975, plaintiff forwarded the final repair cost invoices. However, no log abstracts were ever submitted.

Plaintiff claims that it never received a response from Customs to its request for remission of the repair duties. Defendant maintains that plaintiff was sent a denial, but has not produced a file copy.

The entry was liquidated on October 24, 1975. Shortly after receipt of the bill, i. e., a statement of the amount of liquidated duties, on or about November 5, 1975 plaintiff wrote a letter to the Commissioner of Customs, Washington, D. C., requesting cancellation of the duties. On the following day, a copy of this letter was sent to the customs officials in New York. Plaintiff attached a cover letter to the November 5th letter, asking that the New York office forward plaintiff's request to the Washington office.

Plaintiff received further bills from Customs for payment of the vessel repair duties, but received no reply to its November letters. On January 7, 1976, plaintiff again wrote to the customs officials in Washington, D. C., for a response to the November letters. On February 5, 1976, Customs informed plaintiff that the November letters had never been received.

Plaintiff responded by sending another letter to Customs, repeating the information contained in the November 1975 letters, together with a request for the cancellation of the vessel repair duties. Customs denied this request in a letter dated January 14, 1977.

On April 7, 1977, plaintiff's attorneys wrote to Customs, supplying supplemental information on plaintiff's claim, and asked for reasons for the denial. By letter dated July 28, 1977, Customs reaffirmed its prior denial.

Plaintiff filed a formal protest against the Customs decision on September 27, 1977. On October 7, 1977, Customs again denied this protest, and on January 30, 1978, plaintiff filed a summons to commence this civil action. Whether or not this action was commenced within the jurisdictional requisite depends upon the legal effect of the documents filed.

On July 1, 1974, plaintiff filed a remission application but never filed the required log abstracts. Although defendant maintains that the Customs Service notified plaintiff of the denial of the petition, plaintiff contends that it never received the notification, and that Customs liquidated the entry without completing the procedures for the remission petition. Plaintiff submits that, to require it to file a formal protest within 90 days after liquidation, as urged by defendant, would result in plaintiff's initiating a second review procedure while a prior review procedure, i. e., the remission application, was still pending.

According to plaintiff, the proper time for filing a protest is 90 days after the final decision on its application for remission of the duties rather than 90 days after liquidation. Under this interpretation, plaintiff contends that it would not be required to file a formal protest until after notification of the determination on the remission petition.

In support of its position, plaintiff cites 19 U.S.C. § 1514(b)(2)² which reads in pertinent part:

"(2) A protest of a decision, order, or finding described in subsection (a) of this section shall be filed with such customs officer within ninety days after but not before —

(A) notice of liquidation or reliquidation, or

(B) in circumstances where subparagraph (A) is inapplicable, the date of the decision as to which protest is made."

Plaintiff submits that protests regarding repair remissions are governed by subparagraph (B). Under the circumstances presented, the court does not agree. Subsection (a) of section 1514 requires decisions of the customs officer to be final and conclusive unless a protest is filed as provided in section 1514. Decisions specifically included are "the legality of all orders and findings entering into the same, as to ... (3) all charges or exactions of whatever...