American Express Company v. United States

• Decision Date: 08 February 1973
• Docket Number: Customs Appeal No. 5485.
• Citation: 472 F.2d 1050
• Court: U.S. Court of Customs and Patent Appeals (CCPA)
• Parties: AMERICAN EXPRESS COMPANY, Appellant, v. The UNITED STATES, Appellee.

472 F.2d 1050 (1973)

AMERICAN EXPRESS COMPANY, Appellant, v. The UNITED STATES, Appellee.

Customs Appeal No. 5485.

United States Court of Customs and Patent Appeals.

February 8, 1973.

Edward Garfield, Frederic S. Nathan, Greenbaum, Wolff & Ernst, Barnes, Richardson & Colburn, New York City, attorneys of record, for appellant. Leo Rosen, E. Thomas Honey, New York City, of counsel.

E. Grey Lewis, Acting Asst. Atty. Gen., Andrew P. Vance, Chief, Customs Section, Frederick L. Ikenson, John A. Gussow, New York City, for the United States.

Before MARKEY, Chief Judge, and RICH, ALMOND, BALDWIN and LANE, Judges.

ALMOND, Judge.

This appeal is from a decision and judgment of the United States Customs Court, 67 Cust.Ct. 141, 332 F.Supp. 191, C.D. 4266 (1971), overruling the importer's protest against the assessment of countervailing duties on certain galvanized fabricated structural steel units for the erection of electrical transmission towers (hereinafter "tower units")¹ which were imported from Italy. The duty, at 13.67 lire per kilogram, was assessed by the regional commissioner in compliance with an order of the Secretary of the Treasury, T.D. 67-102 (1 Cust.Bull. 212). The order resulted from the determination of the Secretary, under the provisions of section 303 of the Tariff Act of 1930, 19 U.S.C. § 1303, that Italy bestows an indirect bounty on such tower units. Appellant challenges the validity of that order.

In pertinent part. T.D. 67-102, issued April 17, 1967 after an investigation by the Secretary,² reads:

Information was received in proper form pursuant to the provisions of section 16.24(b) of the Customs Regulations (19 CFR 16.24(b)) alleging that certain rebates or refunds granted by the Government of Italy on the exportation from Italy of galvanized fabricated structural steel units for the erection of electrical transmission towers constitute the payment or bestowal of a bounty or grant, directly or indirectly within the meaning of section 303 of the Tariff Act of 1930 19 U.S.C. 1303), upon the manufacture, production, or exportation of the units to which the refunds apply.

An investigation was conducted pursuant to section 16.24(d) of the Customs Regulations (19 CFR 16.24(d)).

After consideration of all information received, the Bureau is satisfied that exports of such steel units for electrical transmission towers from Italy receive bounties or grants within the meaning of section 303.

Accordingly, notice is hereby given that galvanized fabricated structural steel units for the erection of electrical transmission towers imported directly or indirectly from Italy (except any such importations which are free of duty under the Tariff Act of 1930, as amended), if entered for consumption or withdrawn from warehouse for consumption after the expiration of 30 days after publication of this notice in the Customs Bulletin, will be subject to the payment of countervailing duties equal to the net amount of any bounty or grant determined or estimated to have been paid or bestowed.

In accordance with section 303, the net amount of such bounty or grant under the information presently available has been ascertained and determined, or estimated, and such net amount is hereby declared to be 13.67 lire per kilo of the product.

Section 303 of the Tariff Act of 1930, upon which T.D. 67-102 was grounded, provides:

Whenever any country, dependency, colony, province, or other political subdivision of government, person, partnership, association, cartel, or corporation shall pay or bestow, directly or indirectly, any bounty or grant upon the manufacture or production or export of any article or merchandise manufactured or produced in such country, dependency, colony, province, or other political subdivision of government, and such article or merchandise is dutiable under the provisions of this chapter, then upon the importation of any such article or merchandise into the United States, whether the same shall be imported directly from the country of production or otherwise, and whether such article or merchandise is imported in the same condition as when exported from the country of production or has been changed in condition by remanufacture or otherwise, there shall be levied and paid, in all such cases, in addition to the duties otherwise imposed by this chapter, an additional duty equal to the net amount of such bounty or grant, however the same be paid or bestowed. The Secretary of the Treasury shall from time to time ascertain and determine, or estimate, the net amount of each such bounty or grant, and shall declare the net amount so determined or estimated. The Secretary of the Treasury shall make all regulations he may deem necessary for the identification of such articles and merchandise and for the assessment and collection of such additional duties.

Appellant's protest, with an item (No. 7) omitted because it was not pressed by appellant, reads:

(1) No bounty or grant was paid or bestowed by the Republic of Italy directly or indirectly upon the manufacture, or production or exportation of the said imported merchandise;

(2) The refund by the Republic of Italy, pursuant to Italian Law No. 639, of the Italian internal taxes, duties and charges which are the subject of Treasury Decision No. 67-102 does not constitute a bounty or grant within the meaning of Section 303 of the Tariff Act of 1930 and the amendments thereto (19 U.S.C. § 1303), and said Treasury Decision is outside the authority of the Secretary of the Treasury;

(3) The question of whether the refund of said Italian internal taxes is a bounty, grant or subsidy and of whether countervailing duty can be imposed is governed by Article VI (4) of the General Agreement on Tariffs and Trade which is not, and was not intended by the United States to be, inconsistent with Section 303 of the Tariff Act of 1930 as amended, and Treasury Decision No. 67-102 contravenes said Article VI (4);

(4) Prior to the issuance of Treasury Decision No. 67-102, the Secretary of the Treasury had knowledge that countries other than Italy make refunds of internal taxes, duties and charges of like character on like products and other products exported to the United States but he failed to order the imposition of countervailing duty against importations of such products to the United States, thereby discriminating against Italy and failing to accord most-favored nation treatment in contravention of Article I(1) of the General Agreement on Tariffs and Trade and Article XIV(1) of the Treaty of Friendship, Commerce and Navigation between the United States and Italy, and also thereby depriving importers of said merchandise from Italy of due process of law and the equal protection of the laws in violation of the Fifth and Fourteenth Amendments to the Constitution of the United States;

(5) There has been a uniform and consistent administrative practice and interpretation of Section 303 of the Tariff Act of 1930 as amended, and its predecessors, to the effect that refunds of internal taxes by an exporting country do not constitute bounties or grants subject to countervailing duty, which administrative practice and interpretation was approved and adopted by Congress prior to the issuance of Treasury Decision No. 67-102;

(6) To the extent that Treasury Decision No. 67-102 is based on a supposed delegation of power to the Secretary of sic Treasury to differentiate the particular Italian internal taxes covered by Treasury Decision No. 67-102, from other types of internal taxes, such delegation of Congressional authority would contravene the Constitution of the United States as there are no standards contained in Section 303 of the Tariff Act of 1930 as amended governing the action of the Secretary of the Treasury;

* * * * * *

(8) The Secretary of the Treasury failed to comply with the requirements of the Administrative Procedure Act (5 U.S.C. § 1001 et seq.) and deprived the importer of due process of law in contravention of the Fifth Amendment to the Constitution of the United States.

The evidence in the case consists of two stipulations of facts and accompanying documentary exhibits, testimony of five witnesses for appellant and two witnesses for appellee, and additional documentary exhibits. Objections to certain of the exhibits were, by agreement, reserved for determination of the Customs Court in its opinion and, in some cases, these objections were sustained by the court.

The basis for the action of the Secretary in T.D. 67-102 was the remission by the Republic of Italy, under Italian Law No. 639, of certain internal charges or taxes on the tower units upon their exportation. The charges remitted were termed "Basic Rate Taxes" and included overhead items such as customs duties on factory machinery, registration taxes, stamp taxes, transportation documents taxes, insurance taxes, mortgage taxes and surtaxes. The Italian Government computed the total Basic Rate Taxes that were levied on the tower units to have amounted to 15.08 lire per kilogram and the total amount of such taxes remitted upon exportation to have been 13.67 lire per kilogram, which is the amount of bounty "ascertained and determined, or estimated," by the Secretary.

The Customs Court

The Customs Court first considered objection No. 8 of the protest, supra, which charged that T.D. 67-102 was void for failure of the Secretary to comply with the requirements of the Administrative Procedure Act (hereinafter APA), 5 U.S.C. § 1001 et seq. (now 5 U.S.C. § 551 et seq.), and deprived the importer of due process of law in contravention of the Fifth Amendment. The court held that objection was too broad and general to reveal the nature of the violations charged to the Secretary, and hence did not confer jurisdiction upon the regional commissioner or the court to review the Secretary's action. For that reason, it made no ruling on the merits of particular matters which were raised by appellant in objection No. 8.

The...