Ammex, Inc. v. U.S., 02-2375.
| Decision Date | 06 May 2004 |
| Docket Number | No. 02-2375.,02-2375. |
| Citation | 367 F.3d 530 |
| Parties | AMMEX, INC., Plaintiff-Appellant, v. UNITED STATES of America; Internal Revenue Service, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Joseph W. Koegel, Jr., Washington, DC, Mark H. Sutton (briefed), Craig L. John (argued and briefed), Christopher S. Olsen (briefed), Dykema Gossett, Bloomfield Hills, MI, for Plaintiff-Appellant.
Stephen T. Lyons, U.S. Dept. of Justice Tax Div., Washington, DC, Teresa E. McLaughlin (argued and briefed), U.S. Department of Justice Appellate Section Tax Div., Washington, DC, Judith A. Hagley (argued), U.S. Department of Justice, Tax Division, Washington, DC, for Defendant-Appellees.
Before MERRITT and DAUGHTREY, Circuit Judges; HOOD, District Judge.*
Plaintiff-Appellant, Ammex, Inc. ("Ammex") sued the United States to recover motor fuel excise taxes allegedly collected in violation of, inter alia, the Export Clause of the United States Constitution. Ammex now appeals the district court's order granting Defendants-Appellees' motion for summary judgment on the basis of lack of standing. For the reasons set forth below, we AFFIRM the judgment of the district court.
Ammex operates a "sterile" U.S. Customs Class 9 bonded warehouse, commonly known as a duty-free store, or duty-free sales enterprise, in Detroit, Michigan. The designation "sterile" means that the physical design and operation of the facility guarantee the exportation of products sold therein. The store is located on West Lafayette Street adjacent to the Ambassador Bridge, which connects the United States and Canada. Customers entering Ammex's facility have necessarily proceeded beyond the "point of no return" and must exit the United States.
As a duty-free sales enterprise, Ammex is permitted to sell for export certain goods "duty-free." These duty-free goods are sold to customers who transport them directly to Canada after leaving Ammex's store. At issue in the district court case was whether Ammex could sell gasoline and diesel fuel on a duty-free basis.
Ammex purchased the fuel in question with the intention of selling it for export from its duty-free store. This store has an Automatic Tank Gauging system, whereby its daily fuel needs are automatically recorded and transmitted to its purchasing agent, Fleet Fuel, LLC ("Fleet Fuel"). Based on the data received from that system, Fleet Fuel prepares purchase orders on behalf of Ammex. During the periods at issue, Ammex purchased both gasoline and diesel fuel from several local suppliers, including BP Oil Co., Atlas Oil Co., Viking Oil, Peerless Distributing Co., and Mooney Oil Co.
Because of the duty-free nature of its operations, Ammex requested to purchase the fuel free of federal excise tax. The suppliers, however, as a condition of Ammex's purchase of the fuel, required payment of federal excise taxes at the time of purchase. These taxes were imposed at the time the fuel was removed from the fuel terminal, known as the terminal rack, for delivery to Ammex's duty-free store. This practice is consistent with I.R.C. § 4081, which places the legal incidence of the excise tax at this point in the chain of sales transactions. After removing the fuel from the terminal rack, third-party carriers delivered the fuel directly to Ammex's duty-free facility and unloaded it into Ammex's fuel dispensing tanks. Ammex's purchasing agent remitted payment for the fuel within ten days of its delivery to Ammex's fuel storage facility. After delivery, Ammex sold the fuel to customers who were necessarily required to take it into Canada.
The Export Clause of the United States Constitution prohibits the imposition of any federal tax on duty-free merchandise. This constitutional proscription is confirmed by federal customs law. See, 19 U.S.C. § 1555(b)(3)(C), (8)(E). Ammex also cites to several provisions of the Internal Revenue Code in support of its claim for a refund of the tax paid on the gasoline and diesel fuel at issue.
In part, Ammex relies on a letter ruling it received from the U.S. Customs Service Port Director for Detroit dated September 5, 2000. In that letter, Ammex was granted permission to expand its Class 9 duty-free warehouse operation to include the sale of gasoline and diesel fuel. That letter ruling, however, was revoked in a notice-and-comment ruling letter and explanatory note dated November 1, 2001. The basis of the revocation was that only fuel on which neither duty nor tax has been assessed can qualify as duty-free fuel under 19 U.S.C. § 1555(b)(8)(E), and the fuel sold by Ammex had been assessed a federal excise tax. Customs was enjoined from effectuating its revocation because of a temporary restraining order ("TRO") issued by Court of International Trade Judge Evan J. Wallach on January 23, 2002. That TRO was subsequently dissolved by Judge Wallach on February 22, 2002.
Asserting that taxation of the fuel violated the Export Clause of the Constitution, Ammex made refund claims with respect to gasoline and diesel fuel for each of the tax periods at issue. The total refund requested was $647,494 plus interest. The IRS disallowed Plaintiff's claims for two reasons: first, Plaintiff did not establish that the gasoline and diesel fuel sold constituted export sales, and second, Ammex did not establish that it was the proper party to seek a refund.
On February 3, 2000, Ammex filed its complaint against the United States and the Internal Revenue Service, seeking recovery of fuel tax of $647,494.00, plus interest for quarterly tax periods ending March 31, 1999, and June 30, 1999. Ammex based its claims on the Export Clause of the United States Constitution, art. I, § 9, cl. 5, and I.R.C. §§ 4221, 6421, and 6427.
On November 19, 2001, Ammex filed a motion for summary judgment. On November 20, 2001, the Government filed its own motion for summary judgment. The district court heard the cross-motions for summary judgment on February 7, 2002. On July 31, 2002, the district court granted the Government's motion for summary judgment and denied Ammex's, holding that Ammex lacked standing to seek a refund of fuel taxes because it could not establish "an injury in fact caused by defendant." The court did not reach the merits of the Export Clause claim. Judgment was entered on August 1, 2002.
On August 14, 2002, Ammex filed a motion for reconsideration; the motion was denied by the district court on October 22, 2002. The instant appeal followed.
This Court reviews a district court's grant of summary judgment de novo. See Upsher v. Grosse Pointe Public School System, 285 F.3d 448, 451, (6th Cir.2002). The constitutional and statutory interpretation issues presented in this case are questions of law, also subject to de novo review. See Johnson v. Economic Dev. Corp., 241 F.3d 501, 509 (6th Cir.2001).
The limitation of Article III of the Constitution requires that "a federal court act only to redress injury that fairly can be traced to the challenged action of the defendant, and not injury that results from the independent action of some third party not before the Court." Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 41-42, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976). The district court's conclusion that Ammex had no standing was based, in part, upon the fact that it was not the Government that collected the tax from Plaintiff, but rather Plaintiff's suppliers. In other words, it was the action of a third party (the suppliers) as opposed to the Defendant (the Government), that caused Plaintiff's alleged injury.
In order to satisfy the standing requirements imposed by Article III of the United States Constitution,
A plaintiff must have suffered some actual or threatened injury due to the alleged illegal conduct of the defendant; the injury must be `fairly traceable' to the challenged action; and there must be a substantial likelihood that the relief requested will redress or prevent the plaintiff's injury.
Coyne v. American Tobacco Company, 183 F.3d 488, 494 (6th Cir.1999) (citing Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 473, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982)). Plaintiff claims that (1) it suffered an economic injury in fact by the Government's imposition of the challenged excise tax, (2) since the Government imposed this tax, its injury is fairly traceable to the Government, and (3) by reimbursing Ammex for the taxes paid, its injury will be redressed.
Although the Government did impose an excise tax on the fuel that Ammex purchased and later sold at its "duty-free facility," that tax was not assessed against Ammex. Instead, the tax was imposed on Ammex's suppliers who, in turn, added the amount of the tax to the wholesale price of the fuel Ammex purchased.1 As noted by the district court, "The tax burden at issue here is that of Ammex's suppliers, and not Ammex." Therefore, Ammex did not pay the challenged excise tax to the Government (nor was such a tax assessed against it), but instead paid a tax-included price to its suppliers. It was in the discretion of Ammex's suppliers to charge Ammex for the challenged tax amount. Consequently, any alleged injury suffered by Plaintiff in the form of increased fuel costs was not occasioned by the Government.
It is difficult to see how, "[i]f the defendant did not lay, assess, exact, or otherwise collect from plaintiff any federal excise taxes on the gasoline and diesel fuel during the periods at issue ...," Plaintiff can proceed under this theory. Ammex Inc. v. United States, No. 99-338T (Court of Federal Claims, April 10, 2002) at p. 12. Without an injury-in-fact, caused by the Government, we hold that Ammex does not have standing to pursue its claim based on the Export Clause.
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