Ammex, Inc. v. U.S.

• Citation: 288 F.Supp.2d 1375
• Decision Date: 30 October 2003
• Docket Number: No. Slip Op. 03-145.,Court No. 02-00361.,Slip Op. 03-145.
• Parties: AMMEX, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

288 F.Supp.2d 1375

AMMEX, INC., Plaintiff, v. UNITED STATES, Defendant.

No. Slip Op. 03-145.

Court No. 02-00361.

United States Court of International Trade.

October 30, 2003.

Steptoe & Johnson LLP, Herbert C. Shelley, (J. William Koegel, Jr.), Alice A. Kipel, Washington, DC, for Plaintiff.

Peter D. Keisler, Assistant Attorney General, United States Department of Justice; Barbara S. Williams, Assistant Branch Director, International Trade Field Office; (Amy M. Rubin), Civil Division, United States Department of Justice, Commercial Litigation Branch; Beth C. Brotman, Attorney, Office of Assistant Chief Counsel, International Trade Litigation, Bureau of Customs and Border Protection, of counsel, for Defendant.

OPINION

BARZILAY, District Judge.

Before the court is the motion of Defendant the United States ("government") to dismiss Plaintiff Ammex, Inc.'s ("Ammex") amendment to its complaint for lack of jurisdiction and for failure to state a claim upon which relief can be granted. On May 16, 2002, Ammex filed its original complaint with this court challenging the United States Customs Service's ("Customs")¹ November 21, 2001 revocation of its September 5, 2000 ruling letter authorizing Ammex to sell duty-free gasoline and diesel fuel from its Class 9 Customs-bonded warehouse and duty-free store at the Ambassador Bridge between Detroit, Michigan and Windsor, Canada ("Revocation Ruling"). Compl. ¶¶ 1, 2. In the complaint, Ammex invoked the court's jurisdiction under 28 U.S.C. § 1581(i), framing the issue as "whether fuel imports purchased by Ammex and sold from Ammex's duty-free store, for export only, may nevertheless be charged taxes and duties." Id. ¶ 5. The Revocation Ruling was based on the conclusion that gasoline and diesel fuel subject to section 4081 of the Internal Revenue Code, 26 U.S.C. § 4081, cannot qualify as duty-free under 19 U.S.C. § 1555(b)(8)(E) (2000) and 19 C.F.R. §§ 19.35(a) and 19.36(e) (2001).² Id. ¶¶ 1, 22. By leave of the court, Ammex amended its complaint. In the amended complaint, Ammex added a challenge alleging that Customs had denied Ammex's protest against exclusion of a particular entry of diesel fuel from duty-free entry on February 21, 2002. Am. Compl. ¶ 2. Because Ammex maintains that there was a protestable decision and denial of a valid protest under 19 U.S.C § 1514(a)(4) and § 1515³ regarding the February 21, 2002 entry,⁴ Ammex additionally invokes the court's jurisdiction under 28 U.S.C. § 1581(a) in the amended complaint. Id. ¶ 6. As Defendant seeks to dismiss only the amendment to the complaint and concedes jurisdiction under section 1581(i), the issue before the court is whether the court has jurisdiction under section 1581(a).⁵ For the following reasons, the court finds that there is no jurisdiction under section 1581(a) in this case. Accordingly, Defendant's Motion to Dismiss is granted.

I.

A. Background.

This Court has so far issued two decisions relating to the dispute regarding fuel sold at Plaintiff's Ambassador Bridge facility.⁶ In particular, on August 25, 2000, entertaining Plaintiff's challenge to a 1998 Customs ruling (HQ 227385), which extended an earlier Customs decision, this Court held that diesel fuel and gasoline are eligible for sale from duty-free stores (including Ammex's facility) under 19 U.S.C. §§ 1555(b) and 1557(a)(1).⁷ See Ammex, Inc. v. United States, 24 CIT ___, ___, 116 F.Supp.2d 1269, 1273-76 (2000) ("Ammex I"). On September 5, 2000, Customs, by letter to Plaintiff, granted Plaintiff's request to expand its Class 9 duty-free warehouse to encompass gasoline and diesel fuel tanks located on the facility. On October 23, 2000, Ammex solicited another letter from Customs to certify that fuel sold in Ammex's duty-free store was exempt from taxes, which request Customs forwarded to the Internal Revenue Service ("IRS"). On January 8, 2001, the IRS issued an informal letter contending that under section 4081 of the Internal Revenue Code, 26 U.S.C. § 4081, a tax must be imposed on any taxable fuel entering the United States, including gasoline and diesel fuel for consumption, use, or warehousing. On November 21, 2001 after a notice and comment period and basing its decision on the IRS letter, Customs issued the ruling revoking its September 5, 2000 letter, which had permitted Ammex to sell duty-free gasoline and diesel fuel at the Ambassador Bridge facility. In subsequent litigation, Ammex challenged Customs' Revocation Ruling arguing that Customs should be held in contempt for failing to abide by this Court's opinion in Ammex I. The Court, however, found that the intervening IRS letter (and the new information contained therein) made the issue presented distinct from that litigated in Ammex I. See Ammex, Inc. v. United States, 26 CIT ___, 193 F.Supp.2d 1325 (2002) ("Ammex II"), aff'd, 334 F.3d 1052 (Fed.Cir.2003). The Ammex II Court consequently held that Customs was not in contempt of the Court's Ammex I ruling, nor was the relitigation of the issue barred by res judicata. Because "Ammex is entitled to challenge the basis of Customs' decision to revoke its September 5 letter," but must do so "anew in the proper procedural manner," Ammex II at 1330, this action ensued.

Ammex's Ambassador Bridge facility is situated beyond a U.S. Customs exit point within two miles of the Canadian border. All entry into and exit from the facility is regulated and controlled by U.S. Customs. The facility is configured in such a way that any vehicle entering the facility must necessarily come from the United States and, exiting the facility, it must necessarily enter Canada. Ammex's store sells a variety of duty-free items, as well as retail gasoline and diesel fuel the duty-free status of which is now in dispute.

As part of the enforcement of the Revocation Ruling, which became effective as of February 21, 2002, Customs required that any Ammex entries of gasoline and diesel fuel on or after that date be made as Type Code 01 (consumption) entries, as opposed to Type Code 21 (warehouse) entries. On February 21, 2002, Ammex attempted to enter 11,235 gallons of diesel fuel from Canada as a warehouse entry. Customs denied the warehouse entry, but allowed the entry of fuel for consumption. On the entry/immediate delivery form (dated February 21, 2002) and entry summary form (dated February 22, 2002), Ammex included the following paragraph, at the bottom, set off by an asterix, and in capital letters:

* AMMEX COMPLETES THIS "TYPE CODE/NAME" UNDER PROTEST. THIS MOTOR FUEL IS IN EXPORT TRANSIT AND DESTINED FOR EXPORT SALE AT AMMEX'S DUTY FREE STORE. THE CORRECT TYPE CODE/NAME IS: 21 WAREHOUSE.

Customs did not treat this objection as a formal "protest."

B. Parties' arguments.

Plaintiff asserts that its "fuel came from Canada under a U.S. Customs `in transit' bond until deposited into Ammex's Class 9 bonded warehouse," and was covered by a U.S. Customs warehouse bond while in the warehouse. Pl.'s Reply to Def.'s Mot. to Dismiss ("Pl.'s Reply") at 3. Plaintiff further asserts that the fuel was placed in a "`sterile area' approved and inspected by Customs, constructed for the specific purpose of exporting the fuel." Id. at 4. Plaintiff maintains that Customs' act on February 21, 2002 "improperly characterized the fuel as though for domestic consumption," and that "Customs' refusal to permit Ammex to make a warehouse entry for bonded export sale deprived the fuel of bonded export status." Id. at 5. Plaintiff thus claims that Customs' action on February 21, 2002 was a protestable decision. It furthermore asserts that it properly protested such action by including the paragraph on the entry documents.

In its motion to dismiss, the government first argues that there was no protestable decision. Def.'s Mem. in Supp. of Mot. to Dismiss ("Def.'s Br.") at 2-3. The government asserts that "[a]lthough the fuel may not have been allowed to be deposited into a Class 9 warehouse it was plainly not `excluded' from entry or delivery." Id. at 2 (emphasis omitted). Moreover, the government argues that "[e]ven if Customs' redirection of fuel away from a Class 9 warehouse could be construed as a protestable exclusion, the `protest' itself is facially deficient." Id. at 3. The government claims that the language Ammex included on the entry papers falls short of the statutory and regulatory requirements for valid protests and should not be allowed under precedents of the United States Supreme Court and United States Court of Appeals for the Federal Circuit. Id. at 3-4 (citing 19 U.S.C. § 1514(c)(1), 19 C.F.R. §§ 174.13(a)(6) & 174.21(b), Davies v. Arthur, 96 U.S. 148, 151, 6 Otto 148, 24 L.Ed. 758 (1877) and Koike Aronson, Inc. v. United States, 165 F.3d 906, 908 (Fed. Cir.1999)); Def.'s Reply to Pl.'s Opp. to Mot. to Dismiss ("Def.'s Reply") at 8 (citing 19 C.F.R. § 174.12).

In its reply, Ammex responds by stating that "the statute governing entry of merchandise and Customs' own regulations confirm that protests are not limited to those decisions denying [physical] entry of merchandise into the United States." Pl.'s Reply at 7. According to Ammex, 19 U.S.C. § 1514(a)(4) is not so narrow as to exclude its "protest" at issue here. Id. at 8. As the term "entry" refers to a "documentation process," Ammex's argument implies that Customs' action in diverting the merchandise to a consumption entry is a protestable exclusion even if it did not involve a physical exclusion of the merchandise. Id.

Ammex next reiterates that its "protest" was proper and sufficient to inform Customs of "Ammex's objections and the nature of the decision being protested." Id. at 8. Specifically, Ammex claims that "the entry summary and Ammex's protest included `the category of merchandise affected' by the protested decision and the `nature of [Ammex's] objection and the reasons therefor.'" Id. at 10 (quoting 19 U.S.C. § 1514(c)(1)). According to Ammex, the "entry summary [further] provided the name and...