Ammex, Inc. v. U.S., Slip Op. 00-108.

CourtU.S. Court of International Trade
Writing for the CourtWallach
Citation116 F.Supp.2d 1269
PartiesAMMEX, INC., Plaintiff, v. UNITED STATES, Defendant.
Decision Date25 August 2000
Docket NumberSlip Op. 00-108.,Court No. 99-01-00013.
116 F.Supp.2d 1269
AMMEX, INC., Plaintiff,
v.
UNITED STATES, Defendant.
Slip Op. 00-108.
Court No. 99-01-00013.
United States Court of International Trade.
August 25, 2000.

Page 1270

Steptoe & Johnson LLP (Herbert C. Shelley, Alice A. Kipel, Gregory S. McCue and David N. Tanenbaum), Washington, DC, for Plaintiff.

David W. Ogden, Assistant Attorney General; Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Amy M. Rubin); Beth C. Brotman, Office of Assistant Chief Counsel, United States Customs Service, Washington, DC, for Defendant, of counsel.

OPINION

WALLACH, Judge.


I
INTRODUCTION

This case is before the court upon the Motion Of Plaintiff Ammex, Inc. For Judgment Upon The Agency Record. Plaintiff challenges the decision of the U.S. Customs Service ("Customs") not to allow it to sell duty-free gasoline and diesel fuel from its duty-free store in Detroit, Michigan. For the reasons stated below, the court finds Custom's decision not to be in accordance with law.

II
BACKGROUND

At issue in this case is Plaintiff's challenge of Customs Headquarters Ruling 227385 of February 12, 1998 ("HQ 227385"). In HQ 227385, Customs reaffirmed a 1994 headquarters ruling which found that the activities of duty-free stores should not be extended to cover "unidentifiable fungible" goods, such as gasoline and diesel fuel, when sold on a retail basis. In the 1994 ruling, Customs found, inter alia, that because such merchandise could not be subject to marking or other identification under 19 U.S.C. § 1555(b)(3)(D),1 Customs would have no practical way of ensuring that the duty-free gasoline was "declared" when vehicles returned to the United States. See Customs Headquarters Ruling 225287 of June 27, 1994 ("HQ 225287"), at 4-5.

In HQ 227385, Customs revisited the issue of duty-free gasoline and diesel sales in light of Plaintiff's request that Customs reconsider its 1994 ruling. Analyzing the legislative history of the Omnibus Trade and Competitiveness Act of 1988, which established legislative guidelines for Customs' administration of duty-free shops, Customs concluded that "the fact that Congress did not specifically reject Customs policy regarding the sale of gasoline

Page 1271

by duty-free stores means that Congress did not object to such practice." HQ 227385 at 5. Thus, it reasoned, "in holding that gasoline and diesel fuel may not be sold by duty-free stores, it was proper to follow the precedent established by ruling letter 200396." Id. In Ruling Letter 200396, the Assistant Commissioner of Customs' Office of Regulations and Rulings, Leonard Lehman, held that the activities of duty-free stores could not be extended to unidentifiable fungibles, such as gasoline sold on a retail basis, since Customs would have no practical way of ensuring that the gasoline was declared when it was returned to the United States. Customs Ruling Letter 200396 of October 30, 1972.2

In its 1998 ruling, Customs also rejected Plaintiff's argument that, in allowing U.S. residents to apply merchandise purchased from a U.S. duty-free store against their $400 personal duty exemption allowance, the Miscellaneous Trade and Technical Corrections Act of 1996 rendered Ruling Letter 200396 and HQ 225287 obsolete. Besides pointing to the lack of any explicit Congressional intent to overturn these determinations, Customs observed that

the eligibility for a duty exemption does not exempt the imported merchandise from being subject to other customs laws. The exemption from duty depends on the status of the individual and the circumstances regarding the exportation of the goods, the time spent out of the United States, and the frequency of the claims for eligibility. In order to administer those requirements, the need for simple effective controls has not been lessened by the 1996 statutory change.

HQ 227385 at 7.

By letter dated May 12, 1998, Ammex, Inc. ("Ammex") attempted to protest HQ 227385 under 19 U.S.C. § 1514(a) (1994). On July 9, 1998, Customs ruled that HQ 227385 was not protestable under this provision, since HQ 227385 did not require Ammex to make any payment or cause an assessment on any kind. See Customs Headquarters Ruling 228021 of July 9, 1998. Thereafter, Plaintiff filed its Complaint in this matter on January 12, 1999, timely putting its challenge to HQ 227385 before this court. After considering various motions by Plaintiff to either supplement the administrative record in this case and/or conduct limited discovery,3 the court heard oral argument on August 16, 2000.

The court has jurisdiction under 28 U.S.C. § 1581(i) (1994). See Duty Free Int'l, Inc. v. United States, 17 CIT 1425, 1425 (1993), aff'd 88 F.3d 1046 (Fed.Cir. 1996).4

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III

THE COURT SHALL HOLD UNLAWFUL AGENCY ACTION THAT IS ARBITRARY, CAPRICIOUS, AN ABUSE OF DISCRETION, OR NOT IN ACCORDANCE WITH LAW.

28 U.S.C. § 2640(e) (1994) provides that "[i]n any civil action not specified in this section, the [court] shall review the matter as provided in [5 U.S.C. § 706]." In turn, 5 U.S.C. § 706(2)(A) (1994) provides, in relevant part, that "[t]he reviewing court shall ... hold unlawful and set aside agency action, findings, and conclusions of law found to be ... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." The scope of the court's review is limited to the "whole record or those parts of it cited by a party." 5 U.S.C. § 706 (1994) (emphasis added); see also Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971) (stating that a review of the "whole record" under § 706 "is to be based on the full administrative record that was before the Secretary at the time he made his decision").

IV

CUSTOMS' DECISION TO PROHIBIT AMMEX FROM SELLING DUTY-FREE GASOLINE AND DIESEL FUEL IS NOT IN ACCORDANCE WITH LAW.

Plaintiff first argues that Customs' decision to prohibit Ammex from selling duty-free gasoline and diesel fuel violates 19 U.S.C. § 1557(a)(1) (1994), which allows "[a]ny merchandise subject to duty, with the exception of perishable articles and explosive substances" to be entered and withdrawn (for exportation) from bonded warehouses, such as duty-free stores. According to Plaintiff, Customs' prohibition on the sale of "unidentifiable fungibles," such as gasoline and diesel fuel, creates an additional exception to the general authorization set forth in § 1557(a)(1) that enjoys no support in either the statute or its implementing regulations. See Brief In Support Of Ammex's Rule 56.1 Motion For Judgment Upon The Agency Record ("Plaintiff's Brief") at 9-13.

The first question to consider in reviewing an agency's construction of a statute it administers is "whether Congress has directly spoken to the precise question at issue." Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). "If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842-43, 104 S.Ct. 2778; see also Timex V.I., Inc. v. United States, 157 F.3d 879, 882 (Fed.Cir.1998) ("To ascertain whether Congress had an intention on the precise question at issue, we employ the traditional tools of statutory construction. The first and foremost tool to be used is the

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statute's text, giving it its plain meaning.") (internal quotes and citation omitted).

In this case, 19 U.S.C. § 1557(a)(1) (1994), as well as the other provisions covering duty-free stores and bonded warehouses, make clear the scope of merchandise that may be entered and withdrawn from duty-free enterprises. In relevant part, § 1557(a)(1) provides that

Any merchandise subject to duty, with the exception of perishable articles and explosive substances other than firecrackers, may be entered for warehousing and be deposited in a bonded warehouse at the expense and risk of the owner [,] purchaser, importer, or consignee. Such merchandise may be withdrawn, at any time within 5 years from the date of importation, for consumption upon payment of the duties and charges accruing thereon at the rate of duty imposed by law upon such merchandise at the date of withdrawal; or may be withdrawn for exportation or for transportation and exportation to a foreign country .... (emphasis added).

On its face, the plain language of § 1557(a)(1) shows Congress' intent that there be only two restrictions on the type of dutiable merchandise that may be stored or withdrawn from a bonded warehouse: (1) perishable articles and (2) explosive substances other than firecrackers. Customs did not find that diesel fuel and gasoline fall within either of these exceptions.5 Accordingly, since duty-free stores are a type of bonded warehouse,6 the plain language of § 1557(a)(1) makes both items eligible for sale from duty-free stores.7

In its brief, the government asserts that § 1557(a)(1) is not dispositive of Plaintiff's claim, arguing the more specific provisions for duty-free stores set out in 19 U.S.C. § 1555(b)(3)(D) and (E) provide additional limitations on the type of merchandise that may be sold duty-free. See Defendant's Response To Plaintiff's Motion For Judgment Upon The Agency...

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11 practice notes
  • Ammex, Inc. v. Wenk, Case No. 2:18-cv-10751
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
    • June 1, 2018
    ...may be entered for warehousing and be deposited in a bonded warehouse[.]" See also Ammex, Inc. v. United States , 24 C.I.T. 851, 856, 116 F.Supp.2d 1269 (2000) (finding that U.S. Customs violated § 1557(a)(1) by prohibiting Ammex from selling gasoline).In Ammex's view, via these pronounceme......
  • Ammex, Inc. v. Cox, No. 01-2392.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • December 3, 2003
    ...to Ammex's sales of gasoline and diesel fuel based on the reasoning employed in the letter rulings. See Ammex, Inc. v. United States, 116 F.Supp.2d 1269, 1272-75 (CIT 2000) ("Ammex I"). On September 5, 2000, Customs authorized Ammex to sell gasoline and diesel fuel duty-free. Ammex, Inc. v.......
  • Ammex Inc. v. U.S., SLIP OP. 04-89. Court No. 02-00361.
    • United States
    • U.S. Court of International Trade
    • July 20, 2004
    ...duty-free stores (including Ammex's facility) under 19 U.S.C. §§ 1555(b) and 1557(a)(1). See Ammex, Inc. v. United States, 24 CIT 851, 116 F.Supp.2d 1269, 1273-76 (2000) ("Ammex I"). The Court reasoned as follows: The plain language of section 1557(a)(1)5 of Title 19 shows Page 1310 there c......
  • Ammex, Inc. v. U.S., No. Slip Op. 03-145.
    • United States
    • U.S. Court of International Trade
    • October 30, 2003
    ...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-fr......
  • Request a trial to view additional results
11 cases
  • Ammex, Inc. v. Wenk, Case No. 2:18-cv-10751
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
    • June 1, 2018
    ...may be entered for warehousing and be deposited in a bonded warehouse[.]" See also Ammex, Inc. v. United States , 24 C.I.T. 851, 856, 116 F.Supp.2d 1269 (2000) (finding that U.S. Customs violated § 1557(a)(1) by prohibiting Ammex from selling gasoline).In Ammex's view, via these pronounceme......
  • Ammex, Inc. v. Cox, No. 01-2392.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • December 3, 2003
    ...to Ammex's sales of gasoline and diesel fuel based on the reasoning employed in the letter rulings. See Ammex, Inc. v. United States, 116 F.Supp.2d 1269, 1272-75 (CIT 2000) ("Ammex I"). On September 5, 2000, Customs authorized Ammex to sell gasoline and diesel fuel duty-free. Ammex, Inc. v.......
  • Ammex Inc. v. U.S., SLIP OP. 04-89. Court No. 02-00361.
    • United States
    • U.S. Court of International Trade
    • July 20, 2004
    ...duty-free stores (including Ammex's facility) under 19 U.S.C. §§ 1555(b) and 1557(a)(1). See Ammex, Inc. v. United States, 24 CIT 851, 116 F.Supp.2d 1269, 1273-76 (2000) ("Ammex I"). The Court reasoned as follows: The plain language of section 1557(a)(1)5 of Title 19 shows Page 1310 there c......
  • Ammex, Inc. v. U.S., No. Slip Op. 03-145.
    • United States
    • U.S. Court of International Trade
    • October 30, 2003
    ...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-fr......
  • Request a trial to view additional results

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