Asiatic Petroleum Corp. v. United States, C.D. 3958

• Decision Date: 28 January 1970
• Docket Number: Protest 65/12934-12556-65.,C.D. 3958
• Citation: 64 Cust. Ct. 47,309 F. Supp. 1006
• Parties: ASIATIC PETROLEUM CORP. v. UNITED STATES.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

309 F. Supp. 1006

64 Cust. Ct. 47

ASIATIC PETROLEUM CORP. v. UNITED STATES.

C.D. 3958; Protest 65/12934-12556-65.

United States Customs Court, Third Division.

January 28, 1970.

Sharretts, Paley, Carter & Blauvelt, New York City (Gail T. Cumins, New York City, of counsel); Joseph F. Donohue, associate counsel, New York City, for plaintiff.

William D. Ruckelshaus, Asst. Atty. Gen. (Andrew P. Vance and Sheila N. Ziff, New York City, trial attorneys), for defendant.

Before RICHARDSON, LANDIS, and RAO, Judges:

LANDIS, Judge.

The question in this case is whether the customs reliquidation of an entry of 200 drums of Shell Alexia Oil A, exported from Holland and entered at New York on October 26, 1960, is void for failure to give the notice required under section 315(d), Tariff Act of 1930, as amended.

The protest addresses itself to the following facts stipulated by the parties. On March 12, 1965, customs liquidated the 200 drums of Shell Alexia Oil free of duty under paragraph 1733 of the Tariff Act of 1930, as a distillate of petroleum. On April 16, 1965, customs reconsidered the liquidation as a distillate of petroleum and reliquidated the 200 drums of Shell Alexia Oil as a nonenumerated manufactured article, dutiable at 10 per centum ad valorem, under paragraph 1558, as modified. Plaintiff protests that:

The assessment of duty at 10% ad valorem under paragraph 1558 resulted from an administrative ruling that imposed a higher rate of duty than the Secretary of the Treasury found to have been applicable to imported merchandise under an established and uniform practice in effect at the time of these importations. No notice of said ruling was given as required by 19 U.S.C. Sec. 1315(d). The assessment was therefore void.

Section 315(d) of the Tariff Act of 1930, as amended, provides as follows:

No administrative ruling resulting in the imposition of a higher rate of duty or charge than the Secretary of the Treasury shall find to have been applicable to imported merchandise under an established and uniform practice shall be effective with respect to articles entered for consumption or withdrawn from warehouse for consumption prior to the expiration of thirty days after the date of publication in the weekly Treasury Decisions of notice of such ruling; but this provision shall not apply with respect to the imposition of anti-dumping duties.

Plaintiff's protest, as it well recognizes, can be sustained only if, at the time of importation on October 26, 1960, there was in fact an established and uniform customs practice of liquidating Shell Alexia Oil free of duty under paragraph 1733. To this end, plaintiff relies on a letter from the Acting Commissioner of Customs to the Collector of Customs at New York, dated February 5, 1965 (stipulated exhibit 7) which reads as follows:

Honorable Joseph P. Kelly Collector of Customs New York, New York 10004

Dear Mr. Kelly:

Reference is made to Asiatic Petroleum Corp. v. United States, 43 Cust.Ct. Rept. 252 CD 2137 (December 4, 1959), holding certain "Shell Alexia Oil A" to be properly free of duty under the provisions of paragraph 1733, Tariff Act of 1930.

The Bureau has given extensive consideration to the tariff treatment to be accorded unliquidated entries, made before August 31, 1963, which cover merchandise of the type which was the subject of CD 2137.

In view of the existence of an established and uniform practice and no court decision requiring a different result, it is our conclusion that these entries should be liquidated classifying the merchandise as distillates obtained from petroleum, free of duty under paragraph 1733, in accordance with the court's decision.

This letter is being circulated to all customs officers.

Sincerely yours /s/ Lester D. Johnson LESTER D. JOHNSON Acting Commissioner of Customs

Upon reconsidering the classification of Shell Alexia Oil A, the Acting Commissioner, on April 2, 1965, teletyped new instructions to the Collector at New York as follows (stipulated exhibit 8):

Collector of Customs New York, New York

Re my letter February 5, 1965 (TC344.3 B), (C.I.E. 265/65) about "Shell Alexia Oil A." The Bureau has reconsidered the matter and has decided there is a court decision requiring the entries to which that ruling was applicable to be liquidated (or reliquidated) dutiable. Accordingly, the instructions in that letter are hereby rescinded. Proceed immediately to liquidate (or reliquidate) entries of "Shell Alexia Oil A," which were subject to the ruling of February 5, 1965 (TC344.3 B), under paragraph 1558, Tariff Act of 1930, at 10 percent ad valorem, plus 2 cents per gallon, section 4521, Internal Revenue Code. A copy of this decision is being sent to all collectors of customs to insure uniform treatment.

/s/ Lester D. Johnson LESTER D. JOHNSON

cc: All Collectors of Customs

The above facts constitute what might be called the fat in plaintiff's case. When we consider the lean that goes with it, there is some form but no stuff to plaintiff's case. Take away the letter of February 5, 1965 (exhibit 7), which is all that gives plaintiff's case any form, and, in our opinion, there would be no case. Naumes Forwarding Service v. United States, 42 CCPA 110, C.A.D. 581 (1955); Washington Handle Co. v. United States, 34 CCPA 80, C.A. D. 346 (1946). The absence of any substance to plaintiff's case is apparent from the uncertainty which surrounded the classification of Shell Alexia Oil on the date of the protested importation, and the stipulated litigation and events which preceded the aforementioned letter from the Commissioner of Customs. We find that there was in fact no established and uniform practice classifying Shell Alexia Oil free of duty under paragraph 1733 and overrule the protest.

To appreciate the tone of uncertainty which surrounded the classification of the Shell Alexia Oil in this case, one must go back to the case which tested that issue, Asiatic Petroleum Corp. and E. F. Philbin v. United States, 183 F. Supp. 275, 43 Cust.Ct. 252, C.D. 2137, decided December 4, 1959. In that test case, upon trial of the issue as to the proper classification of the merchandise in this case, namely, Shell Alexia Oil, this Division of the court held that, on the evidence of record, Shell Alexia Oil was properly free of duty as a distillate of petroleum under paragraph 1733 of the Tariff Act of 1930, rather than as a nonenumerated manufactured article under paragraph 1558, dutiable at the modified rate of 10 per centum ad valorem, as classified by customs. Defendant appealed that decision. The appeal was subsequently dismissed on defendant's own motion, United States v. Asiatic Petroleum Corp. and E. F. Philbin, 47 CCPA 173 (May 1960). On June 23, 1960, this court conformed its final judgment with the mandate of the dismissed appeal, namely that Shell Alexia Oil was properly free of duty under paragraph 1733. We shall discuss, infra, plaintiff's second test case (protest 60/12406), involving the same classification issue, which it abandoned September 11, 1961, after trial.

At the time final judgment entered in the first Asiatic test case, supra, there were, in this court, numerous contemporary protests, against the customs liquidation of Shell Alexia Oil under paragraph 1558, suspended pending decision in the test case, pursuant to this court's rule 16(a). Exhibit 2 of the stipulated facts indicates that, in some instances, customs also, on its own initiative, withheld liquidating entries of Shell Alexia Oil pending outcome of the test case. It is long established that res judicata does not apply in cases involving classification of imported merchandise. United States v. Stone & Downer Company et al., 274 U.S. 225, 47 S.Ct. 616, 71 L.Ed. 1013 (1927); United States v. Boone, 188 F.2d 808, 38 CCPA 89, C.A.D. 445 (1951). It follows, therefore, that the decision and judgment in the first Asiatic test case, supra, was not res judicata of the suspended protests in this court involving Shell Alexia Oil, and could not control customs classification of Shell Alexia Oil entries still in customs possession for liquidation. Thus, the customs practice of classifying Shell Alexia Oil dutiable under paragraph 1558 did not necessarily have to change because of the first Asiatic test case, assuming customs did not see fit to follow it. William Adams, Inc. v. United States, 56 Cust.Ct. 429, 440, C.D. 2670 (1966) (concurring opinion). Nor would it be correct to say that an administrative decision to classify merchandise in accordance with a court decision not otherwise affecting such merchandise is an administrative ruling requiring notice under section 315(d). Westergaard, Berg-Johnsen Co. (Chas. H. Timm Co., Inc.) v. United States, 17 Cust.Ct. 1, C.D. 1009 (1946).

The Shell Alexia Oil in this protest, imported for consumption at New York on October 26, 1960, is one of the entries which customs withheld liquidating until it decided whether to follow the decision in the first Asiatic test case, supra. The only period significant in determining whether there was in fact an established and uniform practice of classifying Shell Alexia Oil free of duty under paragraph 1733, effective at the time of importation as plaintiff's protest claims, is, therefore, the period prior to October 26, 1960. Biddle Sawyer Corp. v. United States, 50 CCPA 85, 92, C.A.D. 826 (1963). Quite plainly, the customs classification practice prior to June 23, 1960 was to classify Shell Alexia Oil under paragraph 1558.

To ascertain what cases were pending before customs we observe that on June 23, 1960, the date final judgment entered in the first Asiatic case, supra, customs had in its possession, at various ports, at least 51 entries of Shell Alexia Oil for liquidation or reliquidation: Baltimore 2; Houston 4; Los Angeles 3; Mobile 1; New York 27; Norfolk 2; Philadelphia 8; San Francisco 3; and Seattle 1. Subsequent to June 23, 1960 and up to October 26, 1960, three of the above ports...