Bethlehem Steel Corp. v. United States

• Decision Date: 23 November 1982
• Docket Number: Court No. 80-9-01484.
• Citation: 4 CIT 229,551 F. Supp. 1148
• Parties: BETHLEHEM STEEL CORPORATION, Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

551 F. Supp. 1148

4 CIT 229

BETHLEHEM STEEL CORPORATION, Plaintiff, v. The UNITED STATES, Defendant.

Court No. 80-9-01484.

United States Court of International Trade.

November 23, 1982.

Haight, Gardner, Poor & Havens, New York City (Nicholas H. Cobbs, New York City, on the brief), for plaintiff.

J. Paul McGrath, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, New York City, Atty. in Charge, International Trade Field Office, Commercial Litigation Branch (Jerry P. Wiskin, New York City, on the brief), for defendant.

BOE, Judge:

In the above-entitled action the plaintiff contests the imposition of a duty upon the subject merchandise, a cargo of fluorspar, entered at Lackawanna, New York. Plaintiff claims a reimbursement of the duty paid on the ground that the cargo was shipped from Brownsville, Texas to Lackawanna, New York (via Contrecour, Canada) and hence did not constitute an "import" subject to duty.

The facts herein are undisputed. In Brownsville, Texas, plaintiff purchased the subject merchandise, which had been imported from Tampico, Mexico, duty paid. Plaintiff arranged transportation of the fluorspar on a foreign flag vessel (Japan Lines) from Brownsville to Contrecour, Canada, with subsequent transshipment to be made to Lackawanna, New York. Upon arrival of the cargo in Contrecour on August 30, 1974, plaintiff for the first time was advised by the United States Customs Service that the shipment of the cargo from Brownsville to Lackawanna on a vessel of foreign registry constituted a violation of the Merchant Marine Act, 46 U.S.C. § 883, which provides:

No merchandise shall be transported by water, or by land and water, on penalty of forfeiture thereof, between points in the United States, including Districts, Territories, and possessions thereof embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any other vessel than a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States, ...

In an effort to avoid such a violation, plaintiff in March 1975 offered the cargo of fluorspar for sale to Canadian and other foreign corporations. However, the cargo could not be sold. On March 2, 1976, plaintiff forwarded to Customs a request for advice regarding the shipment of the subject merchandise and its possible violation of 46 U.S.C. § 883. On May 7, 1976, Customs ruled that the shipment of the fluorspar cargo from Brownsville to Lackawanna, via Contrecour, Canada, would be a "transportation between United States points in violation of" 46 U.S.C. § 883. Plaintiff, nevertheless, shipped the cargo to Lackawanna, New York, in July of 1976, where the cargo was seized by Customs pursuant to its determination that plaintiff had violated the coast-to-coast laws. Upon payment by plaintiff of a mitigated penalty of $700 and upon the preparation and filing of a consumption entry and the payment of the appropriate import duty by the plaintiff, as further required by Customs, the cargo was released.

Plaintiff moves for summary judgment seeking a refund of the import duties paid on the subject merchandise. Defendant cross-moves for summary judgment rejecting plaintiff's claim for refund.

In support of its claim, plaintiff contends that the subject merchandise was not subject to any import duty because it had never been "exported" from Brownsville, Texas. Plaintiff relies on a rule in Customs law that the question of exportation of merchandise is controlled by the intent of the parties at the time of shipment. See Nassau Distributing Co. v. United States, 29 Cust.Ct. 151 (1952); Moore Dry Goods Co. v. United States, 11 Ct.Cust.Appls. 449 (1923).

In the instant action it is undisputed that at the time of the shipment of the merchandise in question from Brownsville, Texas, the plaintiff did not intend to export the subject merchandise. The intent of the plaintiff clearly was to cause the subject merchandise to be transported from Brownsville, Texas to Lackawanna, New York, via Contrecour, Canada. However, the characterization of an exportation at the time of shipment "* * * does not completely eliminate subsequent events from consideration." United States v. National Sugar Refining Co., 39 CCPA 96, 101 (1951). Merchandise which, after its initial shipment, is intended to be or in fact is diverted into the commerce of an intermediate country, becomes an export of that intermediate country. C.J. Tower & Sons v. United States, 67 Treas.Dec. 1358 (1935); Hospitaline Inc. v. United States, 48 Cust.Ct. 563 (1962), aff'd 50 Cust.Ct. 556 (1963); Cardinal Glove Inc. v. United States, ___ CIT ___, Slip Op. 82-59 (July 22, 1982). The contingency of diversion sufficient to negate plaintiff's original intent at the time of shipment must, however, have "a realistic basis in fact and not mere conjecture." Hugo Stinnis Steel & Metals Co. v. United States, 80 Cust.Ct. 175, 192 (1978), aff'd 66 CCPA 84, 599 F.2d 1037 (1979).

In the instant action, after the unlading of the merchandise in question, the overt efforts of the plaintiff offering to sell the cargo to potential users of fluorspar in Canada, Europe and the Far East constituted not a contingency or possibility of diversion but an actual entry into the commerce of the intermediate country, Canada. The subject merchandise thereby was converted into an exportation to Canada from whence, upon its subsequent shipment to the United States, it became an export of that intermediate country.

However, the plaintiff now contends that the ruling made by Customs on May 7, 1976, that the shipment from Brownsville, Texas to Lackawanna, New York, via Contrecour, Canada in a vessel of foreign registry "completing a transportation between United States points in violation of 46 U.S.C. § 883," estops the Government from claiming herein that the subject merchandise was an export from Canada, subject to United States duty. In support of its contention the plaintiff relies on recent decisions in which the doctrine of collateral estoppel has been applied to determinations by administrative agencies of the United States. The doctrine has been invoked against the Government if it is found that the Government is acting in its proprietary rather than sovereign capacity. See Hanover Bank v. United States, 285 F.2d 455 (Ct.Cl.1961); United States v. Georgia Pacific, 421 F.2d 92 (9th Cir.1970).

Our appellate court has held that the Government through its Customs Service is acting in its sovereign capacity in the collection of duties on imports. Judge Miller, speaking for the court in Air-Sea Brokers, Inc. v. United States, 66 CCPA 64, 68, 596 F.2d 1008 (1979), stated:

When acting in its soverign sic capacity, the Government is acting for the benefit of the general public—a role clearly embracing the collection or refund of duties on imports. Accordingly, we hold that ... equitable estoppel, even if available in cases involving the Government in its proprietary capacity, is not available against the Government in cases involving the collection or refund of duties on imports.

The foregoing holding has been reaffirmed in Farrell Lines Inc. v. United States, ___ CCPA ___, C.D. 4864 (August 20, 1981).

This court, following the decisions of our appellate court, accordingly finds that the collateral estoppel urged by the plaintiff cannot be invoked against the Government herein while acting in its sovereign...