BP Oil Supply Co. v. United States
| Decision Date | 29 April 2014 |
| Docket Number | Slip Op. 14 - 48 |
| Parties | BP OIL SUPPLY COMPANY, Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Before: Mark A. Barnett, Judge
OPINION
John J. Galvin and Jack D. Mlawski, Galvin & Mlawski, for Plaintiff.
Marcella Powell and Beverly A. Farrell, International Trade Field Office, U.S. Department of Justice, of New York, NY, for Defendant.
Plaintiff BP Oil Supply Company brings suit to challenge United States Bureau of Customs and Border Protection's ("Customs") denial of Protest Nos. 5301-03-100333 and 5301-04-100162. In the protests, Plaintiff contested Customs' refusal to approve twenty-seven claims for substitution unused merchandise drawback on 41,980,559 barrels of crude petroleum pursuant to 19 U.S.C. § 1313(j)(2). The court held a trial on this matter on March 12, 2014. During trial, Plaintiff entered one exhibit into evidence and presented the testimony of Mr. Bobby Waid. Defendant United States offered no evidence, resting its caseafter Plaintiff presented its case-in-chief.1 The parties completed post-trial briefing on March 20, 2014. Based on the findings of fact and conclusions of law below, pursuant to USCIT Rules 52(a) and 58, the court finds that Plaintiff did not produce evidence demonstrating that the imports in question (except for the three types conceded by Defendant) are commercially interchangeable with the substitute merchandise. Plaintiff also did not produce evidence demonstrating that the substitute merchandise is not used. The court will enter judgment for Defendant.
Between 1994 and 1996, Plaintiff imported a total of 41,980,559 barrels of crude petroleum oil of various types: "Cabinda" crude petroleum from Angola; "Zaire" crude petroleum from what is now the Democratic Republic of Congo; "Rabi" crude petroleum from Gabon; "Forcados," "Bonny Medium," "Bonny Light," and "Qua Iboe" crude petroleums from Nigeria; "Camo Limon" crude petroleum from Columbia; and "Guafitas," "Mesa," and "Mesa 30" crude petroleums from Venezuela (the "imported merchandise"). Customs liquidated the entries in question under the eo nomine provision for "Petroleum oils, crude, Testing 25 degrees API[2] or more" in subheading 2709.00.20, HTSUS. (Compl. ¶¶ 5, 13; Ans. ¶¶ 5, 13; Uncontested Facts ¶¶ 18,3 20; Admin. R.4) During the following two years, Plaintiff exported identical quantities ofAlaskan North Slope ("ANS") crude petroleum (the "substitute merchandise"). (Compl. ¶ 6; Ans. ¶ 6; Admin R.) In 1998 and 1999, Plaintiff filed twenty-seven substitution unused merchandise drawback requests with Customs pursuant to 19 U.S.C. § 1313(j)(2), seeking drawback on the duties, environmental taxes, and merchandise processing fees5 that it had paid on the imported merchandise. (See generally Compl.; Pl.'s Ex. 1.) Customs denied drawback on each entry, citing Plaintiff's failure to establish that the substitute merchandise was commercially interchangeable with the imported merchandise. (See Compl. ¶¶ 1-2; Ans. ¶ 1; Summons, ECF No. 1.) On June 24, 2003 and April 8, 2004, respectively, Plaintiff filed Protests 5301-03100333 and 5301-04-100162 to challenge these decisions. Customs denied the protests on January 28 and May 10, 2004, respectively. Plaintiff appealed to this Court on July 19, 2004. (See Summons.)
In November 2010, Plaintiff moved for summary judgment, (ECF No. 51), and Defendant cross-moved for summary judgment in March 2011, (ECF No. 62). On September 16, 2011, the court denied both motions. BP Oil Supply Co. v. United States, Slip Op. 11-116, 2011 WL 4343853 (CIT Sept. 16, 2011). In its motion, Plaintiff argued that API gravity category alone sufficed as a matter of law to demonstrate commercial interchangeability between different crude oil types. The court found that Plaintiff presented no "would be admissible" evidence to demonstrate that API classification alone is indisputably sufficient for commercial interchangeability.6 Id. at *4. Similarly, the court found that Plaintiff had not addressed, interalia, "the significance of the apparently undisputed fact that ANS cannot satisfy the New York Mercantile Exchange . . . light sweet crude contract (unlike Bonny Light and Qua Iboe crude), or the fact that ANS apparently cannot be commingled with sweet crude at the Strategic Petroleum Reserve." Id. at *3. The court also underscored that some of Plaintiff's drawback documents contained apparent discrepancies and that the meaning of others was simply unclear.7 Id. at *3 n.5, 6. The court concluded that ferreting through these issues would require findings of fact at trial. Id. In denying the parties' motions, the court confirmed that Plaintiff would have to demonstrate at trial that the imported and substitute merchandise were commercially interchangeable and that the substitute merchandise was not used and in Plaintiff's possession prior to export. See id. at *4, 6.
Customs decisions enjoy a presumption of correctness, and the burden of proving otherwise lies with the challenging party. 28 U.S.C. § 2639(a); accord Pillsbury Co. v. United States, 27 CIT 1628, 1631, 293 F. Supp. 2d 1351, 1354 (2003). "The presumption is a procedural device that allocates the burden of producing evidence . . . . , placing the burden on [the plaintiff] to show that there was insufficient evidence for the factual components of [Customs'] decision." Chrysler Corp. v. United States, 592 F.3d 1330, 1337 (Fed. Cir. 2010) (citations omitted). The presumption attaches only to the factual bases of Customs' decisions; the Court reviews the legal aspects of challenged decisions de novo. Pillsbury Co., 27 CIT at 1631, 293 F. Supp. 2d at 1354 (citing Universal Elecs., Inc. v. United States, 112 F.3d 488, 492 (Fed. Cir. 1997)).
Drawback is a "refund or remission, in whole or in part, of a customs duty, fee or internal revenue tax which was imposed on imported merchandise under Federal law because of its importation." 19 C.F.R. § 191.2(i). Drawback is a statutory privilege - not a right - and it is due "only when enumerated conditions are met." Guess?, Inc. v. United States, 944 F.2d 855, 858 (Fed. Cir. 1991) (emphasis added). "Because the drawback statute is a grant of privilege, the construction most advantageous to the interests of the government must be adopted." Hartog Foods Int'l, Inc. v. United States, 291 F.3d 789, 793 (Fed. Cir. 2002) (describing Swan & Finch Co. v. United States, 190 U.S. 143, 146-47 (1903)).
Substitution unused merchandise drawback allows a party to recoup from Customs ninety-nine percent of any duty, tax, or fee imposed on imported merchandise if the party establishes that:
(1) the substitute merchandise (for export) is commercially interchangeable with the imported merchandise, (2) the substitute merchandise is either exported or destroyed under supervision, and (3) before such exportation or destruction (i) the substitute merchandise was not used within the United States and (ii) was in the possession of the party claiming drawback.
BP Oil Supply Co., 2011 WL 4343853, at *1 (citing 19 U.S.C. § 1313(j)(2)).
Whether merchandise is "commercially interchangeable" is "an objective, market based consideration of the primary purpose of the goods in question." Pillsbury Co., 27 CIT at 1632, 293 F. Supp. 2d at 1355 (quoting Texport Oil Co. v. United States, 185 F.3d 1291, 1295 (Fed. Cir. 1999)). The court must objectively determine "from the perspective of a hypothetical reasonable competitor" if a reasonable competitor would accept either the imported merchandise or substitute merchandise "for its primary commercial purpose." Id. (quoting Texport Oil Co.,185 F.3d at 1295). If the competition would accept either, the merchandise is commercially interchangeable. Id. In performing this analysis, the court may look to, inter alia, governmental and recognized industrial standards, part numbers, tariff classifications, and the relative values of the merchandise. Texport Oil Co., 185 F.3d at 1295; S. Rep. No. 103-189, at 83 (1993); H.R. Rep. No. 103-361, at 131 (1993); 19 C.F.R. § 191.32(c). It may also examine negotiations between commercial actors, the description of the goods on bills of sale or invoices, as well as other relevant factual evidence. Texport Oil Co., 185 F.3d at 1295; Pillsbury Co., 27 CIT at 1633, 293 F. Supp. 2d at 1355-56.
As noted above, at trial, Plaintiff introduced only one of the exhibits identified in the Pre-Trial Order, (ECF No. 156), and only one of the two identified witnesses. The exhibit introduced by Plaintiff was comprised of excerpts from duty drawback claims made by Plaintiff and denied by Customs. In some cases, the excerpts did not include the signature page of the drawback claim, in other cases it was clear that the claim had been amended but the amendments were not included in the exhibit, and, in all cases, the Customs entry form (Form 7501) identifying the specific type of oil entered was not included. These additional pages and forms were, however, contained in the administrative record, transmitted to the Court by Customs pursuant to 28 U.S.C. § 2635(a) and USCIT Rule 73.1. Neither Plaintiff nor the Defendant moved the administrative record into evidence and, with the exception of the excerpts contained in Plaintiff's Exhibit 1, the truth of the assertions contained in the documents comprising the administrative record was not tested at trial.
Section 2635(a) of 28 U.S.C. and USCIT Rule 73.1 require Customs to provide the documents comprising the record of the Customs protest to the Court "as part of the officialrecord." At...
To continue reading
Request your trial