Carnival Cruise Lines, Inc. v. US, Slip Op. 94-169

• Citation: 866 F. Supp. 1437,18 CIT 1020
• Decision Date: 19 January 1995
• Docket Number: Court No. 93-10-00691.,Slip Op. 94-169
• Parties: CARNIVAL CRUISE LINES, INC., HAL Antillen, N.V., Hal Shipping Ltd., and Wind Surf Limited, Plaintiffs, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

866 F. Supp. 1437

18 CIT 1020

CARNIVAL CRUISE LINES, INC., HAL Antillen, N.V., Hal Shipping Ltd., and Wind Surf Limited, Plaintiffs, v. The UNITED STATES, Defendant.

Slip Op. 94-169, Court No. 93-10-00691.

United States Court of International Trade.

October 21, 1994.

As Corrected January 19, 1995.

Paul, Weiss, Rifkind, Wharton & Garrison, Robert E. Montgomery, Jr., Robert P. Parker, Washington, DC, for plaintiffs.

Frank W. Hunger, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice, John K. Lapiana, of counsel, Arthur Rettinger, Christopher Chen, U.S. Customs Service, Washington, DC, for defendant.

MEMORANDUM OPINION AND ORDER

MUSGRAVE, Judge.

Plaintiffs paid harbor fees in accordance with Customs' interpretation of the Harbor Maintenance Revenue Act. 26 U.S.C. §§ 4461-62. Plaintiffs claim such payments were in excess of the amounts required by the law and accordingly seek a refund of claimed overpayments. Plaintiff HAL Antillen, N.V. challenges Customs' denial of its protest concerning harbor fees which Customs assessed because of HAL Antillen's alleged underpayment of such fees. Defendant argues that this Court does not have jurisdiction to hear these claims. For the reasons set forth below, the Court finds that it does have jurisdiction to review these claims.

Background

Plaintiffs Carnival Cruise Lines, Inc., HAL Antillen, N.V., Hal Shipping Ltd., and Wind Surf Limited, (collectively referred to as the "Companies"), operate commercial cruise ships throughout the world. For the period June 1, 1987 to July 31, 1993, the Companies paid harbor maintenance fees to the U.S. Customs Service ("Customs"), under the Harbor Maintenance Revenue Act of 1986 (Title XIV of the Water Resources Development Act) (the "Act"), Pub.L. 99-662, 100 Stat. 4266, codified at 26 U.S.C. §§ 4461-62 (1988). The payments were made on a quarterly basis as required by regulation. 19 C.F.R. § 24.24(e)(4)(ii) (1987). Customs conducted an audit of the operations of plaintiff HAL Antillen, N.V. ("HAL Antillen"), for the period April 1, 1987 to December 31, 1991. Plaintiffs' First Amended Complaint, ¶ 18. In April, 1993, HAL Antillen was notified by Customs that it had underpaid its harbor fees for the audit period. Id. at ¶ 19. HAL Antillen was subsequently billed by Customs in June, 1993, for $322,311. Id. On July 2, 1993, HAL Antillen protested the bill to the District Director of Customs in Seattle Washington. Id. Pursuant to 19 U.S.C. § 1515(b) and 19 C.F.R. § 174.22, HAL Antillen requested accelerated disposition of its protest claim on October 6, 1993. Id. at ¶ 20. By way of 19 U.S.C. § 1515(b) and 19 C.F.R. § 174.22(d), the protest was deemed denied 30 days later on November 5, 1993. Id.

In the interim between the filing and denial of HAL Antillen's protest, the Companies filed an action in this Court on October 18, 1993, seeking restitution of payments of harbor maintenance fees they claim have exceeded amounts required by law. Plaintiffs' Complaint, ¶ 1. The Companies claim that Customs incorrectly applied the Act by including certain charges in calculating the value for the transportation service on which the harbor fee is based. Id. The Companies claim that because Customs incorrectly applied the Act, they paid fees in excess of the amount authorized by law. Id. For these alleged overpayments, the Companies seek restitution. Id. at ¶ 16.

Plaintiffs amended their complaint, on December 10, 1993, to include HAL Antillen's separate claim contesting Customs' denial of its protest of Customs' assessment of an additional $322,311 in harbor fees. In the amended complaint, HAL Antillen claims Customs' denial of protest and underlying assessment of $322,311 for alleged underpayment were arbitrary and capricious and contrary to law. Plaintiffs' First Amended Complaint, ¶ 29.

In bringing this action, the Companies allege that this Court has jurisdiction over their claims under 28 U.S.C. § 1581(i). Plaintiffs' First Amended Complaint, ¶ 5. For its denial of protest claim, HAL Antillen asserts that this Court has jurisdiction under 28 U.S.C. § 1581(a). Id. The government moves to dismiss this case for lack of jurisdiction.

Discussion

The government argues that this Court lacks jurisdiction to hear the first matter because the Companies failed to file administrative protests in a timely manner. Such protests are required by 19 U.S.C. § 1514(a)¹ in order to assert jurisdiction under 28 U.S.C. § 1581(a),² which, the government argues, is where the Court's jurisdiction properly lies in this matter. The government argues that since the Companies have not exhausted their administrative remedies under the statute, this Court does not have jurisdiction to hear the Companies complaint. Defendant's Motion to Dismiss at 5-7.

For the HAL Antillen claim which was first protested under 19 U.S.C. § 1514(a), the government argues that HAL Antillen's action involving said claim was prematurely filed before HAL Antillen's protest was denied, and should therefore be dismissed. Defendant's Motion to Dismiss at 11-15.

The Companies argue that there is nothing in the Act or regulations which suggests that protest is necessary before seeking a refund. Plaintiffs' Opposition to Defendant's Motion to Dismiss at 12. Moreover, they argue that there was not a single ruling, decision or document issued by Customs from which they could have protested. Id. at 12-13. Since there was no decision which could have been protested under 1515(a),³ they argue, section 1581(a) cannot be the basis of jurisdiction for this Court.

Instead, the Companies argue that this Court has jurisdiction over their restitution claim under 28 U.S.C. § 1581(i).⁴ Specifically, the Companies assert that restitution of harbor fees is a matter arising out of the Act concerning revenue from imports or tonnage as set out at 1581(i)(1). In addition, the Companies argue this matter falls under § 1581(i)(2), as tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue. Lastly, the Companies argue that § 1581(i)(4) also applies as it contemplates the administration and enforcement of matters set out at § 1581(i)(1)-(2). Plaintiffs' First Amended Complaint, ¶ 5, and Plaintiffs' Surreply to Defendant's Motion to Dismiss at 9-10.

Plaintiff HAL Antillen argues that its separate claim concerning Customs' denial of its protest under section 1581(a) was not filed before its protest was denied, but was added to the Companies' original complaint thirty-five days after the protest was deemed denied under 19 U.S.C. § 1515. Hence, HAL Antillen argues that this Court properly has jurisdiction under 28 U.S.C. § 1581(a), which gives this Court exclusive jurisdiction over actions contesting the denial of protests brought pursuant to 19 U.S.C. § 1515. Plaintiffs' First Amended Complaint, ¶ 5, and Plaintiffs' Opposition to Defendant's Motion to Dismiss at 24-27.

This case, therefore, presents three issues. First, whether payment of harbor fees on a quarterly basis to Customs per regulation 24.24(e)(4)(ii) is protestable under 19 U.S.C. § 1514(a). Second, whether payment of harbor fees is reviewable by this Court under 28 U.S.C. § 1581(i). Last, whether amending a complaint to include a challenge to a denial of protest after such protest is denied permits this Court review under 28 U.S.C. § 1581(a), when the original complaint was filed before the subject protest was denied.

The Harbor Maintenance Revenue Act imposes a tax on port use based on the value of commercial cargo loaded or unloaded at any port. 26 U.S.C. § 4461(a)-(b).⁵ For the purposes of the Act, port use means the loading or unloading of commercial cargo on to or off of a commercial vessel. § 4462(a)(1).⁶ Commercial cargo is in turn defined to include passengers transported for compensation or hire. § 4462(a)(3)(A).⁷ Value, as it pertains to transportation of passengers, means "the actual charge paid for such service or the prevailing charge for comparable service if no actual charge is paid." § 4462(a)(5)(B).⁸ Prior to January 1, 1991, fees were payable at a rate of .04 percent of value as set by statute. § 4461. After January 1, 1991, the rate was increased by statute to .125 percent of value. 26 U.S.C. § 4461 (1988 & Supp. II 1990).

The Secretary of the Treasury is authorized to prescribe regulations for the purpose of carrying out the Act. § 4462(i). Accordingly, the Secretary has promulgated regulations which require cruise liners to pay port use fees when passengers board and disembark. 19 C.F.R. § 24.24(e)(4)(i). Fees are to be paid by cruise operators on a quarterly basis by mailing a check or money order along with a quarterly summary report (currently Customs Form 349). § 24.24(e)(4)(ii). Refunds can be requested by filing a Harbor Maintenance Fee Amended Quarterly Summary Report (Customs Form 350). 19 C.F.R. § 24.24(e)(5) (1994).⁹

The Act provides that "all administrative and enforcement provisions of customs laws and regulations shall apply in respect of the tax imposed ... as if such tax were a customs duty." 26 U.S.C. § 4462(f)(1) (1988). The Act further provides that "for purposes of determining the jurisdiction of any court of the United States or any agency of the United States, the tax imposed by this sub-chapter shall be treated as if such tax were a customs duty." 26 U.S.C. § 4462(f)(2) (1988).

The government does not dispute that this Court can exercise jurisdiction over the Harbor Maintenance Revenue Act in general. Rather it argues that prior to this Court exercising jurisdiction, plaintiffs must exhaust their administrative remedies. They argue that the Companies failed to exercise the protest remedy available to them under 19 U.S.C. § 1514(a), and therefore cannot invoke review of their claim in this Court. Moreover, they argue that a party cannot invoke the jurisdictional provision of section 1581(i)...