Echostar Techs., L. L.C. v. United States

• Citation: 391 F.Supp.3d 1316
• Decision Date: 17 June 2019
• Docket Number: Court No. 16-00074,Slip Op. 19-74
• Parties: ECHOSTAR TECHNOLOGIES, L.L.C., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

391 F.Supp.3d 1316

ECHOSTAR TECHNOLOGIES, L.L.C., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 19-74

Court No. 16-00074

United States Court of International Trade.

June 17, 2019

Nancy A. Noonan and Elyssa R. Kutner, Arent Fox LLP, of Washington, DC, argued for plaintiff. With them on the brief were David Hamill, and Jackson D. Toof.

Hardeep K. Josan, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for defendant. With her on the brief were Joseph H. Hunt, Assistant Attorney General, and Amy M. Rubin, Assistant Director. Of counsel was Yelena Slepak, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, of Washington, DC.

Katzmann, Judge:

This case involves an action by plaintiff, EchoStar Technologies L.L.C. ("EchoStar"), against defendant the United States ("the Government") to collect a refund of 99% of duties paid on its exported video technology goods. Before the court is whether EchoStar's electronic transmission of summary data for refunds, known as drawback claims, was legally sufficient under the applicable 1993 version of a statute (since amended), or whether, as the Government contends, EchoStar was required to file paper claims containing more information. Although EchoStar submitted the summary data within the requisite time period, it submitted paper drawback claims after the statutory deadline to file its claims had passed. U.S. Customs and Border Protection ("CBP") liquidated the twelve claims in issue for goods exported in 2011 and 2012 and denied duty refunds worth $276,275.12. EchoStar protested the decisions with CBP, and CBP denied the protests. EchoStar then filed this action. EchoStar asks the court to void the denials of its protests and to remand its claims to CBP with instructions to liquidate the claims with full refunds. Both parties now move for summary judgment. The court grants the Government's motion for summary judgment and denies EchoStar's motion for summary judgment.

BACKGROUND

I. Drawback Claims Generally

Under 19 U.S.C. §§ 1313(j)(1)¹ and 1313(l )(2)² , CBP will refund up to 99% of duties and fees paid on goods imported into the United States if the importer subsequently destroys or exports the goods unused. 19 U.S.C. § 1313 refers to these refunds as "drawbacks." The exporter of those goods may claim the drawback, subject to 19 U.S.C. § 1313(r)(1)³ and CBP's regulations, 19 C.F.R. § 191.82.

"[D]rawbacks are a privilege, not a right."

Shell Oil Co. v. United States, 688 F.3d 1376, 1382 (Fed. Cir. 2012) (internal citations omitted); Graham Eng'g Corp. v. United States, 30 C.I.T. 1907, 1912, 465 F. Supp. 2d 1353, 1357 (2006), aff'd, 510 F.3d 1385 (Fed. Cir. 2007) (holding drawbacks are a "mere gratuity, proffered by the government"). CBP has the authority to deny drawback claims which fail to strictly adhere to the drawback filing requirements. Int'l Light Metals v. United States, 279 F.3d 999, 1001 (Fed. Cir. 2002). Congress has expressly conditioned the privilege of drawback upon fulfilment of CBP's drawback regulations. 19 U.S.C. § 1313(l ). The burden is on the applicant to take "preliminary steps and acts ... in accordance with [applicable] regulations" to establish a claim. Graham Eng'g Corp., 465 F. Supp. 2d at 1357–58 (internal quotations omitted). Further, " ‘reasonable and proper’ drawback regulations are within [CBP]'s authority[,] and ... the drawback statute ‘should be construed as a Governmental grant of privilege, and any doubt in construction thereof should be resolved in favor of the Government.’ " Id. at 1358 (quoting United States v. Ricard–Brewster Oil Co., 29 C.C.P.A. 192, 197, 1942 WL 4360 (1942) ). Where, as here, the regulation is mandatory, "compliance is a condition precedent to the right of recovery of drawback." United States v. Lockheed Petroleum Servs., 709 F.2d 1472, 1474 (Fed. Cir. 1983).

"By statute, claims for drawback generally must be filed and completed within a three-year limitations period accruing from the date of export." Aectra Ref. & Mktg. v. United States, 565 F.3d 1364, 1366 (Fed. Cir. 2009) (citing 19 U.S.C. § 1313(r)(1) ) (emphasis added); see also Flint Hills Res., LP v. United States, 42 CIT ––––, 333 F. Supp. 3d 1362, 1371 (2018) ("In order for [CBP] to grant a drawback claim, the claim must be ‘complete.’ "). Pursuant to 19 U.S.C. § 1313(r)(1), "a drawback entry and all documents necessary to complete a drawback claim ... shall be filed ... within 3 years after the date of exportation ...." See also Shell Oil, 688 F.3d at 1379. Accordingly, the statute requires timely filing of both the "drawback entry" and "all documents necessary to complete a drawback claim." Aectra, 565 F.3d at 1366. If the claim is rejected as incomplete, the filer has an "opportunity to complete the claim subject to the requirement for filing a complete claim within 3 years." 19 C.F.R. § 191.52(a). Claims that are not completed within the three-year period are "considered abandoned." Shell Oil, 688 F.3d at 1379 (quoting 19 U.S.C. § 1313(r)(1) ). "[A]llowing claimants to submit claims piecemeal after the three-year completion window has passed would detract from the ability of [CBP] to effectively carry out its duties, including preventing circumvention of the three-year statutory limit of 19 U.S.C. § 1313(r)(1)." Aectra, 565 F.3d at 1373 (internal quotations omitted).

Under Commerce's regulations, a complete "drawback claim" is comprised of "the drawback entry and related documents required by regulation which together constitute the request for drawback payment." 19 C.F.R. § 191.2(j). Drawback entries -- which contain required information concerning the article on which drawback is claimed -- must be filed using Customs Form 7551. 19 C.F.R. § 191.2(k). On Customs Form 7551, an exporter must list and describe each item for which the exporter claims a drawback, provide the dates of import and export, and indicate the preferred method of filing. 19 C.F.R. § 191.52(a)(1) provides the full list of the documents necessary to complete the claim, including Customs Form 7551.⁴

II. Factual Background and Procedural History

EchoStar is a television and entertainment company that creates, imports, and exports video and satellite technology. Pl.'s Br. at 2, July 17, 2018, ECF No. 26; Compl. ¶ 4, Dec. 23, 2016, ECF No. 9. In 2013, CBP approved EchoStar's application to file drawback claims to recover duties paid on certain imported video technology, including remote controls, switches, and Low Noise Block Feeds.⁵ Pl.'s Stmt. Material Facts ¶ 1–2, July 17, 2018, ECF No. 27; Def.'s Resp. to Pl.'s Stmt. Material Facts ¶ 1–2, Sept. 18, 2018, as modified Sept. 19, 2018, ECF No. 28. EchoStar then hired FAK Distribution and Logistics ("FAK"), which contracted Laredo Becnel, Inc. ("Laredo Becnel"), to file the drawback claims. Pl.'s Stmt. Material Facts ¶ 2; Def.'s Resp. to Pl.'s Stmt. Material Facts ¶ 2.

Prior to attempting to file its drawback claims, EchoStar reviewed a 2010 memo ("Guidance") from CBP's San Francisco Drawback Office to drawback filers, provided to EchoStar by its outside counsel. Def.'s Br. Ex. C, Dep. Tr. 179:18-20. The Guidance provided tips on the submission of drawback claims. Pl.'s Br. Ex. B, July 17, 2018, ECF No. 27; Def.'s Br. Ex. C, Dep. Tr. 179:18-20. The Guidance was not accessible online, and CBP neither sent it to EchoStar nor instructed EchoStar to rely on it. Def.'s Br. Ex. C, Dep. Tr. 166:17-167:5. CBP describes the Guidance as an "informal list of tips and key points [that] is not all inclusive, but does address some of the most frequent issues we have observed." Pl.'s Br. Ex. B. The Guidance provides that "a complete claim must have ... CBP form 7551 - Drawback Entry," among other required documents, and warns that "[i]f any of the above is missing, claims will be rejected prior to input by CBP." Id. The Guidance also indicates that the San Francisco Drawback Office preferred that claimants file through the Automated Broker Interface ("ABI"), an online filing system.⁶ Id. The Guidance states:

How to file claims: There are two options: ABI & Manual.

Filing ABI claims is the preferred method. This can be done directly or by transmitting through a service bureau. This will give you priority processing, fast accelerated payment, access to information on line [sic] and less [sic] documentation errors. If you want a solid cash flow and stay completive [sic] in this economic environment, get ABI certified or use a service bureau.

Manual claims are at the bottom of our processing list. The procedure is to do the initial review and ACS input no sooner than 89 day [sic] after filing. We strongly encourage you to either use a service bureau to transmit these drawback claims or purchase drawback software and work with your ABI rep to become ABI certified for drawback.

Id. The Guidance also said that "[u]nless your claim is outside the standard time frames (if it was submitted without errors or deficiencies), do not contact the drawback office for a status report." Id.

At the time of filing, EchoStar also had in its possession the "Drawback Summary" chapter of the June 2011 CBP and Trade Automated Interface Requirements document ("CATAIR document"), which explained how to use the ABI system for document filing.⁷ Def.'s Br. Ex. A, Sept. 18, 2018, ECF No. 28. The chapter was intended to "provide[ ] records related to the drawback summary processing" and stated that "[o]ne or more drawback summary transactions may be submitted." Id. The CATAIR document also stated that, "[i]t should be noted that at this time, a full paper claim is still required. The ABI data is a summary of the claim. Drawback summary data may be transmitted up to 30 days in advance of the estimated claim date (the date the legal paper claim is submitted)." Id.

EchoStar also reviewed the governing statute, 19 U.S.C. § 1313(r)(1), and the governing regulation, 19 C.F.R. § 191.51, prior to...