Farrell Lines, Inc. v. United States

• Decision Date: 04 February 1982
• Docket Number: Appeal No. 80-38.
• Citation: 657 F.2d 1214
• Parties: FARRELL LINES, INC. as successor to American Export Lines, Inc., Appellant, v. The UNITED STATES, Appellee.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

657 F.2d 1214

FARRELL LINES, INC. as successor to American Export Lines, Inc., Appellant, v. The UNITED STATES, Appellee.

Appeal No. 80-38.

United States Court of Customs and Patent Appeals.

August 20, 1981.

As Modified on Denial of Rehearing February 4, 1981.

Opinion on Rehearing Filed February 4, 1982.

Nicholas H. Cobbs, New York City, for appellant.

Thomas S. Martin, Acting Asst. Atty. Gen., Washington, D. C., David M. Cohen, Director, Joseph I. Liebman, Atty.-in-Charge, New York City, Barbara M. Epstein, Bellmore, N.Y., of counsel, for appellee.

Before MARKEY, Chief Judge, and RICH, BALDWIN, MILLER and NIES, Judges.

Opinion on Rehearing Filed February 4, 1982. See 667 F.2d 1017.

MILLER, Judge.

This appeal is from the judgment of the United States Customs Court (hereinafter referred to as the Court of International Trade) in American Export Lines, Inc. v. United States, ___ Cust.Ct. ___, 496 F.Supp. 1320, C.D. 4864 (1980), dismissing for lack of jurisdiction an action by American Export Lines, Inc. ("AEL"), to recover duties assessed on repairs made overseas to its ship, the C. V. LIGHTNING. We reverse and remand.

As described by the Court of International Trade, the repairs were necessitated by an unexpected grounding of the ship as it was departing New York for Europe. Although the ship was freed in a short time, its master anchored it for inspection. After inspection by both the crew and an American Bureau of Shipping engineer, it was found to be seaworthy, and it continued on its voyage. After docking at Bremerhaven, West Germany, there was another inspection for damage, as a result of which an American Bureau of Shipping surveyor in Bremerhaven found the ship unseaworthy and required that repairs be made before he would authorize a return voyage. After repairs were made in Amsterdam in the amount of $346,850.13, the ship returned to New York. Pursuant to section 466(a) of the Tariff Act of 1930, 19 U.S.C. § 1466,¹ duties in the amount of $153,842.14 were assessed.

AEL contends that the casualty suffered by the C. V. LIGHTNING in running aground falls within the remission or refund provision of section 466. The Government denies that the grounding of the ship constituted a casualty within the regular course of her voyage and contends that AEL does not qualify for the remission or refund of duties authorized by section 466. Primarily at issue here are the Government's argument that AEL failed to file a protest within ninety days after the posting of notice of liquidation and the holding of the Court of International Trade that the filing by AEL of its summons with the court was not timely.

As found by the Court of International Trade, the following is a chronological list of filings and responses between the parties:

June 27, 1974 Vessel repair entry filed by AEL July 1, 1974 Application for relief from duties on ship's foreign repairs (no log abstract as required by 19 CFR 4.14(f) but Coast Guard report and master's statement included)²

August 20, 1975 Final itemized repair cost invoices filed by AEL

October 24, 1975 Entry liquidated (Bulletin Notice showing liquidation this date in record); bill for $153,842.14 duties sent to AEL

November 5, 1975 AEL letter to Commissioner of Customs, Washington, D.C., requesting cancellation of the duties

November 6, 1975 Copy of November 5 letter sent to Customs officials in New York. Cover letter refers to said letter as "petition for cancellation" and requests that it be forwarded to Customs Service Headquarters in Washington, D.C.

January 7, 1976 AEL letter to Commissioner of Customs asking for response to the November 5 letter requesting "cancellation" of duties

February 5, 1976 Reply from Carrier Rulings Branch of Customs Service Headquarters stating there is no record of receipt of the November 5 letter and requesting that AEL direct its petition "to this office through the involved Customs office"

February 9, 1976 AEL letter to Carrier Rulings Branch stating that its "petition" of November 5, 1975, was, in fact, directed "to your office through the U.S. Customs Service here in New York." Bill for duties attached, and "If, however, there is something additional you require from us please do not hesitate to so advise"³

January 14, 1977 Letter from Headquarters, Customs Service, Washington, D.C., to Regional Commissioner of Customs, New York, denying "petition" of AEL "seeking remission of duties"⁴

April 7, 1977 AEL "supplemental petition for relief" and containing supplemental information sent to Headquarters, Customs Service, through the Area Director of Customs, New York

July 28, 1977 Letter from Headquarters, Customs Service, Washington, D.C., to Area Director of Customs, New York, stating "Relief is denied" and giving a more complete analysis than the January 14, 1977, letter

September 27, 1977 Formal protest filed by AEL, referring to decision of July 28, 1977

October 7, 1977 Formal protest denied because "Original Customs decision reviewed and found to be correct"

January 30, 1978 AEL files summons with Customs Court

In addition to the above, affidavits filed by AEL in opposition to the government's motion to dismiss establish, without contravention, that numerous informal meetings between AEL's representatives and Customs officials took place from June of 1974 to January 24, 1977, during the course of which Customs officials (including the Regional Counsel for the Eastern Division) advised that AEL had ninety days in which to appeal the denial of AEL's petition for remission of duties by filing a formal protest; further, that at no time were they advised that AEL's formal protest was not timely⁵ or that the time for filing a formal protest had expired or that a formal protest should have been filed within ninety days following liquidation on October 24, 1975.

We note that, in reaching a decision on this case, the Court of International Trade said: "It cannot be disputed that confusion existed for both parties as to the proper method to obtain administrative review of the decision to impose assessment of foreign repair duties." In such a situation, particularly where the party seeking relief has relied upon Customs officials for guidance, dismissals should be granted sparingly. Dann v. Studebaker-Packard Corp., 288 F.2d 201, 215-16 (6th Cir. 1961); Kingwood Oil Co. v. Bell, 204 F.2d 8, 12-13 (7th Cir. 1953). All uncontroverted factual allegations in the complaint, along with the supporting affidavits of record, should be accepted as true.⁶ See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Smith v. Gross, 604 F.2d 639, 641 n.1 (9th Cir. 1979); O'Connor v. Yezukevicz, 589 F.2d 16, 18 (1st Cir. 1978); Stern v. United States Gypsum, Inc., 547 F.2d 1329, 1332 (7th Cir.), cert. denied, 434 U.S. 975, 98 S.Ct. 533, 54 L.Ed.2d 467 (1977); Garrett v. Bamford, 538 F.2d 63, 65 (3d Cir.), cert. denied, 429 U.S. 977, 97 S.Ct. 485, 50 L.Ed.2d 585 (1976).

Without citation to any authority, the Court of International Trade held that the decision of the Customs Service denying AEL's petition for remission of duties was not subject to protest under 19 U.S.C. § 1514(c)(2)(B).⁷ However, the record shows that there was a notice of liquidation here, so that subparagraph (2)(A) clearly applies and, thus, subparagraph (2)(B) does not apply. Moreover, in 19 U.S.C. § 1466, supra note 1, the Congress established an administrative procedure, implemented in detail by Customs Regulation 19 CFR 4.14, whereby the owner or operator of a vessel may apply for relief (remission or refund) from duties in accordance with the authority of the Secretary of the Treasury and may petition the Commissioner of Customs for review of the district director's decision on the application. This court has held that Congress intended thereby to confer upon the Secretary the exclusive and final authority to act on such a petition and that the Court of International Trade is without jurisdiction over his action. Waterman Steamship Corp. v. United States, 30 CCPA 119, C.A.D. 223 (1942). See Sturm, Customs Law and Administration § 56.3 (1980).^7.5 As the Court of International Trade pointed out, it appears that this procedure was designed to avoid unnecessary liquidations. However, there appears to be no reason why, in a case where an application has been followed by a liquidation, a petition for review of denial of the application (implied by the liquidation as recognized by the Government in its brief) cannot be considered under 19 CFR 4.14(k) of the regulation.⁸ Indeed, that is precisely the procedure followed in this case, and both the filing of the petition and supplemental petition and their consideration appear to have been in the utmost good faith of both AEL and the Customs Service. Now, however, the Government urges, in effect, that, because no protest to the liquidation of October 24, 1975, was filed within ninety days, the petition and supplemental petition for review of the district director's decision and their consideration by the Customs Service amounted to a charade.

Rather than thus to elevate form over substance, we hold that the ninety-day period of limitations for filing a protest to the liquidation of October 24, 1975, was tolled⁹ from the date of the petition for cancellation of November 5, 1975, until the notice, dated July 28, 1977, of denial of AEL's supplemental petition.¹⁰ Cf. Schering Corp. v. United States, ___ CCPA ___, ___ C.A.D. 1250, 626 F.2d 162, 166 n.8 (1980) (unavailability of entry papers does not void an otherwise valid liquidation, but tolls the liquidation until entry papers become available for examination). We agree with AEL that tolling should run until final agency action on its supplemental petition, which elicited a more complete analysis than that provided by the Customs Service in its January 14, 1977, denial of the petition.^10.5

Since, under tolling, only seventy-three days of the ninety-day period of...