FLAGSTAFF LIQUOR COMPANY v. United States

• Decision Date: 31 October 1974
• Docket Number: C.D. 4563,Court No. 71-12-02057.
• Parties: FLAGSTAFF LIQUOR COMPANY v. UNITED STATES.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

388 F. Supp. 554

FLAGSTAFF LIQUOR COMPANY v. UNITED STATES.

C.D. 4563; Court No. 71-12-02057.

United States Customs Court.

October 31, 1974.

COPYRIGHT MATERIAL OMITTED

Wilentz, Goldman & Spitzer, Perth Amboy, N. J. (Steven T. Kessel, Perth Amboy, N. J., of counsel), for plaintiff.

Carla A. Hills, Asst. Atty. Gen. (Gilbert Lee Sandler, New York City, trial atty.), for defendant.

NEWMAN, Judge:

Defendant has moved for summary judgment and dismissal of this civil action, brought pursuant to 28 U.S.C. § 2632(a) (1970).

Plaintiff, a wholesaler of domestic and imported wines, spirits and alcoholic beverages, imported from Great Britain 3,660 cases of "Beefeater Dry Gin", which were entered for warehousing at the New York region subport at Perth Amboy, New Jersey on December 17, 1968. The 3,660 cases were assessed with duty under the provision for "gin" in item 168.35 of the Tariff Schedules of the United States, and additionally were assessed with an internal revenue tax as "distilled spirits" under the provisions of 26 U.S.C. § 5001(a) (1964).

Plaintiff claims that the duty and tax were assessed on too great a quantity of merchandise; the rates of duty and tax are not in dispute. Specifically, plaintiff contends that pursuant to 26 U.S.C. § 5008(a) (1964) it is entitled to a refund of the duty ($2,470.50) and tax ($28,822.50) assessed on 915 cases because they were stolen from its bonded warehouse in Perth Amboy, New Jersey, allegedly "without the connivance, collusion, fraud, or negligence" of the importer, its employees or agents. Plaintiff also demands a judgment for interest, attorney's fees and costs of the suit.

Defendant's motion for summary judgment and dismissal of the action is grounded on the contention that the court lacks jurisdiction for the reason that plaintiff failed to file a protest within sixty days after liquidation in accordance with 19 U.S.C. § 1514 (1964).¹ Plaintiff concedes that it failed to file its protest within sixty days after liquidation; but opposes defendant's motion, contending that defendant is "barred" from raising the statute of limitations under section 1514 "by virtue of the fact that an agent of the government misrepresented material facts and induced plaintiff into not pursuing its statutory right to relief within the time limits specified by law".

I have concluded that defendant's motion should be granted.

1.

The record comprises the official papers forwarded to the court by the Regional Commissioner pursuant to 28 U. S.C. § 2632(f) (1970) and rule 3.2(f); the pleadings; an affidavit executed by Stephen Rineberg, plaintiff's vice president, submitted in opposition to defendant's motion; and an affidavit by Joseph A. Farrell, Port Director for United States Customs at Perth Amboy, New Jersey, submitted by defendant in response to Rineberg's affidavit.

The following material facts are not in dispute:

This case concerns entry number PA-199, dated December 17, 1968, which covered 3,660 cases of gin. It appears that 915 of the cases were stolen from plaintiff's premises while under bond on December 23, or 24, 1968. The theft was reported by plaintiff to the appropriate customs officials on December 24, 1968. In subsequently liquidating the entry on July 2, 1969, the Regional Commissioner made no allowance in duty or tax for the 915 stolen cases. Plaintiff failed to file a protest against such liquidation within sixty days thereafter, as prescribed by 19 U.S.C. § 1514.

On April 27, 1970, or 299 days after liquidation, plaintiff filed a claim for a refund of taxes (Internal Revenue Form 843), citing 26 U.S.C. § 5008(a) and asserting: "Claim for refund is made pursuant to 26 U.S.C. Sec. 5008(a). The tax was erroneously paid by the taxpayer because of inadvertence and ignorance of the applicable laws and regulations. The tax should not have been paid because the merchandise was lost by theft without the connivance, collusion, fraud or negligence of the taxpayer or its employees or agents. The loss has not been indemnified against or recompensed by the responsible insurance carriers though claim for same has been made".

On June 1, 1970, or 334 days after liquidation, plaintiff filed an application for an allowance in duty for theft (Customs Form 4315).

The above-mentioned claim and application were denied by the Regional Commissioner in a letter to plaintiff dated April 12, 1971 on the ground that no protest had been filed within sixty days after liquidation pursuant to section 1514. In that letter, the Regional Commissioner further advised plaintiff: "The importer (Flagstaff Liquor Co.), or their authorized agent may protest this decision by filing a protest on Customs Form 19 in quadruplicate within ninety (90) days after the date of this letter in accordance with Section 1514(a)(7), Title 19, United States Code".

Within ninety days of the Regional Commissioner's letter (June 17, 1971), plaintiff filed a protest against the denial of its claims for refund of duty and tax. The protest was denied on July 16, 1971 on the basis that the Regional Commissioner's original decision was found to be correct. Moreover, the Regional Commissioner commented that plaintiff's claim was "not correctible under Section 1520(c)(1) Title 19 USC".

Thereafter, on December 14, 1971 plaintiff filed a summons initiating this action against the denial of its protest of June 17, 1971.

2.

Plaintiff concedes it is not entitled to relief pursuant to section 1520(c) for "clerical error, mistake of fact, or other inadvertence not amounting to an error in the construction of a law." As previously mentioned, plaintiff further admits that it failed to file its protest within sixty days after the liquidation, as required by 19 U.S.C. § 1514. However, plaintiff insists that defendant should be "barred" from asserting such sixty day statute of limitations under section 1514 because the failure to file a timely protest was due to "misrepresentations" by a customs official. Hence, while not articulated as such, it is clear that plaintiff relies upon the familiar doctrine of equitable estoppel.

3.

At this juncture, it should be pointed out that the alleged "misrepresentations" were made during a conversation between Mr. Rineberg, plaintiff's vice president, and Mr. Farrell, the Port Director at Perth Amboy, New Jersey. As noted, the affidavits of both Rineberg and Farrell are part of the record in these proceedings.

The conversation between Rineberg and Farrell occurred at plaintiff's premises on December 24, 1968 as a consequence of plaintiff's discovery in the morning that a container holding 915 cases of the imported gin had been stolen. Previously, Rineberg had transacted customs business with Farrell, and the latter impressed Rineberg as "a person who exercised considerable authority with respect to the operations of the Port of Perth Amboy, and a person who was knowledgeable in the area of customs and import regulations" (Rineberg affidavit, paragraph 5).

Rineberg related to Farrell the then known facts concerning the theft of the gin, and "asked Mr. Farrell to explain Flagstaff's obligations to the United States Government with respect to the missing cases of gin" (Rineberg affidavit, paragraph 7). Continuing, Rineberg averred that the "misrepresentations" of Farrell, which allegedly deterred plaintiff from filing a timely protest, are as follows: (1) "Flagstaff was under an absolute duty to pay both alcohol excise tax and customs duties on the missing cases of gin" (paragraph 8); (2) "the United States Government would proceed against Flagstaff's warehouse operator and/or carrier's bond in the event that Flagstaff failed to or refused to make payment" (paragraph 9); (3) "if the United States proceeded against said bonds, Flagstaff's position as an approved bonded warehouse operator and carrier would be jeopardized" (paragraph 10); and (4) "Farrell did not advise me that I had a statutory right to protest the payment of taxes or duties" (paragraph 13).

Rineberg further argues: "It appeared that the obligation to pay such taxes and duties was absolute and not subject to any challenge or discretionary action on the part of any government official" (paragraph 12); and "Mr. Farrell's statements and those of the Customs House to me led me to believe that not only was Flagstaff obligated to pay said taxes and duties but that Flagstaff had no recourse to challenge Mr. Farrell's assertions" (paragraph 17).

It also appears from Rineberg's affidavit that it was not until March 1970 that plaintiff consulted its attorneys, and "was advised that it was conceivable that there existed a statutory right to make claims for refund of the customs duties and alcohol excise taxes paid on the missing 915 cases of gin" (paragraph 15).

In summary, as expressed in its brief: "Plaintiff was misled into believing that it must pay the contested taxes and duties, that to dispute said taxes and duties would result in serious adverse consequences to plaintiff, and that in any event, there existed no procedure by which a contest could be made".

I have determined, however, that as a matter of law the averments in Mr. Rineberg's affidavit do not establish any basis for an equitable estoppel predicated upon misrepresentation.

4.

First, plaintiff has failed to show wherein any of the statements attributed to Farrell were either erroneous or misleading. On the contrary, they appear to be substantially accurate.

As of December 24, 1968, when the conversation occurred, there had been no administrative or judicial determination to abate the duty and tax on the stolen cases of gin, and thus at that time plaintiff was indeed "under an absolute duty" to pay duty and tax on the 915 cases of gin. And although the subject of protesting the assessment did not arise in the conversation, it is of course fundamental that payment of liquidated duties and taxes was a condition precedent to filing a protest and to confer...