Lowa, Ltd. v. United States

• Decision Date: 16 March 1983
• Docket Number: Court No. 82-1-00067.
• Citation: 5 CIT 81,561 F. Supp. 441
• Parties: LOWA, LTD., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

561 F. Supp. 441

5 CIT 81

LOWA, LTD., Plaintiff, v. UNITED STATES, Defendant.

Court No. 82-1-00067.

United States Court of International Trade.

March 16, 1983.

Barnes, Richardson & Colburn, New York City (Andrew P. Vance, Leonard Lehman and John J. Galvin, New York City, on brief, Andrew P. Vance, New York City, at oral argument) and Cole & Corrette, Washington, D.C. (John E. Corrette, III, Theodore Sonde and Steven H. Levin, Washington, D.C., of counsel), for plaintiff.

J. Paul McGrath, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, New York City, Attorney in Charge, Intern. Trade Field Office, Commercial Litigation Branch (Madeline B. Kuflik, New York City, on brief and at oral argument), for defendant.

On Defendant's Motion to Dismiss

RE, Chief Judge:

In this action, plaintiff seeks an order directing the Customs Service to accept plaintiff's proffered entry papers for an aircraft under item 694.41 of the Tariff Schedules of the United States (TSUS) which provides for entry free of duty.¹ Customs rejected the entry, and informed plaintiff that the aircraft should be entered under item 694.40 which provides for the payment of a 5% ad valorem duty.²

The defendant has moved to dismiss the action for lack of jurisdiction contending that the court is without jurisdiction because: (a) plaintiff has failed to exhaust its administrative remedies; (b) plaintiff has failed to state a claim upon which relief may be granted; (c) the action is premature; and (d) the United States has not consented to be sued under the circumstances presented in this case.

Since plaintiff has failed to pursue or exhaust its administrative remedies as prescribed by the pertinent jurisdictional statutory provision, this action must be dismissed.

The facts which give rise to this litigation are not in dispute.

On August 7, 1979, a Boeing 707 aircraft of American registry arrived at Honolulu from New Zealand. While the plane was abroad its interior had been extensively refurbished, and, on August 9, 1979, plaintiff, the owner of the aircraft, sought to file a consumption entry under item 694.40, TSUS. Item 694.40 would impose a 5% ad valorem duty on the value added to the aircraft by the refurbishing. Customs officials, believing that the aircraft had been of American registry at the time the repairs were made, a belief confirmed by plaintiff, refused to release the aircraft until a vessel repair entry was filed pursuant to 19 U.S.C. § 1466. Section 1466 imposes a 50% duty on the expense of repairs made in a foreign country to a vessel documented under the laws of the United States. See Suwannee Steamship Co. v. United States, 79 Cust.Ct. 19, C.D. 4708, 435 F.Supp. 389 (1977).

On August 10, 1979, plaintiff secured the release of its aircraft by filing a vessel repair entry and posting a $750,000 bond to cover the estimated vessel repair duties. The plane continued its planned flight across the United States, and since August 10, 1979, plaintiff has enjoyed the uninterrupted use of its aircraft.

On November 5, 1979, plaintiff filed with the district director of Customs a petition seeking relief from the 50% vessel repair duty. Plaintiff claimed that its aircraft was not subject to the duty because it was used solely for corporate and personal purposes, and it was neither licensed to operate, nor did it in fact operate in trade or commerce. In considering this petition, Customs elicited from plaintiff information which established that the aircraft was not documented under the laws of the United States at the time the repairs were made. Because of this newly acquired information, Customs concluded that plaintiff's aircraft was not subject to vessel repair duties, and, on September 17, 1980, notified plaintiff of its decision.

On February 5, 1981, Customs advised plaintiff that it would be required to file an entry summary for its aircraft. By letter dated April 7, 1981, plaintiff requested that the vessel repair entry be liquidated free of duty so that the attendant bond could be terminated. Customs declined, indicating that liquidation was an inappropriate procedure for terminating the bond. Instead, Customs recommended that plaintiff substitute a new entry for the vessel repair entry. This procedure, according to Customs, would allow the cancellation of the vessel repair entry and the invalidation of the bond. Customs also stated that the vessel repair entry and bond would not be canceled until an entry summary with duty was filed.

On May 7, 1981, plaintiff filed with the Customs Service an entry summary entering the aircraft free of duty under item 694.41, TSUS. On January 1, 1980, pursuant to Presidential Proclamation 4707, 3 C.F.R. 87, 139 (1980), item 694.41 superseded item 694.40, TSUS, which contained the 5% duty provision under which plaintiff first sought to enter the aircraft. In rejecting plaintiff's entry, Customs notified plaintiff that the entry should be made under item 694.40, the provision applicable to aircraft during 1979 when plaintiff's airplane had been released into the commerce of the United States.

When informal attempts to reach an agreement failed, plaintiff filed, on July 16, 1981, a protest objecting to the refusal by Customs to accept the entry under item 694.41. Customs responded to plaintiff's protest with a letter which stated that the protest was premature since the rejection of entry papers was not a protestable decision. Plaintiff chose to construe the explanation offered by Customs as a denial of its protest, and, on January 15, 1982 commenced this civil action.

The question presented by defendant's motion to dismiss is whether this court has jurisdiction to review, after imported merchandise has been released into the commerce of the United States, but before liquidation or the payment of estimated duties, a decision by Customs which classifies imported merchandise for the purpose of determining estimated duties. For the reasons which follow, the court holds that it does not have jurisdiction of this action.

It is not questioned that when a jurisdictional issue is raised, "the burden rests on plaintiff to prove that jurisdiction exists." United States v. Biehl & Co., 3 CIT 158, 160, 539 F.Supp. 1218 (1982). In this case, plaintiff asserts that the court has jurisdiction of this action under 28 U.S.C. § 1581, subsections (a), (h) and (i). Section 1581 provides in pertinent part:

(a) The Court of International Trade shall have exclusive jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part, under section 515 of the Tariff Act of 1930.

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(h) The Court of International Trade shall have exclusive jurisdiction of any civil action commenced to review, prior to the importation of the goods involved, a ruling issued by the Secretary of the Treasury, or a refusal to issue or change such a ruling, relating to classification, valuation, rate of duty, marking, restricted merchandise, entry requirements, drawbacks, vessel repairs, or similar matters, but only if the party commencing the civil action demonstrates to the court that he would be irreparably harmed unless given an opportunity to obtain judicial review prior to such importation.

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(i) In addition to the jurisdiction conferred upon the Court of International Trade by subsections (a)-(h) of this section and subject to the exception set forth in subsection (j) of this section, the Court of International Trade shall have exclusive jurisdiction of any civil action commenced against the United States, its agencies, or its officers, that arises out of any law of the United States providing for —

(1) revenue from imports or tonnage;

(2) tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue;

(3) embargoes or other quantitative restrictions on the importation of merchandise for reasons other than the protection of the public health or safety; or

(4) administration and enforcement with respect to the matters referred to in paragraphs (1)-(3) of this subsection and subsections (a)-(h) of this section.

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Jurisdiction Under 28 U.S.C. § 1581(a)

28 U.S.C. § 1581(a) grants the Court of International Trade exclusive jurisdiction of any civil action contesting the denial of a protest under section 515 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1515 (Supp. IV 1980). In turn, 19 U.S.C. § 1515 provides for the allowance or denial of protests filed pursuant to section 514 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1514 (Supp. IV 1980).

This statutory scheme indicates that the court has jurisdiction of this action under 28 U.S.C. § 1581(a) only if the rejection of plaintiff's substitute entry documents was a protestable decision under 19 U.S.C. § 1514. Plaintiff claims that the rejection of its entry documents was protestable under section 1514(a)(4) which allows importers to protest decisions by customs officers as to:

(4) the exclusion of merchandise from entry or delivery or a demand for redelivery to customs custody under any provision of the customs laws, except a determination appealable under section 1337 of this title;

Plaintiff alleges that its aircraft was excluded from entry by the district director's rejection of the substitute entry documents on May 7, 1981. It asserts that the rejection of the substitute entry documents is an "exclusion of merchandise from entry," within the meaning of 19 U.S.C. § 1514(a)(4). Defendant emphasizes that in this case no merchandise has been excluded since the aircraft has already been released into the commerce of the United States. Plaintiff, however, responds that the statute allows importers to protest exclusions from entry or delivery. In plaintiff's view, although the aircraft has not been excluded from delivery, it has nevertheless been excluded from entry.

The authorities which plaintiff submits in support of its interpretation of the statutory...