Shell Oil Co. v. United States

• Decision Date: 20 June 2011
• Docket Number: Slip Op. 11–70.Court No. 08–00109.
• Parties: SHELL OIL COMPANY, c/o Gulf Coast Drawback Services, Inc., Plaintiff,v.UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

781 F.Supp.2d 1313

33 ITRD 1577

SHELL OIL COMPANY, c/o Gulf Coast Drawback Services, Inc., Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 11–70.Court No. 08–00109.

United States Court of International Trade.

June 20, 2011.

Galvin & Mlawski (John J. Galvin), New York, NY, for Plaintiff.Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, and Todd M. Hughes, Deputy Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, DC, (Tara K. Hogan); Richard McManus, Senior Attorney, Office of the Chief Counsel, Bureau of Customs & Border Protection, U.S. Department of Homeland Security, Of Counsel, for Defendant.

OPINION

RIDGWAY, Judge:

In this action, Plaintiff Shell Oil Company contests the U.S. Customs Service's denial of protests filed by Shell seeking drawback (refund) of certain taxes and fees. See Memorandum in Support of Plaintiff's Motion for Summary Judgment (“Pl. Brief”) at 4–5.¹ Distilled to its essence, the issue presented is the timeliness of Shell's requests for such drawback. See Defendant's Response to Plaintiff's Motion for Summary Judgment (“Def. Brief”) at 1, 5, 8.

The relevant facts are relatively straightforward and not in dispute. The action involves seven claims and one partial claim for non-manufacturing substitution drawback associated with certain petroleum products that Shell imported between 1993 and 1994, and acceptable substitute finished petroleum derivatives that were exported during the same period. See Pl. Brief at 1; Def. Brief at 4.

In pertinent part, the drawback statute requires all drawback claims to be filed within three years of the date of exportation of the substitute merchandise. See 19 U.S.C. § 1313(r)(1) (1994).² It is undisputed that Shell filed timely drawback claims, expressly seeking drawback only as to the import duties that the company had paid upon importation of the petroleum products at issue. See Pl. Brief at 1; Plaintiff's Reply to Defendant's Response in Opposition to Plaintiff's Motion for Summary Judgment (“Pl. Reply Brief”) at 8, 23; Def. Brief at 4–5, 6, 7, 11–12, 13. It is similarly undisputed that Customs refunded as drawback 99% of the import duties, in accordance with the drawback statute. See Pl. Brief at 1; Def. Brief at 5, 12; 19 U.S.C. § 1313. Finally, it is also undisputed that, on November 7, 1997 (more than three years after the date of Shell's exportation of the substitute petroleum products), Shell filed protests with Customs, seeking—for the first time—drawback as to Harbor Maintenance Tax (“HMT”) and Environmental Tax (“ET”) payments that Shell had made in connection with the imports at issue. See Pl. Brief at 1; Pl. Reply Brief at 6; Def. Brief at 5, 7. ³ Customs promptly denied Shell's protests. See Pl. Brief at 1; Def. Brief at 5. Shell thereafter filed a timely summons in this Court.

This action, which has been designated a test case pursuant to USCIT Rule 84, is now before the Court on Shell's Motion for Summary Judgment. Shell maintains that it timely requested drawback of HMT and ET, that its protests were wrongly denied, and that its claims for drawback of HMT and ET should be sustained. See Pl. Brief at 4–5, 13; Pl. Reply Brief at 23–24. ⁴ In contrast, the Government argues that Shell failed to seek drawback of HMT and ET within the statutory three-year period following the company's exportation of substitute merchandise, that Shell's requests for HMT and ET thus were untimely, and that Shell's protests therefore were properly denied. See Def. Brief at 1, 6, 13. According to the Government, Aectra requires the entry of judgment in its favor, and the dismissal of Shell's complaint. See Def. Brief at 1, 6, 13; Aectra Refining & Marketing, Inc. v. United States, 565 F.3d 1364 (Fed.Cir.2009).

Jurisdiction lies under 28 U.S.C. § 1581(a). For the reasons that follow, Shell's Motion for Summary Judgment must be denied, and summary judgment is granted in favor of the Government.

I. Background

This action involves seven claims and one partial claim for non-manufacturing substitution drawback associated with certain petroleum products that Shell imported between 1993 and 1994, and acceptable substitute finished petroleum derivatives that were exported during the same period. See generally 19 U.S.C. § 1313(p) (addressing drawback and “Substitution of finished petroleum derivatives”). At issue is the timeliness of Shell's claim for drawback (refund) of certain taxes and fees, specifically HMT and ET.

The drawback statute requires all drawback claims to be filed within three years of the date of exportation of the substitute merchandise, and claims that are not completed within the three-year period are—in the words of the statute—“considered abandoned.” See 19 U.S.C. § 1313(r)(1). A complete drawback claim consists of “[a] drawback entry and all documents necessary to complete a drawback claim.” See 19 U.S.C. § 1313(r)(1).⁵ At the time of the transactions in question, claims filed under the provision of the drawback statute at issue here ( i.e., the “substitute petroleum derivatives” provision) were limited to 99% of “the amount of the duties paid on, or attributable to” the imported petroleum products. See 19 U.S.C. § 1313(p); 19 U.S.C. § 1313(a).⁶

Shell's timely drawback claims, filed in 1995 and 1996, sought drawback only as to the import duties that it had paid. Each “Drawback Entry” form (Customs Form 7539) that Shell filed with Customs required Shell to state its “net claim” specifying the precise sum that it sought. Nowhere did Shell claim for (or even refer to) drawback of HMT and ET—much less include HMT and ET in the “net claim” figure that the company provided on each of the drawback entry forms that it filed with Customs.⁷ Customs paid all of Shell's drawback claims in full, refunding 99% of the import duties as requested in the drawback claims that Shell had filed.

Thereafter, on November 7, 1997 (after the statutory three-year period for the filing of drawback claims had expired), Shell filed protests with Customs, seeking—for the first time—drawback as to HMT and ET payments that Shell had made in connection with the imports at issue. Customs denied Shell's protests less than a month later, on December 3, 1997, stating:

Under provisions of 19 U.S.C. § 1313(b) & (p) drawback is allowed upon Customs duty paid on imported merchandise. Harbor Maintenance Tax (HMT) is an incidental expense incurred upon a vessel entering a harbor. The HMT is not incurred as a result of the importation of merchandise but simply imposed for the use of the harbor. The fee is collected by U.S. Customs for the benefit of the Army Corps of Engineers.

Protest No. 5301–97–100421 (Dec. 3, 1997) (same language used to deny all of Shell's protests). Some months later, Shell commenced this action, filing a timely summons in this Court.⁸

In 1999, Congress amended the relevant language of the drawback statute. Among other things, Congress expanded the scope of drawback available under the “substitute petroleum derivatives” provision of the statute, to include other import-related expenditures in addition to customs duties. Specifically, in relevant part, the 1999 amendments made eligible for drawback “any duty, tax, or fee imposed under Federal law because of ... importation.” See 19 U.S.C. § 1313(p) (2000); 19 U.S.C. § 1313(j) (2000).⁹

In addition, the 1999 amendments suspended the standard statutory three-year period for the filing of drawback claims, but only as to “drawback claim[s] filed within 6 months after the date of enactment of [the 1999 amendments]” for which the statutory three-year period had expired. See 1999 Trade Act, Pub.L. No. 106–36, § 2420(e), 113 Stat. 127, 179 (1999).¹⁰ The effect of that language was to “creat[e] a six-month grace period in which otherwise untimely [drawback] claims could be filed or re-filed to obtain relief under the amended statute.” See Aectra, 565 F.3d at 1370–71. As a result, between June 25, 1999 and December 25, 1999, importers who had failed to make such claims within the statutory three-year period were expressly authorized to file claims for drawback of “any duty, tax, or fee imposed under Federal law” paid on imported merchandise “because of its importation.” Unlike other importers who seized on this opportunity to file otherwise untimely drawback claims, Shell took no action to avail itself of the 1999 amendments.Compare, e.g., Aectra, 565 F.3d at 1367 n. 2 (noting that plaintiff in Aectra re-filed drawback claims “in December 1999 pursuant to a temporary suspension of the three-year limitations period accompanying a June 25, 1999 amendment to the drawback statute”).

Shortly thereafter, however, the Court of Appeals issued its decision in Texport, interpreting the statute's “because of ... importation” language to preclude the payment of drawback on any “duty, tax, or fee that is assessed in a nondiscriminatory fashion against all shipments”—not just imports—“utilizing ports.” See Texport Oil Co. v. United States, 185 F.3d 1291, 1295–97 (Fed.Cir.1999). Texport ruled the Merchandise Processing Fee (“MPF”) to be eligible for drawback, concluding that the MPF “is explicitly linked to import activities.” See Texport, 185 F.3d at 1296. On the other hand, reasoning that the HMT is “assessed in a nondiscriminatory fashion against all shipments utilizing the ports” (not just imports), Texport ruled the HMT to be ineligible for drawback. See Texport, 185 F.3d at 1296–97. George E. Warren held the ET to be ineligible for drawback, for similar reasons. See George E. Warren Corp. v. United States, 341 F.3d 1348 (Fed.Cir.2003) (holding ET ineligible for drawback, and ruling reversal of Texport unwarranted).

In December 2004, Congress amended the drawback statute with the express intent of overturning Texport and eliminating the distinction between taxes and fees that discriminate against imports and those that do not. See S. Rep. 108–28 (2003), at...