Texport Oil Co.v. U. S.

• Decision Date: 27 July 1999
• Citation: 185 F.3d 1291
• Parties: (Fed. Cir. 1999) TEXPORT OIL COMPANY, Plaintiff-Cross Appellant, v. UNITED STATES, Defendant-Appellant. 98-1352, -1353, -1373 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 1291

185 F.3d 1291 (Fed. Cir. 1999)

TEXPORT OIL COMPANY, Plaintiff-Cross Appellant, v. UNITED STATES, Defendant-Appellant.

98-1352, -1353, -1373

United States Court of Appeals for the Federal Circuit

DECIDED: July 27, 1999

Appealed from: United States Court of International Trade

Judge R. Kenton Musgrave

Rufus E. Jarman, Jr., Barnes, Richardson & Colburn, of New York, New York, argued for plaintiff-cross appellant. With him on the brief was Christopher E. Pey.

John Warshawsky, Trial Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellant. With him on the brief were David M. Cohen, Director, and Jeanne E. Davidson, Assistant Director.

John J. Galvin, Galvin & Mlawski, of New York, New York, argued for amicus curiae American Petroleum Institute. On the brief were G. William Frick and Andrew C. Yood, The American Petroleum Institute, of Washington, DC. Of counsel was Jack D. Mlawski, Galvin & Mlawski.

Before MICHEL, CLEVENGER, and BRYSON, Circuit Judges.

CLEVENGER, Circuit Judge.

This case presents a question of interpretation of a statute that grants an exporter a refund (or "drawback") of up to 99 percent of "any duty, tax, or fee imposed under Federal law because of [the merchandise's] importation" if the exported goods are "commercially interchangeable with such imported merchandise." 19 U.S.C. 1313(j)(2) (1994). The United States appeals from the decision of the United States Court of International Trade granting the exporter in this case, Texport Oil Company, drawbacks under section 1313(j)(2) on seven of eight disputed shipments of petroleum products. See Texport Oil Co. v. United States, 1 F. Supp. 2d 1393 (Ct. Int'l Trade 1998). Texport Oil Company cross-appeals the denial of its claim with respect to the eighth shipment. The United States also appeals the Court of International Trade's holding that sums paid to satisfy two non-duty charges--the Merchandise Processing Fee and the Harbor Maintenance Tax--were imposed "because of . . . importation," thus making them eligible for drawback under section 1313(j)(2).

Because we conclude that (1) the Court of International Trade's construction of the phrase "commercially interchangeable" in section 1313(j)(2) was erroneous, (2) the trial court correctly determined that the Merchandise Processing Fee is eligible for drawback, and (3) the Harbor Maintenance Tax is ineligible for drawback, we vacate-in-part, affirm-in-part, reverse-in-part, and remand.

I

The relevant provisions of 19 U.S.C. 1313(j)(2) are as follows, with the critical language highlighted:

(2). if there is, with respect to imported merchandise on which was paid any duty, tax, or fee imposed under Federal law because of its importation, any other merchandise (whether imported or domestic), that -

(A). is commercially interchangeable with such imported merchandise;

then upon the exportation or destruction of such other merchandise the amount of each such duty, tax, and fee paid regarding the imported merchandise shall be refunded as drawback, but in no case may the total drawback . . . exceed 99 percent of that duty, tax, or fee.

Thus, section 1313(j)(2) evinces a clear congressional purpose to allow exporters to obtain refunds on sums paid as a result of the importation of goods that, although not identical to the exported goods, are nonetheless "commercially interchangeable" with the exported goods.

The shipments at issue here¹ were exported from the United States between September 1990 and May 1991 by Texport Oil Company ("Texport"), a petroleum product marketing company extant from 1987 to 1994. After initially granting some of the claims, the United States Customs Service ("Customs") denied drawback to Texport on all the shipments upon final liquidation. Customs determined that the merchandise exported--petroleum products ranging from heating oil to jet fuel--were not "commercially interchangeable" with their corresponding imported goods. Customs also denied drawback of amounts paid under two non-duty charges, the Merchandise Processing Fee ("MPF") and the Harbor Maintenance Tax ("HMT"), reasoning that those charges were not assessed "because of [the merchandise's] importation" and thus did not fall within the ambit of section 1313(j)(2).

Texport filed suit in the Court of International Trade, which conducted a trial in mid-1997. Based on its own construction of the statutory language, the Court of International Trade determined that each of the disputed shipments were "commercially interchangeable" with their corresponding imported goods, except for one--the shipment exported onboard the Al Deerah--where the imported merchandise was described as "jet fuel" and the exported merchandise was listed on the sales contract as "stove fuel." See id. at 1399. The Court of International Trade also held that the MPF and HMT were charges assessed because of importation, and thus were eligible for drawback under section 1313(j)(2). See id. at 1401.

The United States appeals this decision, vesting us with jurisdiction under 28 U.S.C. 1295(a)(5) (1994).

The Court of International Trade's conclusions of law are reviewed de novo, see, e.g., Lynteq, Inc. v. United States, 976 F.2d 693, 696 (Fed. Cir. 1992), while findings of fact are reviewed for clear error, see Medline Indus., Inc. v. United States, 62 F.3d 1407, 1409 (Fed. Cir. 1995). Because Customs' factual determinations are presumed to be correct, see 28 U.S.C. 2639(a)(1) (1994), the challenger bears the burden of proving disputed facts. See Universal Elecs. v. United States, 112 F.3d 488, 492 (Fed. Cir. 1997).

II

The parties agree that what "commercially interchangeable" means in the context of section 1313(j)(2) is a question of statutory interpretation, an issue of law. See, e.g., Guess? Inc. v. United States, 944 F.2d 855, 857 (Fed. Cir. 1991) (reviewing Court of International Trade's statutory interpretation de novo). Customs has not asked this court to grant its proffered interpretation of "commercially interchangeable" deference under the rule of Chevron U.S.A. v. Natural Res. Def. Coun., 467 U.S. 837 (1984). See Avenues in Leather, Inc. v. United States, 178 F.3D 1241-44 (Fed. Cir.)(noting that United States v. Haggar Apparel Co., 526 U.S. __, 119 S.Ct. 1392 (1999), "raises questions regarding the proper standard of review of Customs' [statutory] interpretation."). In these circumstances, where Customs' conspicuous silence raises the question of whether there is an official "agenc[y] construction" of the relevant statute, we decline to sua sponte extend Chevron deference. Chevron, 467 U.S. at 842 (deference afforded to "an agency's construction of the statute which it administers."); see also Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212 (1989) (no deference afforded to litigating position where agency's position was unclear). We thus consider the parties' arguments in this case without formal deference.

A

Customs' apparent application of the language "commercially interchangeable" in section 1313(j)(2), as evidenced by the rulings that are the subject of this appeal, is to require that the exported merchandise meet what it calls "recognized industrial standards" in the same way that the imported merchandise did. That is, Customs asserts that "commercially interchangeable" requires that complete tests of the physical properties of the imported and exported goods be conducted. Here, Customs required the Texport shipments to comport with the formal requirements of the American Society of Testing and Materials ("ASTM") standards. For example, in the case of jet fuel, Customs required that 23-part ASTM standard tests be conducted on the fuel after it was loaded aboard the exporting vessel. Customs determined that the Texport shipments did not meet the "commercially interchangeable" requirements because the tests either did not fully conform to the ASTM standard (i.e., they were incomplete), were conducted prior to loading the ship, or both.

The Court of International Trade found this interpretation of "commercially interchangeable" to be overly narrow, and instead held that imported and exported goods are "commercially interchangeable" under section 1313(j)(2) if they meet the following two-part test:

(1) "the imported and exported goods must be commercially accepted"; and

(2) "the description of the imported and exported goods must match on the sale invoice or contract."

See Texport, 1 F. Supp. 2d at 1398. Texport supports this construction of the statutory language on appeal.

B

Our review of the statutory language and the relevant legislative history leads us, however, to conclude that neither proffered interpretation is satisfactory.

By requiring drawback to be extended to exports that were "commercially interchangeable" with dutiable imports, Congress clearly and unequivocally stated its intention to allow the benefits of drawback to extend to exports that are not identical to the imported merchandise. The scope of the difference between the imports and exports, Congress states, is limited to "commercia[l] interchangeab[ility]." 19 U.S.C. 1313(j)(2). The phrase "commercially interchangeable" was inserted in place of the term "fungible" in a 1993 amendment, see Pub. L. 103-182, 632(a)(4), 1993 U.S.C.C.A.N. (107 Stat.) 2193-94, ruling out any construction of "commercially interchangeable" that requires the imports and exports to be identical (or even very nearly so); compare 19 U.S.C. 1313(j)(2) (1988) (amended), with 19 U.S.C. 1313(j)(2) (1994); see also H.R. Rep. No. 103-361, at 131 (1993), reprinted in 1993 U.S.C.C.A.N. 2552, 2681 ("[T]he Committee intends to permit the substitution of merchandise when it is 'commercially interchangeable' rather than 'commercially identical.'"). This precludes our acceptance of Customs' interpretive position, as it would require not "interchangeability," but "identity." Instead, we are convinced...